- Companies are required to have a secretarial audit each year as a part of the Compliance Requirement under Companies Act, 2013.
It is an audit conducted to verify and report various compliance requirements by a practicing Company Secretary.
Secretarial Audit Applicability
As per the Companies Act, 2013, the companies that are required to have a secretarial audit and annex with the Board’s report are listed below:
1. All listed companies
2. Public Limited company with a turnover of Rs.250 crore or exceeding it.
3. Public limited company having a paid-up share capital of Rs.50 crore or more.
The Company Secretary has the powers to call for any records or forms or returns to proof-check of filings and receipts obtained from Registrars and other authorities. The Company Secretary would verify various forms, statutory registers and records and documents that are relevant for the current period and the previous period.
Scope of Secretarial Audit
As per the guidance issued under the Companies Act, 2013 by The Institute of Company Secretaries of India, compliance with respect to the following major Acts-fall under the scope of secretarial audit:
1. Companies Act
2. Depositories Act
3. Foreign Exchange Management Act
4. Securities Contracts Act
5. Securities and Exchanges Board of India Act
All other laws that may be applicable specifically to the company may also be used to verify compliance of the Company.
Verified areas in a secretarial Audit
- Review of board meetings conducted, statutory registers maintained by the company.
- Compliance with FEMA regulations.
- Payment of dividends.
- Loans, security and guarantee delivered to the Directors and other parties.
- Acceptance of deposits.
- Remittance of security deposits collected from employees.
- Registration and modification of charges.
- Issuance of shareholders.
- Information for change in promoters and shareholders filed in the ROC.
- Appointment of Key Managerial Personnel and cessation of office of directors.
- Increase in authorized, issued and paid-up capital.
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