What does Secretarial Audit in India mean?
Secretarial review shall be carried out with a view to confirming conformity with the various regulations, including the Companies Act and other corporate and economic laws specific to the business.
Below mentioned companies are required to carry out a secretarial audit in India and to acquire a secretarial audit report as set out in section 204 of the Company Act 2013 as set out in Rule 9 of the Company Rules (Designation and Remuneration of Managerial Personnel) of 2014.:
- Every listed company
- Every public company having paid up share capital of 50 crore rupees or more or
- Every public company having *turnover of 250 crores or more
*Pursuant to Section 2(91) of the Companies Act, 2013, Aggregate value of the recognition of the balance of the selling, procurement or distribution of goods or services rendered, or both, by the corporation during the financial year is reflected turnover.
Organizations which come under these requirements are expected to add a secretarial audit report to the board of directors. Nonetheless, companies which do not comply with the above requirements can receive a secretarial audit report on a voluntary basis, as they will provide impartial confirmation of the company's enforcement.
The layout of the Secretariat's audit report shall be in the type MR-3, as provided for in Rule 9 of the Company's Rules for Appointment and Remuneration of Managerial Personnel 2014.
Who all are eligible to conduct secretarial audit in India?
Pursuant to section 204(1) of Companies Act 2013, Only a member of the Institute of Company Secretaries of India holding certificate of practice (company secretary in practice) can conduct the secretarial audit and furnish the Secretarial Audit Report in form MR-3 to the company.
The Secretary of the Organization, who is working and not in full-time training, is not qualified to perform a secretarial examination. There is no restriction by the Institute of Company Secretaries of India on the number of inspections that may be carried out by Company Secretary of Practice for one financial year..
Secretarial inspection is a thorough review of all the rules, regulations and regulation related to the organization. When carrying out a secretarial review, the organization may conform with a number of rules and legislation depending on its area of operation.
The Secretary of the Company is known to be the legal regulator of the corporate world, and it has always been the responsibility of the Secretary of the Company to ensure that all laws and regulations are enforced by management.
Secretarial Inspection allows the Secretary of the Company to take into consideration any non-compliance in a business and to take corrective measures in a company to avoid any kind of theft or mistake.
The Secretarial Report needs to ensure better regulation of the laws. The main objective of the career of corporate secretary is to foster corporate management. With the aid of the secretariat report, the internal systems of the organizations will enhance efficiency of the legal compliance process.
Who are authorized to Sign of Secretarial Audit report?
Secretarial Auditor is required to sign the Secretarial Audit Report who is liable to conduct the secretarial audit of the company and partner under whose control/ supervision the audit shall be conducted shall sign the Secretarial Audit Report in case of company secretaries firm.
What is the procedure to appoint Secretarial Auditor?
The company's secretarial auditor shall be named by decision-making at a properly held board meeting in compliance with Rule 8 of the Rules of Procedure of the Companies (Meeting of the Board and its powers) of 2014.
It is always necessary for the secretarial auditor to receive a letter of commitment from the client and to officially approve a letter of commitment. In the event of a change in the secretariat auditor, it is always desirable to note a shift in the secretariat auditor's statement to the members of the board as good business procedure.
What is the Applicability of Secretarial Audit in case of Private Limited Companies?
As per the section 2 (71) of the Companies Act, 2013, Secretarial audit is not applicable to the private companies, whereas public company is defined as which is not a private company and It has been concluded from the definition that a secretarial review is applied to a private company which is a subsidiary of a public company that falls within the specified group of businesses..
What is the non compliance law?
Pursuant to section 204(4) of the Company Act, in the case that the company or any officer of the corporation or business secretary in action contravenes the rules pertaining to the secretarial inspection of the company, any officer of the firm or company secretary in practice who is in breach shall be liable for a penalty.