Who is required to get a secretarial audit and when?
Section 204 of the Companies Act 2013: secretarial audit is mandatory for: (a) every listed company; (b) every public company with paid-up share capital ≥ ₹50 crore; (c) every public company with turnover ≥ ₹250 crore; (d) every company with outstanding loans ≥ ₹100 crore. For unlisted public companies meeting the threshold: secretarial audit is due along with the annual report. The MCA can extend the requirement to private companies by notification — currently not mandatory for private companies.
What does the secretarial audit cover?
The Secretarial Audit Report (Form MR-3) — issued by a Company Secretary in Practice — covers compliance with: Companies Act 2013 and rules, SEBI Act 1992 and regulations (for listed companies), FEMA, RBI regulations (for companies with foreign investment), Secretarial Standards (SS-1 for Board meetings, SS-2 for General meetings), and industry-specific regulations. The scope is substantially broader than a statutory audit — it covers all regulatory filings, not just financial statements.
Who can conduct a secretarial audit?
Only a Company Secretary in Practice (CS in Practice) — a member of the Institute of Company Secretaries of India (ICSI) holding a certificate of practice — can conduct and sign the secretarial audit report (Form MR-3). A CA cannot sign MR-3 — this is a CS-specific mandate under Section 204. However, CA firms often work alongside CS firms on large compliance mandates where both financial (CA) and secretarial (CS) audits are required for the same company.
What are the consequences of an adverse secretarial audit report?
An adverse or qualified secretarial audit report is disclosed in the company's annual report and filed with MCA as part of the MGT-7 annexure. For listed companies, SEBI LODR Regulation 24A requires the secretarial audit report to be disclosed to the stock exchange within 21 days of the AGM. Persistent qualifications signal regulatory non-compliance and can trigger SEBI/RBI/ROC enforcement action. Directors are personally liable for secretarial non-compliance under Section 204(4) — penalty up to ₹5 lakh.
What is the secretarial compliance report required for listed companies?
SEBI Circular dated 8 February 2019: every listed entity must submit an annual secretarial compliance report (separate from the secretarial audit under Section 204) to the stock exchanges within 60 days of the end of each financial year. The report must be from a PCS (CS in Practice) and covers all SEBI regulations applicable to the listed entity: LODR, Takeover Code, Insider Trading regulations, Buyback regulations, Issue of Capital regulations. This is in addition to, not a substitute for, the MR-3 secretarial audit.
