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Introduction to Secretarial Audit

A Secretarial Audit is a form of compliance audit which is an effective tool for corporate compliance management. It is a part of the total compliance management of an entity which helps on the detection of non-compliances and helps in to take the corrective measures of the organisation. The pROCess of Secretarial Auditing is done by an independent professional and is a mechanism which monitors the compliances with requirements of the laws which have been stated.


Objectives of Secretarial Audit


The following are the list of objectives of the Secretarial Audit:

  1. It verifies and reports on all the compliances of the applicable laws and Secretarial Standards
  2. It helps in pointing out the compliances which are inadequate and non-compliances.
  3. Helps in protecting the interest of various stakeholders of the Company inclusive of the customers, employees, society etc
  4. It also helps in avoiding any kind of unwarranted legal actions or penalties by the law enforcing people and agencies

Need for a Secretarial Audit


The Secretarial Audit is needed for the following purpose: 


  1. The audit is an effective mechanism which would make sure of the compliances with the legal and pROCedural elements.
  2. The Secretarial Audit helps to provide a level of assurance to the key people of the organisation such as Directors & Key Managerial Personnel etc.
  3. The Secretarial Audit allows the directors to concentrate on important business matters as it takes care of the legal and pROCedural requirements.
  4. It helps in strengthening the goodwill of a Company for its regulators as well as the stakeholders.
  5. The Secretarial Audit also refers to an effective compliance risk management tool and governance tool.
  6. It helps in increasing the reputation of the Company as it allows the investor to analyze the compliance level of the Company.

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FAQ - Frequently asked questions

Who has to own a secretarial audit report?

As per Section 204(1) of Companies Act, 2013, the following companies are required to obtain Secretarial Audit Report in Form MR-3: ● Every Listed Company ● Every Public Company having a paid-up share capital of Rupees 50 Crores or more ● Every Public Company having a turnover of Rupees 250 Crores or more.

Who can conduct the Secretarial Audit?

Only members of the Institute of Company Secretaries of India holding Certificate of Practice can conduct Secretarial Audit and submit the report in Form MR-3 to the management.

What if the Secretarial Audit is not conducted?

If a company or any officer of the company or the company secretary in practice, contravenes the provisions of the 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.