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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 conduct ‘Secretarial Audit’-

(1) Every listed company.

(2) Every public company having a paid-up share capital of 50 Crore rupees or more; or

(3) Every public company having a turnover of 250 Crore rupees or more.

“Turnover” means the aggregate value received from sale, supply or distribution of goods, services rendered, or both, by the company during a financial year. [Section 2(91)]
Secretarial Audit is also compulsory for a private company which is a subsidiary of a public company, and which falls under the prescribed class of companies.

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Secretarial Audit is an audit to check to check compliance of various legislations including the companies act and other corporate and economic laws applicable to the company. Secretarial audit gives assurance as if there exist sufficient process and systems in the company in accordance to the size and operation of the company to monitor and assure compliance with applicable laws, rules, regulations and guidlines. It audits the adherence of good corporate exercises by the company. Secretarial audit gives the company necessary comfort to the stakeholders, regulators and management as to the good governance, statutory compliance and occurrence of proper system and processes.



Procedure of Secretarial Audit of Company

Step - 1 : Secretarial Auditor should be appointed by means of a resolution passed in a duly met board meeting.


Step - 2 : After passing the resolution company shall give a letter of appointment to the secretarial auditor.


Step - 3 : Secretarial auditor should formally accept the letter of appointment.


Step - 4 : Further, it is desirable that the change in secretarial auditor during the year is communicated to members of board.

What is the Periodicity of Secretarial Audit?

It is desirable, for betterment of company, that the secretarial audit taken out periodically (quarterly, half yearly, annually) and adverse findings, if any, should be communicated on an interim basis to the board immediately.


Most frequent questions and answers

Only a company secretary in practice ( holding certificate of practice) can conduct secretarial audit and furnish the secretarial audit report to the company.

As per the provisions of Companies Act 2013, the following companies required to Secretarial Audit Report:-
a. Every listed company
b. Every public company having a paid up capital of fifty crore rupees or more
c. Every public company having turnover of 250 crore rupees or more.

Secretarial Audit report should be in format required in Form MR-3 ((Rule 9 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014).

In case of financial laws like tax law and custom act etc. , the secretarial auditor may rely on the report of statutory auditor or other designated professionals.

Yes, The notice in writing of every meeting shall be given to every member of the company. Such notice shall also be given to the directors, auditors, seretarial auditor of the company , debenture trustee ,if any, and other specified persons.

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