APPLICABILITY OF SECRETARIAL AUDIT

Secretarial Audit for Bigger Companies

Companies Act, 2013

1. Every listed company
2. Every Public Company having a paid-up share capital of 50crore rupees or more
3. Every Public Company having a turnover of 250 crore rupees or more
4. Every Company having outstanding loans or borrowings from banks or public financial institutions of 100 crore rupees or more

Regulation 24A

Secretarial Audit and Secretarial Compliance Report under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

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1.(a) Every listed entity and its material unlisted subsidiaries incorporated in India  shall  undertake Secretarial  Audit  by  a  Secretarial  Auditor  who  shall  be  a  Peer  Reviewed  Company Secretary and shall annex a Secretarial Audit Report in such form as specified, with  the annual report of the listed entity

b) On the basis of recommendation of board of directors, a listed entity shall appoint or re- appoint:

(i) an individual as Secretarial Auditor for not more than one term of five consecutive years; or

(ii) a  Secretarial  Audit  firm  as  Secretarial  Auditor  for  not  more  than  two  terms  of  five  consecutive years, with the approval of its shareholders in its Annual General Meeting:

 (c) The casual vacancy arising out of resignation, death or disqualification of a Secretarial Auditor shall be filled by the board of directors of the listed entity within a period of three months and the secretarial auditor so appointed shall hold office till the conclusion of the next annual general meeting.]

With effect from April 1, 2025, every listed entity shall ensure compliance with sub -Regulation (1),  (1A)  and  (1B)  for  appointment,  re appointment  or  continuation  of  the  Secretarial Auditor of the listed entity:

Provided that any association of the individual or the firm as the Secretarial Auditor of the  Listed entity before March 31, 2025 shall not be considered for the purpose of calculating  the tenure under clause (b) of sub- regulation (1).

Secretarial Compliance Report

Every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year.

Provided  that  the  listed  entity  shall  ensure  that  with effect  from  April  1,  2025,  the Secretarial Compliance Report submitted to the stock exchange(s) on annual basis is signed only by the Secretarial Auditor or by a Peer Reviewed  Company Secretary who satisfies the  conditions mentioned in sub- regulations (1A) and (1B) of this regulation.

APPOINTMENT OF SECRETARIAL AUDITOR

Section 204(1)

Only a member of the Institute of Company Secretaries of India holding Certificate of Practice i.e. Company Secretary in Practice can conduct Secretarial Audit and furnish the Secretarial Audit Report to the company.

As per Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014

Secretarial auditor is required to be appointed by means of resolution at a duly convened meeting of the Board of Directors of the company and the same shall be intimated to the concerned Registrar of the Companies in Form MGT-14 within 30 days of passing it.

Eligibility, Qualifications and Disqualifications of Secretarial Auditor:

(a) A person shall be eligible for appointment as a Secretarial Auditor of the listed entity  only if such person is a Peer Reviewed Company Secretary and has not incurred any of the disqualifications as specified by the Board:

Provided  that  a  firm  whereof  majority  of  partners practising  in  India  are  qualified  for  appointment as aforesaid may be appointed by its firm name to be Secretarial Auditor of the listed entity.

(b) Where a firm including a limited liability partnership is appointed as Secretarial Auditor of the listed entity, only the partners who are Peer Reviewed Company Secretaries shall be authorised to act and sign on behalf of the firm.

(c) Where a person appointed as Secretarial Auditor of the listed entity incurs any of the disqualifications as specified by the Board, after appointment, such person shall vacate the office as Secretarial Auditor and such vacation shall be deemed to be a casual vacancy in the office of the Secretarial Auditor.

Secretarial Auditor not to render certain services:

A Secretarial Auditor appointed under these regulations shall provide to the listed entity only  such other  services  as  are  approved  by  the  board  of  directors,  but  which  shall  not include any services as specified by the Board in this behalf.

ICSI AUDITING STANDARDS

CSAS 1

Auditing Standard on Audit Engagement;

CSAS 2

Auditing Standard on Audit Process and Documentation

CSAS 3

Auditing Standard on Forming of Opinion

CSAS 4

Auditing Standard on Secretarial Audit

LIMITS ON AUDIT ENGAGEMENTS

PEER REVIEW

Secretarial Audit/ Secretarial Compliance Report to be done by Peer Reviewed Units only for all companies w.e.f. April 1, 2023

ICSI BEST SECRETARIAL AUDIT REPORT AWARD

ICSI Best Secretarial Audit Report Award

ICSI Best Secretarial Audit Report Award was introduced in the year 2019 to recognize and encourage the efforts of Company Secretaries in Practice in their role as Secretarial Auditors in elevating the culture of governance in the corporate sector and for enhancing the importance of Secretarial Audit Report in the years to follow.

Limits

A Company Secretary in Practice can nominate 5 Secretarial Audit Reports, for the Audits conducted by him under section 204 of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

POWERS AND DUTIES OF SECRETARIAL AUDITOR UNDER THE COMPANIES ACT, 2013

Section 143 of the Companies Act, 2013

Sub-section (14) of section 143 provides that the provisions of this section shall mutatis mutandis apply to the Company Secretary in Practice conducting Secretarial Audit under Section 204 of the Companies Act, 2013

PUNISHMENT

Section 143(15)

• (a) in case of a listed company, be liable to a penalty of 5,00,000 rupees; and 
• (b) in case of any other company, be liable to a penalty of 1,00,000 rupees.

Punishment for fraud

• Punishment for fraud for the Secretarial Auditor under Section 447 of the Companies Act, 2013

Punishment for false statement

• Punishment for false statement for the Secretarial Auditor under Section 448 of the Companies Act, 2013

Section 204 Contravention

• The company, every officer of the company or the company secretary in practice, who is in default, shall be liable to a penalty of two lakh rupees.

Company Secretaries Act, 1980

• When found guilty of professional or other misconduct mentioned in the First Schedule
• When found guilty of professional or other misconduct mentioned in the Second Schedule

S.NO

DOCUMENTS TO BE GIVEN

STATUS

REMARKS

Board, Committee, General Meetings Minutes 

Proof of sending BM, AGM, notices, Annual report to Directors, Auditors, etc.

Proof of circulation of Minutes to Directors.

Attendance registers.

Proof of sending circular resolutions along with replies of circular resolution assent/dissent (if any).

Statutory registers.

Video Recordings of Board, Committee meetings etc.

Annual Declarations like MBP-1, DIR-8, ID declaration u/s 149(7).

Receipt of Listing fees.

BSE/NSE (Acknowledgement) of Compliances submitted.

Signed Internal Audit report, Cost Audit report.

Details of the following during the financial year:

1. Loan given (fresh) along with borrower name, purpose of grant of loan, tenure of repayment, interest rate. 
2. Loan borrowed (fresh) along with lender name. 
3. Investments (fresh) made 
4. Securities Issued (Copy of LOF, if applicable)

Details of increase in remuneration for KMP or any director during the audit period.

Signed Auditor’s Report along with financial statements along with Board’s Report.

All e-forms filed with ROC along with acknowledgement.

Bank statements or E-Mail confirmation for crediting Dividend Amt in separate Bank a/c, thereon to shareholders within prescribed time. 

Details of Related Party Transactions during the financial year.

Structural Digital Database as per PIT, regulations and proof of capturing.

Disclosures done under Reg 29, 31 of SAST, 2011 and proof of service to BSE/NSE.

Documents related to Pre clearance and Trading Plan, if applicable.

Proofs of Freezing of Scrip during trading window closure user issuer portal in depositories.

Show cause notices, Summons, Punishments, Fines imposed by regulators, Authorities, tribunals or courts. (IF ANY)

CSR receipts, CSR 1 filed, CSR impact assessment report if any, CSR -2 Acknowledgement, Workings on Calculation of Net profit as per Sec 198, if applicable.

Signed copy of CFO Certificate for CSR spending.

Details of Unspent Corporate Social Responsibility Account opened with Bank, along with bank statements for transfer.

E-FORM CSR-1 filed for Registration of Entities for undertaking CSR Activities.

Audit Engagement Letter as per CSAS. 

APR/FLA returns filed if applicable; Access to FIRMS Portal

Disclosure under 7(1) (b), 7(2) of PIT along with acknowledgement, if applicable

Details of Investor Complaints in SCORES website along with the reply filed by the company.

Details of Queries/ discrepancies raised by the Stock Exchanges and the reply done by the company.

Various licenses in the name of the Company during the Audit Period and renewal.

Various Policies adopted by the Company during the Audit Period

Share Transfers and Share Transmission Report from RTA for the Audit Period

Details regarding Beneficial & Significant Beneficial Ownership and change during the year, if any.

Compliance record under FEMA with respect to FDI, ECB and ODI as applicable.

Corporate Action Forms filed by the Company with Depositories.

Any orders received by the company from the High court/Tribunal or from any other regulatory body

MCA portal checking meticulously.

Labor laws compliances based on applicability.