{"id":39854,"date":"2022-02-05T11:47:37","date_gmt":"2022-02-05T06:17:37","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=39854"},"modified":"2022-02-05T11:49:15","modified_gmt":"2022-02-05T06:19:15","slug":"secretarial-audit-applicability-as-per-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/","title":{"rendered":"Understanding Secretarial Audit Applicability as per Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The corporate sector is governed by a structure of complex laws, rules, and regulations. However, the enactment of rules and regulations is not enough unless their implementation is geared up. <a href=\"https:\/\/corpbiz.io\/secretarial-audit\"><strong>Secretarial Audit<\/strong><\/a> is one of the processes that ensure 100% compliance. To ensure the Company&#8217;s transparency, ethical, and responsible governance, Companies may get the Secretarial Audit done by a competent professional. In this article, we will pen down Secretarial Audit applicability as per companies Act, 2013. \u00a0<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Secretarial_Audit_as_per_Companies_Act_2013\" >Secretarial Audit as per Companies\nAct, 2013-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Understanding_the_Secretarial_Audit_applicability_via_objectives\" >Understanding the Secretarial Audit applicability via objectives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Eligibility_of_Secretarial_Auditor\" >Eligibility of Secretarial Auditor-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Important_provisions_regarding_the_Secretarial_Audit_under_the_Companies_Act2013\" >Important\nprovisions regarding the Secretarial Audit under the Companies Act,2013-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Advantages_of_the_Secretarial_Audit\" >Advantages of the Secretarial Audit-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Process_of_Secretarial_Audit\" >Process of Secretarial Audit-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Documents_required_for_Secretarial_Audit\" >Documents required for Secretarial Audit-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Legislations_that_fall_under_Secretarial_Audit_applicability\" >Legislations\nthat fall under Secretarial Audit applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Secretarial_Compliance_Certificate_under_the_Companies_Act2013\" >Secretarial\nCompliance Certificate under the Companies Act,2013-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-applicability-as-per-companies-act-2013\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Secretarial_Audit_as_per_Companies_Act_2013\"><\/span>Secretarial Audit as per Companies\nAct, 2013-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Under the <strong>Companies Act,2013<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup>, A Secretarial Audit is an audit to examine the compliances of various legislations and various other laws applicable to the companies. A Secretarial Audit is an audit where the Auditor exhibits an opinion as<\/p>\n\n\n\n<p><strong>To whether there persist appropriate systems and processes in the Company consistent with the size and operations of the Company. Also, it monitors and checks compliance with applicable laws, rules, regulations, and guidelines.&nbsp;<\/strong><\/p>\n\n\n\n<p>Applicability-<\/p>\n\n\n\n<p>As per the mandatory\nprovisions relating to appointment of Secretarial Audit-<\/p>\n\n\n\n<ul><li>All Listed Company,<\/li><li>Every Public Company with Paid-up capital of&nbsp;<strong>50 crores or more,<\/strong>&nbsp;Every Public Company with a turnover of&nbsp;<strong>250 crores or more,<\/strong><\/li><li>Any private company that is a subsidiary of a public company that falls into the above categories shall conduct a Secretarial Audit.&nbsp;<\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><p>Note-A secretarial audit is mandatory if any of the above criteria meets.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_the_Secretarial_Audit_applicability_via_objectives\"><\/span>Understanding the Secretarial Audit applicability via objectives<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Go through the following underlying\nobjectives to have a better clarity on the Secretarial Audit applicability<\/strong><\/p>\n\n\n\n<ul><li>To analyze the factors that\nnecessitates a Secretarial Audit.<\/li><li>To examine the\nregulations that governs Secretarial Audits for Companies.<\/li><li>Recognizing the event of\nnon-compliance.<\/li><li>Facilitates taking\ncorrective measures in case of non-compliance.<\/li><li>Auditing of the\ncompliance of good corporate practices followed by the Company.<\/li><li>It intends to add value\nand improve the working of the Company.&nbsp;<\/li><li>Helps in accomplishing\nthe Company&#8217;s objectives.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_of_Secretarial_Auditor\"><\/span>Eligibility of Secretarial Auditor-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the Companies\nAct,2013, only a Practicing Company Secretary can carry out such Statutory\nSecretarial Audit.<\/p>\n\n\n\n<ul><li><strong><em>A Practicing Company Secretary\nshall prepare the Secretarial audit report.<\/em><\/strong><\/li><li><strong><em>It shall be prepared in\nForm MR-3 format.<\/em><\/strong><\/li><li><strong><em>The Secretarial Audit\nReport needs to be laid as an annexure by the company in its Board\u2019s Report.<\/em><\/strong><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Periodicity of Secretarial Audit-<\/h3>\n\n\n\n<p>The Secretarial Audit helps\nthe Company take disciplinary measures and build up its compliance mechanism\nand processes. The Secretarial Audit can be carried out-<\/p>\n\n\n\n<ul><li>Periodically,&nbsp;<\/li><li>Quarterly,&nbsp;<\/li><li>Half-year and,<\/li><li>Annually.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Important_provisions_regarding_the_Secretarial_Audit_under_the_Companies_Act2013\"><\/span>Important\nprovisions regarding the Secretarial Audit under the Companies Act,2013-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The important provisions\nregarding Secretarial Audit are-<\/p>\n\n\n\n<ul><li>Subject Matters to be disclosed in the Secretarial Audit.<\/li><li>Objectives of Secretarial Audit.<\/li><li>Preparation of Compliance Certificate.<\/li><li>Verification of records and documents.<\/li><li>Act, rules, and regulation covered under the Secretarial Audit report-<\/li><li>Companies Act, 2013<\/li><li>SEBI Rules and Regulations.<\/li><li>Other laws.<\/li><li>Period of the Secretarial Audit.<\/li><li>Disqualification of the Secretarial Auditors.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_the_Secretarial_Audit\"><\/span>Advantages of the Secretarial Audit-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The advantages of the\nSecretarial Audit are-<\/p>\n\n\n\n<ol><li>It assures the owners\nthat the management and affairs of the Company are being conducted following\nthe requisite rules and regulations.<\/li><li>Helps in administering\nprofessional discipline and self-regulation.<\/li><li>Minimizes the work burden\nof the regulators due to better and timely compliances.<\/li><li>It helps the investors in\nfinding the right path by displaying the legal records.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Secretarial_Audit\"><\/span>Process of Secretarial Audit-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The process of\nSecretarial Audit under the Companies Act,2013 is as follows-<\/p>\n\n\n\n<ol><li>Appointment of\nSecretarial Auditor<\/li><li>Communication to earlier\nIncumbent<\/li><li>Acceptance of Appointment\nby Secretarial Auditor<\/li><li>Preliminary Discussions\nabout the company with Secretarial Auditor<\/li><li>Preliminary Meeting with\nthe Auditor<\/li><li>Finalization of Audit\nplan &amp; briefing the staff<\/li><li>Testing, Interview &amp;\nAnalysis<\/li><li>Preparing the working\npapers<\/li><li>Audit Summary for\nDiscussions<\/li><li>Submission of Secretarial\nAudit Report<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_required_for_Secretarial_Audit\"><\/span>Documents required for Secretarial Audit-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The documents required\nfor Secretarial Audit are mentioned below-<\/p>\n\n\n\n<ul><li>&nbsp;MOA, AOA, and Statutory Registers,<\/li><li>Minutes and Notices of\nBoard and General Meeting&nbsp;<\/li><li>Previous year Secretarial\nAudit Report and Audited financial statements,<\/li><li>In case Listed entity-\nFilings &amp; Intimations with ROC, Stock Exchanges, Newspaper\nAdvertisements.&nbsp;<\/li><li>Performance Reports\nprepared on an annual basis, Deed, Bonds, and returns.<\/li><li>In case of foreign\ninvestment, filings with Reserve Bank of India and other statutory departments,<\/li><li>Registers maintained\nunder Labour Laws,<\/li><li>Bank account details for\ndividend<\/li><li>Disclosure of\nRemuneration and Sitting fees paid by the Company to the directors.<\/li><li>Particulars of CSR amount<\/li><li>SAST Disclosures<\/li><li>Particulars of External\nCommercial Borrowing Returns, if any.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legislations_that_fall_under_Secretarial_Audit_applicability\"><\/span><strong>Legislations\nthat fall under Secretarial Audit applicability <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Secretarial Audit applicability can be understood by going through the following legislations. The auditors usually take these Acts under consideration while conducting Secretarial Audit of the company. <\/p>\n\n\n\n<ol><li>Companies\nAct, 2013&nbsp;<\/li><li>Depositories\nAct, 1996&nbsp;<\/li><li>Securities\nContracts Regulation Act, 1956,<\/li><li>Rules\nand Regulations are made thereunder in the above-mentioned acts.<\/li><li>FEMA,\n1999 and the rules and regulations made thereunder to the extent of-<\/li><li>FDI\n(Foreign Direct Investment),&nbsp;<\/li><li>ODI\n(Overseas Direct Investment) and&nbsp;<\/li><li>ECB\n(External Commercial Borrowings).<\/li><li>Various\nRegulations and Guidelines prescribed under the SEBI Act,1992.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Secretarial_Compliance_Certificate_under_the_Companies_Act2013\"><\/span>Secretarial\nCompliance Certificate under the Companies Act,2013-<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Secretarial Compliance\nCertificate is a certificate given by a Practicing Company Secretary based on\nthe documents received by the Company for the respective financial year.<\/p>\n\n\n\n<p>Under the Companies\nAct,2013, Secretarial Compliance Certificate is a Secretarial Audit Report\nprepared by Secretarial Auditor. The Secretarial Auditor while preparing a\nSecretarial Audit report, shall mark in his report-<\/p>\n\n\n\n<ul><li><strong><em>A qualification,&nbsp;<\/em><\/strong><\/li><li><strong><em>Reservation, or&nbsp;<\/em><\/strong><\/li><li><strong><em>Adverse remarks are highlighted in Bold type or Italics.&nbsp;<\/em><\/strong><\/li><\/ul>\n\n\n\n<p>However, suppose the\nSecretarial Auditor cannot form their opinion on any matter. In that case, they\nshould specify that they cannot express an opinion on that particular matter,\nstating the reason.<\/p>\n\n\n\n<div class=\"shadow1\"><p>Note- The Board of Directors of the Company in its Board&#8217;s report shall explain in full any qualification or observation, or other remarks made by PCS in the Secretarial Audit Report.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> Secretarial Audit helps in building brand image and assures that the Company is conducting its management affairs per the governing rules and regulations. It is a dynamic governance process and an effective tool for Corporate Compliance Management that strengthens the goodwill in the minds of investors, stakeholders, and regulators. Secretarial Audit applicability is not only limited to non-compliance identification, but it also paves a roadmap for better corporate governance.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/secretarial-audit-is-standing-out-in-the-market\/\">Changes in Secretarial Audit in the Market: MCA 2020\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The corporate sector is governed by a structure of complex laws, rules, and regulations. However, the enactment of rules and regulations is not enough unless their implementation is geared up. Secretarial Audit is one of the processes that ensure 100% compliance. To ensure the Company&#8217;s transparency, ethical, and responsible governance, Companies may get the Secretarial [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":39856,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[339],"tags":[2105],"acf":{"service_id":"195"},"authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220303-WA0005.jpg","authorDescription":"A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.","postViews":9276,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39854"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=39854"}],"version-history":[{"count":14,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39854\/revisions"}],"predecessor-version":[{"id":39869,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/39854\/revisions\/39869"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/39856"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=39854"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=39854"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=39854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}