What Is Secretarial Audit
Secretarial Audit includes checking compliances under various legislations including the Companies Act and other corporate economic laws applicable on the Company. Secretarial Audit helps to detect the instances of non-compliance and facilitates taking corrective measures. Every company needs to comply hundreds of Laws, rules, regulations. The laws are complex and in case of not complying, major risk will rise in the company. Periodically inspecting the records of the company gives exact information, whether, and if so, to what extent Company has complied with the laws applicable to the Company.
As per the Companies Act, an Officer or Director of a Company is required to furnish information and explanation as requested by a Secretarial Auditor for the performance of his/her duties as Auditor
Secretarial Audit gives comfort to the regulators, stakeholders and management, that company has disciplined approach for evaluating and improving the control, risk management and governance processes
Applicability of Secretarial Audit
Following companies are required to obtain ‘Secretarial Audit Report’ from independent practicing company secretary;
- Listed companies
- Pubic Companies having a paid-up share capital of Fifty Crore rupees or more; or
- Pubic Companies having a turnover of Two Hundred Fifty Crore rupees or more
Secretarial Audit is also mandatory for a private company which is a subsidiary of a public company, and which falls under the prescribed class of companies.
Appointment as Secretarial Auditor
Only a member of the Institute of Company Secretaries of India holding certificate of practice (company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial Audit Report to the Company.