Secretarial Audit is Applicable
Secretarial Audit is Applicable, It’s also known as compliance audit, is a process of examining and assessing the compliance of a company’s statutory and regulatory obligations. The applicability of secretarial audit depends on the legal and regulatory requirements of the jurisdiction in which the company operates.
Here are some common scenarios when secretarial audit may be applicable:
1.Mandatory Requirement:
In certain jurisdictions, companies are legally require to undergo secretarial audit. For example, in India, certain classes of companies as defined under the Companies Act, 2013, such as listed companies, public companies with a certain threshold of paid-up capital, and companies with multiple subsidiaries, are required to conduct secretarial audit on an annual basis.
2.Regulatory Compliance:
Companies operating in highly regulated industries may be require to undergo secretarial audit as part of regulatory compliance. This is often the case in sectors such as banking, insurance, securities, and other financial services, where regulatory authorities may mandate regular audits to ensure compliance with sector-specific laws and regulations.
3.Stock Exchange Listing Requirements:
Companies listed on stock exchanges may have obligations to conduct secretarial audit as per the listing rules and regulations. Stock exchanges often require listed companies to comply with corporate governance norms and submit periodic reports on compliance. Secretarial audit can serve as an evaluation of the company’s adherence to such requirements.
4.Due Diligence and Corporate Transactions:
Secretarial audit may be perform as part of due diligence during corporate transactions such as mergers, acquisitions, or investments. The audit helps the acquiring party or investor assess the target company’s compliance status, identify any potential legal or regulatory risks, and make informed decisions.
5.Voluntary Decision:
Even when not mandated by law or regulations, companies may opt for secretarial audit voluntarily. This can be driven by the desire to ensure good corporate governance practices, mitigate risks, identify areas for improvement, and demonstrate transparency and accountability to stakeholders.
The specific applicability and frequency of secretarial audit may vary based on the jurisdiction, company type, size, and industry. It is advisable for companies to consult with legal professionals or corporate secretarial experts to determine the requirement and timing of secretarial audit based on the applicable laws, regulations, and best practices.
To visit: https://www.mca.gov.in/
