Scope of Secretarial Audit (Which is Need to be Done By CS) under Companies Act, 2013
The secretarial audit is one of the very powerful and worthy tool given by companies act 2013 to company secretary professional.
After Release of companies acts 2013, Secretarial audit is mandatory for the following prescribed company
(1)All listed company
(2) All public company having a paid-up share capital of Fifty Crore rupees or more; or
(3) (b) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.
• “Turnover” means the aggregate value of the realisation of the amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year. [Section 2(91)]
• Secretarial Audit is also compulsory to a private company which is a subsidiary of a public company, and which falls under the prescribed class of companies.
Section 204 requires every listed company and a company belonging to other class of companies as may be prescribed to annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.
The format of the Secretarial Audit report has been prescribed as Form no. MR. 3.
In terms of Form No. MR. 3, the Secretarial auditor needs to examine and report he compliance of five specific laws:
1.Companies Act, 2013.
2.Securities Contracts (Regulation) Act, 1956 (‘SCRA’).
3. Depositories Act, 1996.
4. Foreign Exchange Management Act,
5.Securities and Exchange Board of India Act, 1992.
6.Other laws as may be applicable specifically to the company).
Secretarial standards and listing agreement To finalise the scope of Acts to be examined by Secretarial Auditor while conducting a secretarial audit, ICSI held consultation meets at various regional chapters of the Institute to get the views of company secretaries (in employment as well as in practice).
Scope Of Secretarial Standard
Scope of Secretarial Audit would include:
• Reporting on compliance with Five laws as mentioned in form MR-3 o Companies Act, 2013, o Securities Contracts (Regulation) Act, 1956 (‘SCRA’), o Depositories Act, 1996, o Foreign Exchange Management Act, o Securities and Exchange Board of India Act, 1992;
• Reporting on compliance with ‘Other laws as may be applicable specifically to the company’ which shall include all the laws which are applicable to specific industry for example for Banks- all laws applicable to Banking Industry; for insurance company-all laws applicable to insurance industry; likewise for a company in petroleum sector- all laws applicable to petroleum industry; similarly for companies in pharmaceutical sector, cement industry etc.
• Examining and reporting whether the adequate systems and processes are in place to monitor and ensure compliance with general laws like labour laws, competition law, environmental laws.
• In the case of financial laws like tax laws and Customs Act etc., Secretarial Auditor may rely on the Reports given by statutory auditors or other designated professionals.
Recognition of secretarial audit has been received after long undying efforts of the Institute. Regulators have reposed faith in us, the CS professionals and hence let us all display professionalism and meet the challenges of the new law. Let us submit quality secretarial audit reports and keep the dignity of the CS profession high.