Procedures under Companies Act, 2013

Secretarial Audit for Public Companies

  • Compulsion for Secretarial Audit : Following classes of companies are required to appoint Secretarial Auditor for auditing the secretarial and related records of their companies:
  • Every Listed Public Company; or
  • Public Companies having a paid up capital of Rupees fifty crore or more; or
  • Public companies having a turnover of two hundred fifty crore rupees or more.

[Section 204(1) & Rule No. 9(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

  • Professional eligible to conduct Secretarial Audit: The Secretarial Audit shall be conducted by a Company Secretary in Practice who shall submit his Secretarial Audit Report to the Board.
  • Company Secretary in Practice means a Company Secretary who is deemed to be in Practice under Section 2(2) of Company Secretaries Act, 1980 [Section 2(25)]
  • Secretarial Auditor shall be appointed by passing a resolution in Board meeting and not by circulation. [Section 179(3)(k) read with Rule 8(4) of the Companies (Meetings of Board and its Powers) Rules, 2014]

The following procedure is to be followed for appointment of a Secretarial Auditor for issue of Secretarial Audit Report of the Company under Section 204 read with Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014-

  1. Before appointment of Company Secretary in Whole-Time Practice, ensure that individual to be appointed, satisfies the definition of Company secretary in Whole Time Practice i.e. he is a member of the Institute of Company Secretaries of India and is not in full time employment anywhere.
  1. Further ensure that individual proposed to be appointed, holds a certificate of practice from the Institute of Company Secretaries of India and that certificate is valid.
  1. Issue not less than 7 days notice and agenda of Board meeting, or a shorter notice in case of urgent business, in writing to every director of the company at his address registered with the company and call a Board Meeting to consider the appointment of Secretarial Auditor of the company for issue of Secretarial Audit report.
  1. Hold a meeting of Board of Directors-
    1. To pass a Board Resolution for the appointment of secretarial auditor of the company and to fix the remuneration to be paid to such auditor for issue of Secretarial Audit report.
    2. To delegate authority to Company Secretary or any one director of the company to sign, certify and file the required form with Registrar of Companies and to do all such acts and deeds as may be necessary to give effect to the appointment of secretarial auditor .
  1. Prepare and circulate draft minutes within 15 days from the date of the conclusion of the Board Meeting, by hand/speed post/registered post/courier/e-mail to all the Directors for their comments. Also follow the procedure prescribed for preparing, circulation, signing and compiling of Board Minutes.(Secretarial Standards-1 )
  1. File a certified copy of the Board resolution approving the appointment of a Secretarial auditor with the Registrar in Form No. MGT.14 under Section 117 of the Act along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 within 30 days of passing the Board Resolution. [Section 117(3)(g) read with Section 179(3)(k) and Rule 8(4) of the Companies (Meetings of Board and its Powers) Rules, 2014].
  1. Inform the auditor concerned about his appointment and fix the schedule for conducting the Secretarial Audit of the Company for a particular financial year.
  1. While conducting secretarial audit, Company shall furnish all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company. [Section 204(2)]
  1. After completion of secretarial audit, Company Secretary in practice will prepare and submit his Secretarial Audit Report in Form No. MR.3 to the Board of Directors of the company. [Rule 9 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
  1. The company shall annex this secretarial audit report in Form No. MR.3 with its Boards report made in terms of sub-section (3) of section 134. [Section 204(3)]
  1. The Board of Directors, in their board report shall give explanation or comments in full on any qualification, reservation or adverse remark or disclaimer made by the company secretary in practice in his secretarial audit report. [Section 204(3) read with Section 134(3)(f)(ii)]
  1. The provisions of Section 143 shall apply to the Company Secretary in Practice conducting secretarial audit.

Procedure Authors

ACS Divya Jain
ACS Palak Jain
ACS Ankita Jain
ACS Sugandh Jain
ACS Mansi Kapor
ACS Bhawna Sharma


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