Company Secretarial Audit
The Secretarial Audit is the fragment of Legal Compliance reporting system. The Government of
India analyzes the requirement for Secretarial Audit India only by rewarding it with the due
Statutory recognition to such an audit. It’s the responsibility of the company to undertake
Company Secretarial audit on its own.
This audit assures the board of directors about compliance of different provisions affecting
corporate entities and, in this way, help justify their Bonafede of non-involvement in any
commission or omission, any technical error, violation or contravention and breaches. This
direct the directors to adopt measures for mitigating the consequences of the offences they
hadn’t committed deliberately. The secretarial auditor performs as a catalyst in case of
multiple corporate laws dealing with corporate functions and handles the situation well in
case of alarming increment in the implications. In this way it supports the Board of
Directors and Government of India.
According to section 383 A (1), any company which doesn’t require a full-time secretary and
bears the paid-up capital up to 10 lakhs. The Compliance Certificate was made compulsory
under the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, which inserted a provision in
section 383A (1) of the Companies Act making it mandatory for every company not required to
employ a whole-time secretary under sub-section. The certificate is a proof of the
completion of the procedure complying with all the relevant provisions. The copy of the
certificate is to be attached with the Board’ s report referred in section 217. The company
secretary audits the documents before being submitted to board of directors for concluding
the position of the company.
The content, scope and criteria of the company secretarial audit are framed by the Central
Government of India and the rules and regulations are devised accordingly. According to
2000, Compliance Certificate Rules, the secretarial Audit is always conducted in interest of
every corporate management as; an independent professional can approve that the company has
walked by the compliances under the Act. It also serves as the thing of larger interest for
the shareholders, creditors and employees. It assists in department of company affairs and
registrar offices, the documents filed by the small and medium companies enveloped in this
provision, assure proper compliance. This will even be helpful in reducing work of the
inspection department. The inherent objectives of secretarial Audit are:
- Protection of apex management from uninvited hassles
- Compliance of Statutory requirements by the company
- The services cater exclusively to investors, lenders, shareholders for mitigating the
Secretarial Audit Advantage: -
Below are the respective advantages of the Secretarial Audit:
- It is conducted for ensuring the owners that the management undertakings and other
affairs of the company are conducted in accordance with the statutory requirements and
the owner’s stake is in safe zone.
- Ensures the Management of a company that those who are charged with the duty and
responsibility of compliance with the legislation requirements are performing their
duties competently, effectively and efficiently, so that the personality in charge of
the regular monitoring of the management of the company doesn’t get exposed to penalty
or other liability in case of non-compliance with the laws.
- Assuring them of being thoroughly complied with the necessary regulations
- Repose faith in them that the company has complied with the laws and therefore they are
free from any action by the enforcement agencies for non-compliance issues.
- The secretarial audit being pro-active measure for compliance with a plethora of laws,
it will have a salutary effect of substantially reducing the burden of the
- The secretarial audit provides assistance to bodies like SEBI, Stock Exchanges,
Financial Institutions, Banks, etc. for measuring the parameters of compliance and
non-compliance by the concerned companies
- The Secretarial audit can prove an effective strategy for the prospective acquirer of
the company and for the joint venture partners interests.
- Comforting with hand on shoulder as an assurance for legal undertakings and the safe
investment. SA will help unearth and check these practices and also enable law-enforcing
agencies take well-timed corrective action by bringing to book the guilty. Secretarial
audit provides comfort to the shareholder regarding the compliance and for ensuring them
the safety of their investments.
What Rajput Jain & Associates Offers
We deal in providing the following types of Secretarial audits:
- SECRETARIAL AUDIT FOR LISTED COMPANIES: All the listed companies are required to
go through the secretarial audits under the supervision of a well experienced Chartered
Accountant or company secretary. The move aims at reconciliation of total shares held in
CSDL, NSDL and in physical form with the admitted, issued and listed capital of
companies, says a SEBI release. In the lieu of this, SEBI has also been active in asking
in Indian companies to submit quarterly audit report to stock exchange where they have
listed their original share. Any differences observed are required to be brought to the
notice of SEBI and depositories instantaneously.
- SECRETARIAL AUDIT FOR PUBLIC UNLISTED COMPANIES: The public unlisted companies
are required to go through audit by the professional on getting any notice issued by the
ROC. The audit lay before the audit comments and the view of the auditors about the
company taking the compliance standards of the Company Law, 1956 as the base. It
presents the comments on the same.
- SECRETARIAL AUDIT FOR PRIVATE LIMITED COMPANIES: It is required of a private
limited company to go through the secretarial audit by the professional annually. The
auditors review the documents for auditing and analyze each aspect thoroughly by
checking the company’s abidance by the standards of the Company Law, 1956 and other
relevant acts along with the required comments.
- SECRETARIAL AUDIT – CORPORATE GOVERNANCE AUDIT OF CENTRAL PUBLIC SECTOR
UNDERTAKING: Public Enterprise and Ministry of Heavy Industries have devised
certain guidelines on corporate governance for Central Public Sector Enterprise. These
guidelines are devised in cooperation with the active participation of the stakeholders
in the consultation process. The guidelines are prepared by concentrating on the
provisions in the relevant rules, laws and instructions. These guidelines on corporate
governance are formulated with the motive that the Central Public Sector Enterprises
follow the guidelines in their functioning. Proper implementation of these guidelines
would protect the interest of shareholders and relevant stakeholders.
- DUE DILIGENCE REPORT FOR BANKS- PUBLIC AND PRIVATE LIMITED COMPANIES AS PER RBI
COMPLIANCE: The RBI owing to its circular no. DBOD NO. BP.
BC.46/08.12.001/2008-09 dated September 19,2008 appealed and advised all the banks to
obtain regular certificate by professional, by a company secretary about complying with
the various statutory prescription in trend as per the specimen given in the
notification. The intern Company Secretary is required to approve the compliance in the
issues prescribes in RBI Circular No. NO. BP. BC.46/08.12.001/2008-09 dated September
19, 2008. Para (2) (iii) which highlight that the Due diligence report shall be in the
format provided in the Annexure III Thereto. The format has been subsequently revised
and streamlined by RBI.
- STOCK BROKERS AUDIT: SEBI (Security and Exchange board of India) vide its
Circular Number 20091016-5 as on 16th October, 2009 has commanded to whole internal
audit on half yearly basis by the chartered accountants, cost and management accountant
and company secretaries India in practice.
For carrying out effective auditing procedure, like the provisions associated with money
laundering act, Handling Mechanism, status of compliance of last audit/inspection, Investor
Grievances, Power of Attorney received from investors are taken into account for