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Secretarial Audit

Secretarial Audit under Companies Act, 2013


The term "Secretarial Audit" has been introduced by Companies Act, 2013.

The purpose of Secretariat Audit is to check compliances under Companies Act, 2013 and other laws, rules and regulations. In order to implement an error free compliances in an organization, it is necessary to periodically examining the system.

Every company is required to comply with various laws applicable to them. These laws are complex in nature and can major risks to the company on non compliances.

When the records and information is checked on periodical basis, the exact authenticity of the compliances and the extent of compliances comes into notice.

Secretarial Audit provides comfort to the management as well as stakeholders of the company, that the company is complying with all the rules and regulations and maintaning a disciplines approach for the same.

Now lets look forward which classes of companies are mandatory required to get the secretarial audit done:

Secretarial Audit

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Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 following companies are required to get the secretarial audit done:


  • 1. Every listed company
  • 2. Every public limited company having share capital of Rs. 50 crore or more
  • 3. Every public company having a turonver of Rs. 250 crore or more
  • 4. Every private limited company which is a subsidiary of a public limited company which falls under any of the above class/classes.

Eligibility for appointment as a secretarial auditor:

Only a member of the Institute of Comapany secretaries of India holding a certificate of practise can conduct a secretatial audit.

Appointment of secretarial auditor

As per rule 8 of the companies (Meetings of Board and its Powers) Rules, 2014 a secretarial auditor must be appointed in a duly conveyed board meeting by passing a resolution.

The resolution passed in the concerned board meeting must be filed with the registrar of companies in form MGT-14, withing 30 days.

It is advisable for secretarial auditor that he must obtain the letter of appointment as secretarial auditor from the company and he must accept the letter of appointment and also the change in secretarial auditor must be reported to the members in the Board's Report.

Scope of Secretarial Audit

A secretarial auditor is required to check the compliances of the company under following laws and rules made there-under.

  • 1. The Companies Act, 2013 and the rules made there under.
  • 2. The Securities Contracts (Regulation) Act, 1956 and the rules made there under.
  • 3. The Depositors Act, 1996 and the Rules and regulations made there under.
  • 4. FEMA (Foreign Exchange Management) Act, 1999 and the rules made there under to the extent of FDI, ODI and external commercial borrowings.
  • 5. Some rules and guidelines under Securities and Exchange Board of India Act, 1992.
  • 6. Standards issued by The Institute of Company Secretaries of India.
  • 7. Listing agreements in case of listed companies.
  • 8. Other laws specifically applicable to the company.

Pentaly in case of default

Sub-section 4 of Section 204 of Companies Act, 2013 deals with the penalty applicable in case of default to the provisions of this sections.

In case the provisions of this section is being contravened by any company, the company, every officer of the company or the Secretarial Auditor in default , shall be punishable with a fine of Rs. 1 lakh and which may extend to Rs. 5 lakhs.

Further sub-section 15 of Section 143 of the Companies Act, 2013, if the secretarial auditor finds any fraud against the company by its officers or the employees , he shall report the matter to the central government immediately within the prescribed timeline. Failing which will attract a penalty which will not be less than Rs. 1 lakh and which may extend to Rs. 25 lakhs.

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