The companies act 2013 deals with the Secretarial Audit pursuant to Section 204 of the 2013 Companies Act. Through the Secretarial Audit, the compliances are checked which a company is required to comply under various Corporate Law and other relevant laws, rules, regulations, and procedures, etc.
This is a tool whereby the regulators monitor companies for compliances as required by the stated laws and processes.
Who is Eligible to Conduct the Secretarial Audit?
Only a member of the Institute of Company Secretaries of India, holding a certificate of practice, can conduct a secretarial Audit and basis the audit done he/she shall furnish the official Secretarial Audit Report to the Company.
Objectives of Secretarial Audit are:
2. A compliance check of the statutory regulations of the company.
3. It is also an important tool to check into the insight of the company and can be used by the investor, shareholder, and lender protection so as to mitigate the level of scam and non- compliance.
The advantage of Secretarial Audit:
2. The owners’ stake is not being exposed to excessive risk.
3. It confirms that the upper management is working competently, effectively and efficiently, and takes care of the compliance level, this on other hand gives a comfortable feeling that the people in charge of the day-to-day management of the company are not likely to be exposed to penal or other liability in near future on account of non-compliance done by the company.
4. It substantially reduces the burden of the law-enforcement authorities
5. It acts as the assistance tool to the bodies like SEBI, Stock Exchanges, Financial Institutions, Banks, etc. to gauge or measures the levels of compliance and non-compliance by the concerned companies.
6. It acts as an effective due diligence exercise for the prospective acquirers.
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