SECRETARIAL AUDIT :
The Companies Act 2013 has introduced a new requirement of Secretarial Audit for bigger companies, which has been prescribed under Section 204 of the Act. The provisions regarding secretarial audit of the company according to section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are discussed below
Companies required conducting secretarial audit:
(1) Every listed company and
(2) Company belonging to other class of companies: The other class of companies are
• every public company having a paid-up share capital of fifty crore rupees or more; or
• every public company having a turnover of two hundred fifty crore rupees or more.
Qualifications for the secretarial auditor: A Secretarial Audit has to be conducted by a Practising Company Secretary in respect of the secretarial and other records of the company.
Report of the secretarial audit: A secretarial audit report shall be annexed with the Board’s report of the company. The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1). The format of the Secretarial Audit Report shall be in Form No.MR.3.
Other Provisions:
• It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.
• If a company or any officer of the company or the company secretary in practise, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. As per Section 143(14), all provisions regarding rights, duties and obligations of statutory auditors shall also apply to Company Secretary in Practice conducting secretarial audit.