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TMI BlogSECRETARIAL AUDIT UNDER NEW COMPANIES ACT, 2013 (PART - 2)X X X X Extracts X X X X X X X X Extracts X X X X ..... SECRETARIAL AUDIT UNDER NEW COMPANIES ACT, 2013 (PART - 2) - By: - Dr. Sanjiv Agarwal - Corporate Laws / IBC / SEBI - Dated:- 8-10-2013 - - Statutory Provisions Provisions under the Companies Act,, 2013 which are relevant for Secretarial Audit are - Section 204: Secretarial audit for bigger companies Section 205 :Functions of company secretary The corresponding provision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, 1956 was - Section 383A : Certain companies to have secretaries Secretarial Audit and Compliance Certificate Section 204 of Companies Act, 2013 seeks to provide that every listed company and companies belonging to prescribed class or classes of companies shall annex a secretarial audit report given by a Company Secretary in practice with its Board s report. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The form of such report shall be prescribed by the Central Government. The Board in its report shall explain any qualifications or other remarks made by the Company Secretary in practice. The clause further provides penalty for the company or any officer of the company or the Company Secretary in practice. On the other hand, Compliance Certificate, is a certificate given by a Practicing Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary based on the examination of records provided by the Company ,for that concerned financial year to the shareholders of that Company, stating that whether the Company has complied with various provisions of the Companies Act, 1956 as applicable from time to time or not. It s an audit of compliances of the company under the Companies Act, 1956 in respect of those provisions which are ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlined under the said Act . New Requirements The significant changes made by the Companies Act, 2013 are as follows - (a) all listed companies and such companies belonging to a class as may be prescribed, shall have the Secretarial Audit done by a Company Secretary in practice and the report thereof shall be annexed with the Board Report, (b) Board of Directors, in their report, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all explain in full, any qualification or observation or other remarks made by the Company Secretary in practice in audit report. The term 'bigger company' has not been defined but implies listed company and company belonging to other class of companies as may be prescribed. Secretarial Audit was very much in vogue in listed companies. However, in Companies Bill, 2012, the Parliamentary Standi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Committee recommended Secretarial Audit for listed as well as a company belonging to other class of companies as may be prescribed. The Companies Act, 1956 provides for compliance certificate to be issued by a Company Secretary in practice and annexed to Board Report by certain class of companies. To widen the scope of such Compliance Certificate, the concept of Secretarial Audit has now been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced. The Board of Directors of the company are required to explain in its Board Report, every qualification, reservation or adverse remark or disclaimer made by the Company Secretary in his Secretarial Audit Report. A qualification in the Secretarial Audit Report may imply a non-compliance of legal requirement under Companies Act and other laws and would, therefore, be significant, speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally from a regulatory perspective. According to Clause 204 of the Companies Act, 2013 the requirements relating to Secretarial Audit are as follows: a) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board s report a Secretarial Audit Report , given by a Company Secretary i n Practice , in such form as may be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed. b) The company will be obliged to give all assistance and facilities to the Company Secretary in Practice for auditing the secretarial and related records of the company. c) The Board of Directors, in their report shall explain in full, any qualification or observation or other remarks made by the Company Secretary in Practice in his report. Scope of Secretarial Audit Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the class of companies to which secretarial audit will apply and the form of secretarial audit report shall be prescribed by the Central Government, the provision is silent on the scope of secretarial audit. Such audit shall have to be comprehensive covering all aspects of company law compliances and secretarial practices being followed by the company. It may take the form of compliance audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which all corporate laws and secretarial related compliances are verified. The scope may be determined by the Government itself as the form and content of the report shall indirectly prescribe the sum and substance of such secretarial audit. Secretarial audit may, inter alia, cover the following aspects - compliance with secretarial standards memorandum of association and articles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... association conversion of company invitation of deposits borrowing powers inter-corporate loans and advances appointment of managerial personnel managerial remuneration maintenance of statutory books / records issue of securities buy-back of shares / securities capitalization of reserves board procedures general meetings corporate governance compliances listing complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces dividend declaration and distribution filings and corporate actions compliances related to financial statements approvals and permissions penalties and prosecution CSR expenditure other issues concerning legal risks etc. The secretarial auditor shall submit his report to the Board of Directors and it ought to be annexed to Board Report. - - Scholarly articles for kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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