Secretarial audit checklist

Last Updated at: November 26, 2019
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Secretarial audit checklist

For any company to check whether it complies with all the rules and regulations of the laws mentioned, it is necessary to file the secretarial audit. The main purpose of this audit is to maintain corporate governance.  Section 204 of the Companies Act, 2013 along with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 states that all listed companies, all Public Limited Companies who has a paid-up share capital of 50 crores or more and all the Public Limited Companies who have a turnover of 250 crores or more.

The Secretarial Audit is done and carried by an individual professional of the company in MR-3 form. The secretarial audit should be signed by the secretarial auditor, in case of more than one auditor, everyone should sign. In default of filing, the person responsible i.e. the company auditor will be fined not less than 1 lakh and extend to 5 lakh. The secretarial audit is exempted for Private Limited Companies. If the companies are not mentioned under the Section, they can voluntarily file the Secretarial Audit thereby providing independent assurance.

Know how to be Compliant

Secretarial audit checklist

The auditor has to check and comply the documents on the basis of five specific laws.

  • The Companies Act and Rules, 2013,
  • Securities Contracts (Regulation) Act and Rules, 1956 (SCRA)
  • Depositories Act, 1996 and their bylaws
  • Foreign Exchange Management Act (FEMA) 1999
  • Securities and Exchange Board of India Act 1992(SEBI), its regulations and guidelines.

General Compliances

The auditor has to check whether the company has maintained all registers, returns, files under Companies Act 2013 and also the company should fulfill the provisions of Memorandum and Articles of Association of the company.

Documents to be checked

The auditor should check the following statutory reports under Companies Act, 2013:

  1. Register of investments under Section 49- When a company calls for further share capital, the details of the investors should be recorded.

2.  Register of deposits under Rule 7 of the Companies (acceptance of deposits) Rule, 1975 – Whenever a company accepts deposits, the particulars of each depositor should be entered and maintained separately.

3. Register of charges under Section 143- The company has to maintain all the charges especially affecting the property of the company and also all the floating charges made for the company.

 4. Register of members under Section 150- The company has to maintain one or more books of records regarding the details of each and every member, how many shares they hold etc.

 5. Register and index of debenture holders under Section 152- The company has to record all the debenture holders. Also, the date when they cease the debentures should also be mentioned

 6. Foreign registers of members or debenture holders under Section 157 – The company which has shares and issues the debentures outside India, any members who buy it is known as foreign registers members. The company should record within 30 days in the registrar office.

 7. Registers and returns under Section 163 – The company has to file annual returns, annual accounts (balance sheet and profit and loss account), return of allotment, and notice of change in the situation of registered office. The court or CLB Order, Return of Appointment of MD/WTD/Manager, Return of Deposits, Registration of Resolutions and Agreements.

 8. Minute’s book of meetings under Sec 118 – The company has to maintain the minute of all the meeting. It should contain the members, agenda, and all the matters discussed. The minute should be fairly drafted.

 9. Books of accounts and cost records under Section 209 –Every company should have proper books of accounts for the particular financial year

10. Register of particulars of contracts in which directors are interested under Section 301-The company should maintain a book of records of all the contracts the directors are interested. It should contain the date of the agreement, parties involved and time period (if any)

11. Register of directors, managing director, manager and secretary under Section 303 – The company should maintain the full details of its directors, manager etc. In case of corporate being the member, its name should be recorded

12. Register of investments of loans made, guarantee given or security provided under Section 372A- It is nothing but Inter-Corporate loan and investment. The company should record the names where the company is borrowing/ making an investment

The auditor has to check the observance of Secretarial Standards i.e. they has to check whether there is any sundry items, remuneration of directors etc; the auditor should have the record of any changes made in MOA and AOA.

The auditor should make sure that the company had E-Filed MG-14 Form. After the resolution is passed, the form should be filed within 30 days.

Compliances under SEBI

The company has to check whether the securities of the company are listed in stock exchange and also it has to check whether they issued shares/debentures to the public. If yes, the auditors have to make sure those shares got approved and finalised by the stock exchange, if no, they have to see whether they can file appeal. They have to see whether the closure of transfer of books is done at least once in a year of Annual General Meeting. They have to indicate the date of meeting in certain cases. They should file all the documents relating to accounts under SEBI Guidelines.

  •  When the secretarial audit is filed; it gives benefits to the executive directors, officers of the company, governmental institution etc.  It helps the investors in analysing the level of company. Also, it helps in strengthening the goodwill and reputation of the company thereby ensuring legal directions to the directors.

Secretarial audit checklist

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For any company to check whether it complies with all the rules and regulations of the laws mentioned, it is necessary to file the secretarial audit. The main purpose of this audit is to maintain corporate governance.  Section 204 of the Companies Act, 2013 along with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 states that all listed companies, all Public Limited Companies who has a paid-up share capital of 50 crores or more and all the Public Limited Companies who have a turnover of 250 crores or more.

The Secretarial Audit is done and carried by an individual professional of the company in MR-3 form. The secretarial audit should be signed by the secretarial auditor, in case of more than one auditor, everyone should sign. In default of filing, the person responsible i.e. the company auditor will be fined not less than 1 lakh and extend to 5 lakh. The secretarial audit is exempted for Private Limited Companies. If the companies are not mentioned under the Section, they can voluntarily file the Secretarial Audit thereby providing independent assurance.

Know how to be Compliant

Secretarial audit checklist

The auditor has to check and comply the documents on the basis of five specific laws.

  • The Companies Act and Rules, 2013,
  • Securities Contracts (Regulation) Act and Rules, 1956 (SCRA)
  • Depositories Act, 1996 and their bylaws
  • Foreign Exchange Management Act (FEMA) 1999
  • Securities and Exchange Board of India Act 1992(SEBI), its regulations and guidelines.

General Compliances

The auditor has to check whether the company has maintained all registers, returns, files under Companies Act 2013 and also the company should fulfill the provisions of Memorandum and Articles of Association of the company.

Documents to be checked

The auditor should check the following statutory reports under Companies Act, 2013:

  1. Register of investments under Section 49- When a company calls for further share capital, the details of the investors should be recorded.

2.  Register of deposits under Rule 7 of the Companies (acceptance of deposits) Rule, 1975 – Whenever a company accepts deposits, the particulars of each depositor should be entered and maintained separately.

3. Register of charges under Section 143- The company has to maintain all the charges especially affecting the property of the company and also all the floating charges made for the company.

 4. Register of members under Section 150- The company has to maintain one or more books of records regarding the details of each and every member, how many shares they hold etc.

 5. Register and index of debenture holders under Section 152- The company has to record all the debenture holders. Also, the date when they cease the debentures should also be mentioned

 6. Foreign registers of members or debenture holders under Section 157 – The company which has shares and issues the debentures outside India, any members who buy it is known as foreign registers members. The company should record within 30 days in the registrar office.

 7. Registers and returns under Section 163 – The company has to file annual returns, annual accounts (balance sheet and profit and loss account), return of allotment, and notice of change in the situation of registered office. The court or CLB Order, Return of Appointment of MD/WTD/Manager, Return of Deposits, Registration of Resolutions and Agreements.

 8. Minute’s book of meetings under Sec 118 – The company has to maintain the minute of all the meeting. It should contain the members, agenda, and all the matters discussed. The minute should be fairly drafted.

 9. Books of accounts and cost records under Section 209 –Every company should have proper books of accounts for the particular financial year

10. Register of particulars of contracts in which directors are interested under Section 301-The company should maintain a book of records of all the contracts the directors are interested. It should contain the date of the agreement, parties involved and time period (if any)

11. Register of directors, managing director, manager and secretary under Section 303 – The company should maintain the full details of its directors, manager etc. In case of corporate being the member, its name should be recorded

12. Register of investments of loans made, guarantee given or security provided under Section 372A- It is nothing but Inter-Corporate loan and investment. The company should record the names where the company is borrowing/ making an investment

The auditor has to check the observance of Secretarial Standards i.e. they has to check whether there is any sundry items, remuneration of directors etc; the auditor should have the record of any changes made in MOA and AOA.

The auditor should make sure that the company had E-Filed MG-14 Form. After the resolution is passed, the form should be filed within 30 days.

Compliances under SEBI

The company has to check whether the securities of the company are listed in stock exchange and also it has to check whether they issued shares/debentures to the public. If yes, the auditors have to make sure those shares got approved and finalised by the stock exchange, if no, they have to see whether they can file appeal. They have to see whether the closure of transfer of books is done at least once in a year of Annual General Meeting. They have to indicate the date of meeting in certain cases. They should file all the documents relating to accounts under SEBI Guidelines.

  •  When the secretarial audit is filed; it gives benefits to the executive directors, officers of the company, governmental institution etc.  It helps the investors in analysing the level of company. Also, it helps in strengthening the goodwill and reputation of the company thereby ensuring legal directions to the directors.

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