Ministry of Corporate Affairs with a view to regulate the compliances of certain big companies have come up with a new type of Audit of Company
viz. Secretarial Audit under Section 204 of the Companies Act, 2013.
It is a mechanism through which the compliance of the company are monitored with the requirements prescribed under various laws and regulations.
It provides the stakeholders and management of the company a sense of comfort that the Company is complying with all the requirement of the law and
practicing good corporate governance. It creates confidence among the investors, stakeholders, creditors of the company.
As per Section 204 of the Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 following
companies are required to get the Secretarial Audit done and obtain the Report of the same viz. "Secretarial Audit Report" from a Practicing Company
- Every Listed Company
- Every Public Company having a Paid-up capital of INR 50 Crore or more
- Every Public Company having a turnover of INR 250 Crore or more
Apart from such companies which requires compulsory Secretarial audit can also get such Audit done voluntarily to provide an assurance to the
compliance of the Company.
Scope of Secretarial Audit:
Secretarial Auditor is required to check the compliance of the following laws and regulations applicable on the company:
- The Companies Act, 2013 (the Act) and the rules made there under
- The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there under
- The Depositories Act, 1996 and the Regulations and Bye-laws framed there under
- Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct
Investment and External Commercial Borrowings
- The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
- The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
- The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992
- The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
- The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
- The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008
- The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and
dealing with client
- The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009
- The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998
- Secretarial Standards issued by The Institute of Company Secretaries of India.
- The Listing Agreements entered into by the Company with ….. Stock Exchange(s), if applicable
- Other laws as applicable on the Company.