SECRETARIAL AUDIT

Secretarial Audit is compliance audit, it is a part of total compliance management in an organization. The Secretarial Audit is an effective tool for corporate compliance management. The Secretarial Audit is an audit where the Secretarial Auditor expresses an opinion as to whether there subsist appropriate systems and processes in the company proportionate with the size and operations of the company to monitor and check compliance with applicable laws, rules, regulations, and guidelines.

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Secretarial Audit (CS Professional) An audit is defined as a detailed analysis and verification of the accounting records and transactions of a business or an organization. Secretarial Audit under Companies Act, 2013 aims at evaluating company’s compliances and abidance to statutory compliance as applicable to the company.

Applicability of Secretarial Audit:-

As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form independent practicing company secretary;

(1) Every listed company

(2) Every public company having a paid-up share capital of Fifty Crore rupees or more, or

(3) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

A Secretarial Auditor needs to check compliances by the organization under the accompanying laws and rules made there-under; I. The Companies Act, 2013 (the Act) and the Rules made there-under;
ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the Rules made there-under;
iii. The Depositories Act, 1996 and the Regulations and Bye-Laws Framed there-under;
iv. Unfamiliar Exchange Management Act, 1999 and the Rules and Regulations made there-under to the degree of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;
v. The accompanying Regulations and Guidelines recommended under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 in regards to the Companies Act and managing customer;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
vi. Secretarial Standards gave by The Institute of Company Secretaries of India.
vii. The Listing Agreements went into by the Company with Stock Exchange(s), if relevant;
viii. Different laws as might be relevant explicitly to the organization Thus the extent of Secretarial review isn’t restricted to the corporate laws pertinent to organization however it degree to all laws appropriate to Company. As of late Institute of Company Secretaries of India (ICSI) has given a FAQ on Secretarial Audit and has explained “Different Laws”, the text of the equivalent is replicated as beneath: The Council of the ICSI at its 226th gathering hung on November 21, 2014 settled on the Scope of Secretarial Audit as respects “point
(vi) … … .( different laws as might be relevant explicitly to the organization)”, which is set as under: Reporting on consistence of ‘Different laws as might be material explicitly to the organization’ will incorporate every one of the laws which are appropriate to explicit industry for instance; for Banks-all laws pertinent to Banking Industry; for insurance agency all laws pertinent to protection industry; moreover for an organization in petrol area all laws material to petrol industry; comparably for organizations in drug area, concrete industry and so on Inspecting and revealing whether the satisfactory frameworks and cycles are set up to screen and guarantee consistence with general laws like work laws, contest law, natural laws and so on

Required Documents for Secretarial Audit

Below-mentioned documents are required for Secretarial Audit-

  • Charter Documents and Statutory Registers,
  • Board and General Meeting Minutes & Notices,
  • Audited financial statements and Last year Secretarial Audit Report,
  • If the company is listed, Filings & Intimations with ROC, Stock Exchanges, Newspaper Advertisements.
  • Annual Performance Reports, Lease Deed, Bonds and returns
  • Filings with RBI (If there is a foreign investment) and other statutory departments,
  • Registers maintained under Labour Laws
  • Admission and Statement for code of conduct received from the directors
  • Remuneration and Sitting fees details paid to directors.
  • Particulars of CSR amount
  • SAST Disclosures
  • Bank account details for dividend
  • Details of ECB Returns, in case of foreign borrowings in the company.

Applicability of Secretarial Audit:-

As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form independent practicing company secretary;

(1) Every listed company

(2) Every public company having a paid-up share capital of Fifty Crore rupees or more, or

(3) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

Required Documents for Secretarial Audit

Below-mentioned documents are required for Secretarial Audit-

  • Charter Documents and Statutory Registers,
  • Board and General Meeting Minutes & Notices,
  • Audited financial statements and Last year Secretarial Audit Report,
  • If the company is listed, Filings & Intimations with ROC, Stock Exchanges, Newspaper Advertisements.
  • Annual Performance Reports, Lease Deed, Bonds and returns
  • Filings with RBI (If there is a foreign investment) and other statutory departments,
  • Registers maintained under Labour Laws
  • Admission and Statement for code of conduct received from the directors
  • Remuneration and Sitting fees details paid to directors.
  • Particulars of CSR amount
  • SAST Disclosures
  • Bank account details for dividend
  • Details of ECB Returns, in case of foreign borrowings in the company.

FAQs

Qus:-Who can be appointed as secretarial auditor?

Only a practicing company secretary be appointed as Secretarial Auditor of the Company.

Qus:-Who can conduct the Secretarial Audit?

Only members of the Institute of Company Secretaries of India having COP (Certificate of Practice) can conduct Secretarial Audit and submit the Secretarial Audit Report in Form MR-3.

Qus:-What is the format of the Secretarial Audit Report?

Secretarial Audit Report is required to be provided in the format lay down in Form MR-3.

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