SECRETARIAL AUDIT UNDER COMPANIES ACT, 2013
WHAT IS SECRETARIAL
AUDIT?
‘Secretarial
Audit’ has introduced by recently enacted Companies Act, 2013. It is compliance audit, by independent
practicing company secretary. The purpose is to detect the non-compliances by
companies under Companies Act 2013 and other allied Laws as
applicable to the companies.
TO WHICH COMPANIES SECRETARIAL
AUDIT IS MANDATORY?
As per section 204 of the
Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form
independent practicing company secretary;
(1)
Every
listed company
(2)
Every 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.
WHO CAN BE APPOINTED
AS SECRETARIAL AUDITOR?
Only a practicing company secretary be
appointed as Secretarial Auditor of the Company.
SCOPE OF SECRETARIAL
AUDIT
A secretarial auditor has to check
compliances by the company under the following laws and rules made there-under;
i.
The Companies Act, 2013 (the Act)
and the rules made there-under;
ii.
The Securities Contracts
(Regulation) Act, 1956 (‘SCRA’) and the rules made there-under;
iii.
The Depositories Act, 1996 and the
Regulations and Bye-laws framed there-under;
iv.
Foreign Exchange Management Act,
1999 and the rules and regulations made there-under to the extent of Foreign
Direct Investment, Overseas Direct Investment and External Commercial
Borrowings;
v.
The following Regulations and
Guidelines prescribed under the Securities and Exchange Board of India Act,
1992 (‘SEBI Act’):-
a. The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 1992;
c. The Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009;
d. The Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;
e. The Securities and Exchange Board of India (Issue and
Listing of Debt Securities) Regulations, 2008;
f.
The Securities and Exchange Board
of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting
of Equity Shares) Regulations, 2009; and
h. The Securities and Exchange Board of India (Buyback of
Securities) Regulations, 1998;
vi.
Secretarial Standards issued by
The Institute of Company Secretaries of India.
vii.
The Listing Agreements entered into by the
Company with Stock Exchange(s), if
applicable;
viii.
Other laws as may be applicable specifically to the company
Thus the scope of Secretarial audit is not limited to
the corporate laws applicable to company but it extent to all laws applicable
to Company.
POWER TO SECRETARIAL
AUDITOR
The Companies Act, 2013 has empowered
secretarial auditor and has given him all rights and powers as given to statutory
auditor. As per section 204 of the Companies Act, 2013, the secretarial auditor
company shall be entitled to require from the officers of the company such
information and explanation as he may consider necessary for the performance of
his duties as auditor.
IS SECRETARIAL AUDIT
MANDATORY FOR FINANCIAL YEAR 2013-14?
The secretarial audit report shall
annex with its Board’s report made in terms of sub-section (3) of section 134,
of the Companies Act, 2013.
Ministry of Corporate Affairs, vide
its circular No. 08/2014, dated 4th April 2014, has clarified that
Board Report of the Company relating to financial year that commenced before 1st
April 2014, shall be made in accordance with the relevant provisions of the Companies
Act, 1956.
As the secretarial audit report is
an annexure to Board’ Report thus the secretarial audit is not mandatory for financial
year ended on 31st March 2014.
PUNISHMENT FOR
DEFAULT
Sub-Section 4 of Section 204 of the
Companies Act, 2013, provides that if a company or any officer of the company
or the company secretary in practice, contravenes the provisions of section 204
of the Act, the 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 1 lakh rupees but which may extend to 5 lakh rupees.
Moreover as per sub section (15)
of section 143 of the Companies Act, 2013, if a secretarial auditor, has reason
to believe that an offense involving fraud is being or has been committed
against the company by officers or employees of the company, he shall
immediately report the matter to the Central Government within such time and in
such manner as may be prescribed. Failure to do so shall attract a fine which
shall not be less than 1 lakh rupees but which may extend to 25 lakh rupees.
Thanks &
Regards:
KASHIF ALI & ASSOCIATES
Company Secretaries
268, Business India Complex,
Uday Park, New Delhi-110049
Call us: +91 9718483209
Mail:- cs.kashifali@gmail.com
Note: Kindly note that the entire contents of this
article have been developed on the basis of relevant statutory provisions and
as per the information existing at the time of preparation i.e. Act,
notification, clarifications & circular issued by MCA. Though we have made
upmost efforts to provide authentic information, however we do not undertake
any liability in any way whatsoever, to any person in respect of anything
arising by reliance upon the content of this article. It shall not be
used as a legal opinion and not to be used for rendering any professional
advice.
No comments:
Post a Comment