Requirement of Secretarial Audit in private/Public/listed Company by Practicing Company Secretary.

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WHAT IS SECRETARIAL AUDIT

A Secretarial Audit is a mechanism to check the compliance of  Corporate and economic laws, rules, regulations, notifications under various applicable laws such as Companies Act, 2013, SEBI Act 1992, SCRA Act 1956 FEMA Act, Depository Act and rules therein prevalent at the time of the audit.

BENEFIT OF SECRETARIAL AUDIT

  • To have an effective mechanism in place to monitor compliance and non-compliance by a company
  • Secure the confidence of directors, employee, stakeholders, creditors, and management in the working of the company
  • The Secretarial audit ensures legal procedures are in place so that management can concentrate on important matters
  • The compliant company enjoys the advantage of the goodwill
  • Investors get a fair idea about the level of compliance the company does to be assured that their money is in safer hands.

 

WHO REQUIRES TO HAVE A STATUTORY AUDIT

As per section 204(1) of Companies act, 2013 Following class of Company requires Secretarial Audit of Company.

  1. Every Listed Company
  2. Every Public Company having paid-up share capital of fifty crore rupees or more.
  3. Every Public Company having turnover of Two hundred Fifty crores or more.
  4. Every Private company Subsidiary of the above mentioned public company
  5. Every Company(private or public both) Having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.

WHO CAN BE APPOINTED AS A SECRETARIAL AUDITOR

As per section 204(1) of Companies Act, 2013 Only a Company secretary in practice can conduct Secretarial Audit and furnish the Secretarial Audit Report to the company in Form MR-3. [Section 204(1) of Companies Act, 2013].

The Secretarial Auditor is required to be appointed at the beginning of the Financial year by the Board Resolution passed by the Board of Directors of the Company in their Board Meeting. Required filing e-form MGT-14 within a period of 30 days from the date of appointment.

The secretarial Audit report should be Signed by Secretarial Auditor who has been engaged by the company to conduct the Secretarial Audit and in case of a firm of Company Secretaries, by the partner under whose supervision the Secretarial Audit was conducted.

Annual Secretarial Compliance report

As per Regulation 24A of SEBI (LODR), Regulations, 2015 & SEBI Circular dated Feb. 8, 2019, Every Listed Company requires to submit the Annual Secretarial Compliance report as prescribed signed by a practicing Company Secretary within 60 days of the end of the Financial year.

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