The Companies Act of 2013 introduced the concept of Secretarial Audit in India. Secretarial Audit is a process of verification of records and documents of a company to ensure that the company is complying with the legal and regulatory requirements under various laws. The objective of Secretarial Audit is to ensure that the company is conducting its affairs in compliance with the provisions of applicable laws, rules, regulations, guidelines, standards, etc. In this article, we will discuss the applicability of Secretarial Audit.
Applicability of Secretarial Audit
The Companies Act, 2013, has made it mandatory for certain companies to conduct Secretarial Audit. The following companies are required to conduct Secretarial Audit:
Every Listed Company: Every listed company is required to conduct Secretarial Audit report under Section 204 of the Companies Act, 2013. This applies to all listed companies, whether they are listed on a stock exchange in India or outside India.
Public Companies with a Paid-up Capital of Rs. 50 Crore or More: Public companies having a paid-up capital of Rs. 50 crore or more are also required to conduct Secretarial Audit.
Companies with Outstanding Loans or Borrowings of Rs. 100 Crore or More: Companies with outstanding loans or borrowings of Rs. 100 crore or more in aggregate from any bank or financial institution or anybody corporate at any point in time during the financial year are required to conduct Secretarial Audit.
Companies having a Turnover of Rs. 250 Crore or More: Companies having a turnover of Rs. 250 crore or more during the preceding financial year are also required to conduct Secretarial Audit.
Role of Secretarial Auditor
The Secretarial Auditor is responsible for examining the records, books, and papers of the company and ensuring that the company is in compliance with the provisions of applicable laws, rules, regulations, guidelines, standards, etc. The Secretarial Auditor verifies the following:
Compliance with the provisions of the Companies Act, 2013, and rules made thereunder.
Observance of the company’s Memorandum and Articles of Association.
Compliance with other laws applicable to the company, such as the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Foreign Exchange Management Act, 1999.
Whether the company has maintained proper records of its meetings, such as board meetings and general meetings.
Whether the company has filed the necessary forms and returns with the Registrar of Companies within the prescribed time.
Whether the company has complied with the provisions of the Code of Conduct as applicable to the company.
Conclusion
In conclusion, Secretarial Audit is an important process that ensures that the company is conducting its affairs in compliance with the provisions of applicable laws, rules, regulations, guidelines, standards, etc. The Companies Act, 2013, has made it mandatory for certain companies to conduct Secretarial Audit. The Secretarial Auditor is responsible for examining the records, books, and papers of the company and ensuring that the company is in compliance with the provisions of applicable laws. Companies that are required to conduct Secretarial Audit should ensure that they comply with the requirements and engage a qualified and experienced Secretarial Auditor for the same.