Secretarial audit is conducted by every specified companies to verify whether all the legal compliances has been done correctly as per prevailing rules and regulations and pointing out any deficiency in order to rectify the same.

For conducting a secretarial audit, secretarial auditors have been provided all the rights and powers by Companies Act, 2013 as given to statutory auditor. In this regard, for the performance of his duties as auditor, He may ask for any relevant information and explanation from any officers of the company.

Also, copy of secretarial audit report need to be annexed with board’s report as per section 134(3) of the Companies Act, 2013.

Under secretarial audit, verification of legal provisions of various Acts and Rules need to be done by auditor which requires expert knowledge of following Acts and Rules, namely

  • Companies Act, 2013 and Company Rules
  • Foreign exchange Management Act and its regulations
  • Various Regulations and Guidelines prescribed under Securities and Exchange Board of India Act, 1992 and its rules
  • Securities Contracts (Regulation) Act, 1956 and rules
  • Depositories Act, 1996 and regulations made under same
  • Secretarial Standards prescribed and issued by The Institute of Company Secretaries of India.
  • In case any Listing Agreements entered into by the Company with Stock Exchange,
  • Any other laws as may be applicable, specifically to the company

It may be seen from above that secretarial audit is not limited to only Companies Act or Rules but covers all laws which may be applicable to company.

Meaning of other laws as per Institute of Company Secretaries of India

  • It includes all the laws which are applicable to specific industry. For example, in case of banks, all laws applicable to banking industry, In case of insurance companies, all laws applicable to insurance companies, in case of pharmaceutical sector, all laws applicable to such sector etc
  • It also includes examination of existing system and reporting whether proper compliance are being done relating to labour laws, environmental laws, competition law,

What all needs to be included in Secretarial Auditors’ report

Besides, reporting relating to compliance of allied acts and rules, following things must also be included in secretarial auditor’s report:

  • Whether constitution of board of directors is proper containing executive director, non-executive director and independent directors
  • Whether in case of any change in composition of Board of Directors during period under review all the provisions of the Act and Rules properly followed.
  • Whether proper procedure has been followed wrt holding board meeting like proper notice has been given to all directors to schedule board meeting, atleast 7 days notice along with agenda has been given in advance etc
  • Whether dissenting member’s views were captured and recorded as part of minutes while taking majority decisions.
  • Whether company has adequate system and processes to ensure and monitor proper compliance with applicable laws, rules, regulations and guidelines.
  • Whether any major event which occurred during reporting period having bearing on affairs of company relating to Companies Act or other allied acts have been properly reported.

When it comes to financial laws like Direct tax and Indirect tax, report of statutory auditors or other professionals report may be relied upon by secretarial auditor.

Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or