In an era where corporate governance and regulatory compliance are critical to business success, Secretarial Audit has emerged as a vital mechanism for ensuring adherence to legal frameworks in India. Mandated under the Companies Act, 2013, Secretarial Audit provides an independent review of a company’s compliance with applicable laws and regulations, promoting transparency and accountability.

What is Secretarial Audit?

Secretarial Audit is a legal requirement for certain classes of companies in India, including listed companies and public companies meeting specific thresholds of paid-up share capital or turnover. Conducted by a qualified Company Secretary in Practice (PCS), this audit covers compliance with corporate laws, securities laws, foreign exchange regulations, labour laws, and more.

This independent verification not only identifies potential risks but also reinforces the company’s commitment to good governance practices.

Applicability of Secretarial Audit

The mandate applies to:
All listed companies.
Unlisted public companies with:
Paid-up share capital of ₹50 crores or more.
Turnover of ₹250 crores or more.
Private companies that are subsidiaries of public companies meeting the above criteria.
Benefits of Secretarial Audit
Secretarial Audit offers multiple advantages to businesses, including:

Enhanced Compliance: Ensures adherence to statutory and regulatory obligations.

Stakeholder Confidence: Builds trust among investors, regulators, and other stakeholders by showcasing a commitment to governance.
Proactive Risk Mitigation: Identifies non-compliance risks early and recommends corrective measures.
Corporate Governance: Strengthens governance frameworks, ensuring ethical and transparent operations.
Market Credibility: Positions the company as a responsible and law-abiding corporate entity.

Process and Reporting
The Secretarial Audit process is systematic, involving a thorough examination of the company’s compliance with relevant laws. The findings are documented in a Secretarial Audit Report (Form MR-3), which forms part of the company’s Annual Report presented at the Annual General Meeting (AGM).

Industry Insights
As businesses navigate complex regulatory landscapes, the importance of Secretarial Audit continues to grow. This practice not only ensures compliance but also helps companies align with global governance standards.

The compliance ecosystem in India is witnessing increased scrutiny from regulatory bodies such as the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI). Secretarial Audit serves as a proactive approach to managing compliance risks and meeting these expectations effectively.

Future of Corporate Governance
Secretarial Audit represents a cornerstone of India’s corporate governance framework. By emphasizing compliance and accountability, it fosters sustainable growth and strengthens the foundation of the Indian corporate sector.

Businesses are encouraged to embrace this audit as an integral part of their operational strategy. With robust compliance systems in place, companies can enhance their reputation, attract investments, and build lasting relationships with stakeholders.

For more information on Secretarial Audit and its role in corporate governance, visit the official website of the Ministry of Corporate Affairs or consult a qualified Company Secretary in Practice.