Secretarial Audit
A Secretarial Audit is a detailed compliance examination conducted under Section 204 of the Companies Act, 2013. The purpose is to verify whether the company has complied with applicable laws, rules, regulations and secretarial standards.
Objective of Secretarial Audit
The core objective is to promote governance, compliance discipline, transparency, and early identification of non-compliances. It provides an independent opinion on:
- Accuracy and correctness of statutory records
- Compliance with the Companies Act, 2013
- Compliance with SEBI Regulations, Listing Regulations (if applicable)
- Compliance with Secretarial Standards (SS-1 & SS-2)
- Internal control systems relating to statutory compliance
Scope of Secretarial Audit (As per Form MR-3)
Secretarial Audit covers verification of compliances under:
- Companies Act, 2013 and Rules
- SEBI Act & Regulations
- Securities Contracts Regulation Act (SCRA)
- Depositories Act
- Foreign Exchange Management Act (FEMA)
- Environmental, labour and industry-specific laws (as applicable)
- Secretarial Standards issued by ICSI
Key Components of Secretarial Audit Report (MR-3)
Checking statutory registers, minute books, resolutions, e-forms and board processes.
Share allotment, transfers, changes in directors, charge management, borrowings, etc.
Filing of financial statements, annual returns and compliance certificates.
Applicable for listed entities – PIT Regulations, LODR, Insider Trading Code etc.
Importance of Secretarial Audit
Secretarial Audit enhances:
- Compliance discipline and governance standards
- Stakeholder confidence and transparency
- Risk identification through red-flag reporting
- Adequate documentation and record-keeping
- Proper functioning of the Board and committees
Risk Matrix & Reporting
A Secretarial Audit Report highlights:
- Non-compliances identified during the audit
- Level of severity (High / Medium / Low Risk)
- Corrective actions required
- Compliance strengthening recommendations
Frequently Asked Questions (Informational)
Which companies require Secretarial Audit?
As per Section 204 and Rule 9, Secretarial Audit is applicable to listed companies and specified public companies based on paid-up capital and turnover thresholds.
Is Secretarial Audit applicable to private companies?
Private companies are generally not mandated unless they meet specific criteria through subsidiary/associate relationships.
Does Secretarial Audit include financial audit?
No. It focuses on statutory and regulatory compliances, not financial statements or tax audits.
Is the audit report publicly filed?
The MR-3 report is annexed to the Board’s Report and filed with ROC through Form MGT-7.