Secretarial Audit

Check the compliances.

Audit the records. Conformation with Company Law, confirmed.

Benefits

Chances of improvement through assessment.

  • An effective mechanism to make sure of compliance with the legal and procedural requirements.
  • Secretarial Audit ensures legal and procedural requirements so directors can concentrate on important business matters.
  • Provides a level of confidence to the directors & Key Managerial Personnel etc.
  • Strengthen the goodwill of a company for their regulators and stakeholders.
  • It helps the investor in analyzing the compliance level of companies, thereby increases the reputation
  • Secretarial Audit is an effective governance and compliance risk management tool.
audit-2823174_960_720-300x300-removebg-preview, Secretarial Audit

Procedure

As prescribed under the law.

  • Discuss with management regarding the scope of its work and professional fees to be rendered for the conduct of such audit
  • Once the primary objects are set, identification of scope and activities to be carried shall be listed
  • After the discussion and finalizing the PCS, the company shall issue an engagement letter consisting of terms and condition of his appointment
  • PCS shall plan ahead of the procedure for audit such as areas of laws it will cover first, date of visits for conducting an audit, approx months or days required to be taken to complete audit, etc
  • Conducting the audit and jotting down the entire observations and finding made throughout the audit
  • Once the audit is completed, PCS shall submit the final Audit report in format MR-3 duly signed and stamped by Company Secretary in Practice
Secretarial-Audit-1-removebg-preview, Secretarial Audit

Documents required

All papers of your company.

  • Charter Documents
  • Last year Secretarial Audit Report
  • Board and General Meeting Minutes & Notices thereto
  • Audited financial statements
  • Annual Performance Reports, Lease Deed, LUT cum Bond, softex returns (if falls under SEZ)
  • Filings with other statutory departments
  • ECB Returns (if there are foreign borrowings in the company)
  • Filings & Intimations with Registrar of Companies, Stock Exchanges, Newspaper Advertisements
  • Statutory Registers
  • Sitting fees and Remuneration details paid to directors
  • Proof of spending CSR amount
  • Disclosures and Declaration for code of conduct received from the directors
  • Filings with RBI (If there is foreign investment)
  • Registers maintained under Labour Laws
  • SAST Disclosures
  • Bank account details for dividend

Why LawDocs?

Fulfilment of regulatory procedure, verbatim.

  • We may make you available secretarial auditor.
  • Assist you in fulfilment of regulatory requirements.
  • Experts are always available to assist you.
  • Monitoring of processes and procedure by LawDocs.

FAQs

Secretarial audit is an audit to check compliance of a variety of legislations including the Companies Act and other corporate & economic laws applicable to company. Secretarial audit is a process to check compliances made by a company under  Corporate Law and other relevant laws, rules, regulations  and procedures etc.

A detailed secretarial audit helps:

  • To check reports on compliances.
  • To avoid any unnecessary legal actions by the law enforcing agencies
  • To protect the interest of employees, customers, society etc.
  • To point out inadequate compliances and non-compliances.
  • To ensure that procedural and legal requirements are suitably complied and that is important for the image and the goodwill of any company.

 It is report on compliance of SEBI act, circulars, regulations, guidelines etc. So, it specifically deals with SEBI regulation angel.

 Format of Secretarial Audit Report will continue to be MR-3.

Only the member of  Institute of Company Secretaries of India holding Certificate of Practice can conduct Secretarial Audit.

If a company or any officer of the company or company secretary in practice, contravenes provisions of the section, 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 but which may extend to five lakh rupees.

The Secretarial Audit covers broad check on compliances of overall applicable acts to Company like SEBI Act, Companies Act, FEMA, Depositors Act, SCRA and other industry specific laws while  the Secretarial Compliance Report covers only SEBI Act and its regulations, circulars issued there under.

FAQs- Appointment of Statutory Auditor

A person who is a chartered accountant or firm with  majority of partners practising in India can be appointed as the auditor of a company.  limited liability partnership can be appointed as the auditor of company, but only chartered accountant partners will be authorised to act and sign on behalf of the firm.

Yes, auditor can be removed prior to expiry of his term only via  special resolution of the company. This can only be done after securing prior written approval of the Central Government.

In case of a casual vacancy, board of directors will make a recommendation in the board meeting within 30 days of resignation. The recommendation requires approval of the members within three months from the date of the board meeting.

First auditor of the company is appointed to hold office up to conclusion of the first annual general meeting of the company as per section 139 (6) of the Companies Act.

Appointment of First Auditor of the company is done either in 1st  board meeting that has to take place within 30 days of incorporation, if the appointment could not take place in the board meeting, then  general meeting needs to be held within 90 days of incorporation to hold office till the conclusion of the first AGM. Further, at the first annual general meeting, auditor who shall hold office from the conclusion of that meeting until conclusion of its sixth annual general meeting is appointed.

Yes, in case of casual vacancy auditor appointment can be done by board of directors within thirty days only if  the casual vacancy is not a result of  resignation of auditor. If that is the case, then appointment will also have to be approved by the company at a general meeting held within three months of the board recommendation.

The Form ADT 1 is required to be filed within 15 days of appointment with attachment:

  1. Consent and certificate from auditor for eligibility and appointment
  2. Intimation by the Company for Auditor appointment
  3. Board Resolution or Shareholder’s resolution for the appointment of auditor.

No, the director does not have the power to remove the auditor.

No, it is not mandatory to file any form with  ROC on the appointment of the first auditor.

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