What are the services provided under Secretarial Audit?
Secretarial audit is an audit to check compliance of various legislations including the Companies Act and other corporate and economic laws applicable to the company. Secretarial audit is a process to check the compliances made by a company under the Corporate Law and the other relevant laws, regulations, rules and procedures etc. It was enacted vide section 204 of the 2013 Companies Act. Under this, the regulators monitor the companies for compliances as needed by the stated laws and processes.
In the multifarious business scenario of today, it is mandatory for every company to comply with the hundreds of rules, regulations and law. Any non-adherence to the compliances can be dicey for the company. It is very important for organizations to conduct a periodical examination of their work in order to point out the errors and to maintain a strong compliance mechanism system in any organisation.
It is maintained that periodical inspections of the records gives the Authority the exact information of the company’s compliance policy. For the inexperienced, only a member of the Institute of Company Secretaries of India, who holds a certificate of practice, can conduct such a secretarial audit and then furnish the official Secretarial Audit Report to the Company.
A detailed secretarial audit helps:
- To check reports on compliances.
- To protect the interest of employees, customers, society etc.
- To avoid any unnecessary legal actions by the law enforcing agencies.
- To point out inadequate compliances and non-compliances.
- To ensure that the procedural and legal requirements are suitably complied and that is important for the image and the goodwill of any company.
Companies Act, 2013
- Review of Charter Documents alterations if any and related compliances
- Share Capital and Debentures Rules - Compliance related to ICDR, Pre and Post Issue Compliances
- Borrowings - Borrowing Limit, Pre and Post Borrowing Compliances
- Public Deposit if any - Pre and Post Compliances
- Board and General Meetings - Notice, Agenda and Minutes
- Declaration and Payment of Dividend - Pre and Post Compliances
- Board of Directors - Appointment & Resignation
- Internal Audit and Internal Audit Report
- Auditor Appointment, Tenure of Appointment & Rotation
- CSR Compliances - Committee Formation, Limit of Contribution
- Related Party Transactions & its Compliances
- Inter Corporate Loan, Investments and Corporate Guarantee
- Buy Back of Shares - Pre & Post Compliances
- Annual Return & Annual Compliances
- Member Register and Change in any Shareholding Pattern
- Secretarial Standards
Foreign Exchange Management Act
- Foreign Direct Investment
- Overseas Direct Investment
- External Commercial Borrowings
Securities and Exchange Board of India Act, 1992
- 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, 2015
- The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
- The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
- 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 (Listing Obligations and Disclosure Requirements) Regulations, 2015
Labour, Fiscal & Other Laws
- Factories Act, 1948
- Industrial Disputes Act, 1947
- The Payment of Wages Act, 1936
- The Minimum Wages Act, 1948
- Employees’ State Insurance Act, 1948
- The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
- The Payment of Bonus Act, 1965
- The Payment of Gratuity Act, 1972
- The Contract Labour(Regulation and Abolition)Act,1970
- The Maternity Benefit Act, 1961
- The Child Labour (Prohibition and Regulation Act), 1986
- The Employees’ Compensation Act, 1923
- The Apprentices Act, 1961
- Equal Remuneration Act, 1976
- The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
- The Environment (Protection) Act, 1986
- The Sexual Harassment Of Women at Workplace (Prevention,, Prohibition and Redressal) Act, 2013
- The Water(Prevention & Control of Pollution)Act,1974
- The Air(Prevention & Control of Pollution) Act, 1981
- Tax deducted at Source
- Advance Tax
- Service Tax
- Professional, Property & Dividend Tax
Securities Contracts (Regulation) Act, 1956 (‘SCRA’)
Depositories Act, 1996
* Labour, Fiscal and Other laws are limited to the applicability of the Company
Documents Required for Secretarial Audit
- Charter Documents
- Last year Secretarial Audit Report
- Statutory Registers
- Board and General Meeting Minutes & Notices thereto
- Audited financial statements
- Filings & Intimations with Registrar of Companies, Stock Exchanges, Newspaper Advertisements (if Listed)
- Annual Performance Reports, Lease Deed, LUT cum Bond, softex returns (if falls under SEZ)
- Filings with other statutory departments
- Filings with RBI (If there is foreign investment)
- ECB Returns (if there are foreign borrowings in the company)
- Registers maintained under Labour Laws
- Disclosures and Declaration for code of conduct received from the directors
- Sitting fees and Remuneration details paid to directors
- Proof of spending CSR amount
- SAST Disclosures
- Bank account details for dividend
FAQs on Secretarial Audit for Companies
As per Section 204(1) of Companies Act, 2013, following companies are required to obtain Secretarial Audit Report in Form MR-3:
- Every Listed Companies
- Every Public Companies having a paid-up share capital of Rupees 50 Crores or more
- Every Public Companies having a turnover of Rupees 250 Crores or more
Only the member of the Institute of Company Secretaries of India holding Certificate of Practice can conduct Secretarial Audit and submit the report in Form MR-3 to the management.
If a company or any officer of the company or the company secretary in practice, contravenes the provisions of the section, 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 one lakh rupees but which may extend to five lakh rupees.
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