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Secretarial audit defined under Companies Act, 2013. It is Compliance of various applicable laws under companies act or any other act, rules, regulation and Procedure.

Secretarial audit will be helpful to the Promoters, Independent & Non-Independent Directors, government authorities & regulators, Investors, stakeholders, Creditors and management of the company.

The main focus of stakeholder is to validate statutory compliance of the company, good governance & evaluate performance of the company. The Secretarial audit helps to find out or detect  any non-compliance made by the company and taking corrective steps (measures) for that the same. It is one of the important tool of risk mitigation and allow companies to effectively address compliance risk issue.

It is also helpful to the company to build their corporate image. Secretarial Audit is carried out quarterly, half yearly or annually and in case of any adverse finding in audit report immediately intimated to the board of directors.


As per Section 204(1) of the companies Act, 2013 read with Companies rule9 of the (Appointment and remuneration of managerial personnel) Rules,2014.The following companies are required to prepare Secretarial Audit Report from Practicing Company Secretary.

1. Every listed company
2. Every public company having paid-up share capital of fifty crore rupees or more OR
3. Every public company having turnover of two hundred fifty crore rupees or more.

Secretarial audit is also mandatory to a private company which is subsidiary of a public company, and which falls under the prescribed class of companies.

Companies which are not covered under the provision of section 204 of the Companies Act, 2013 may obtain secretarial audit report voluntarily as it provides an independent assurance of the compliance in the company.

Section 143 of the Companies Act, 2013 deals with the powers and duties of auditors. Sub-section 14 of section 143 provides that the provision of this section shall mutatis mutandis apply to the Company secretary in practice conducting Secretarial Audit under section 204.


Member of the Institute of Company Secretaries of India holding Certificate of practice (Practicing company secretary PCS) can conduct Secretarial audit and given secretarial audit report to the company in format of MR-3.


As per Rule 8 of the Companies (Meeting of board and its powers) Rules, 2014 Secretarial auditor is required to be appointed by means of resolution passed at a duly convened board meeting and resolution for appointment shall be filed with ROC within 30days in e-form MGT-14.


Secretarial Audit Report is required to be provided in the format prescribed in Form MR-3.

The Secretarial audit Report should be signed by the Company Secretary in practice or in case of a firm of company secretaries, by the partner under whose supervision the secretarial audit was conducted.

The Secretarial audit report to be annexed with Board's report. 

As per the section 134(3)(f) of the Companies Act,2013 defines that in the board of directors report shall give explanations or comment by the board on every qualification, reservation or adverse remarks or disclaimer made by the company secretary in practice in their secretarial audit report.


A secretarial auditor has to check compliances by the company under the following laws and rules made there-under;

i. The Companies Act, 2013 (the Act) and the rules made there-under;

ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA') and the rules made there-under;

iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there-under;

iv. 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;

v. 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; and
  • The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

vi. Secretarial Standards issued by The Institute of Company Secretaries of India.

vii. The Listing Agreements entered into by the Company with Stock Exchange(s), if applicable.

viii. Other laws as may be applicable specifically to the company.

Thus the scope of Secretarial audit is not limited to the corporate laws applicable to company but it extent to all laws applicable to Company.


There is no minimum fee prescribed by ICSI for conducting Secretarial audit by Practicing Company secretary practice.


A Practicing Company Secretary is allowed to do 10 Secretarial Audits per partner/ PCS, and an additional limit of 5 secretarial audits per partner/PCS in case the unit is peer reviewed.


Section 204(4) of the Companies Act, 2013, provides that if a company or any officer of the company or the company secretary in practice, contravenes the provisions of section 204 of the Act, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 5 lakh rupees.

Section 448 of Companies Act, 2013 deals with Punishment for false statements. the section provides that if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,

(a) Which is false in any material particulars, knowing it to be false; or
(b) Which omits any material fact, knowing it to be material,

He shall be liable under section 447.

In terms of Section 448, a Company Secretary in Practice is liable to attract penal provision if, he makes statement in the Secretarial Audit Report which is false is any material particulars, knowing it be false or omits any material fact knowing it to be material.

The author can also be reached at


Published by

CS Yashree Dixit
(Practicing Company Secretary )
Category Corporate Law   Report

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