What Is a Secretarial Audit and Why Does It Matter?

Compliance is central to the ever-complex subject of corporate governance since it enhances the sustainability and reputation of a firm. The secretarial audit is one of the powerful sources to measure that the affiliated company is properly responding to the legal and regulatory provisions. Besides, this audit assists to recognize which aspects of the compliance procedure are lacking while also providing the organization with accountability and transparency. It is now important to look at what exactly a secretarial audit involves and why this area is so important today.

Introduction to Secretarial Audit

A secretarial audit is a formal way of ascertaining that a company has complied with several legal procedures as required in the corporate laws. It is mainly done by a professional Company Secretary (CS) in practice who assess the company’s records, returns and legal compliance with laws, rules and regulations.The scope of a secretarial audit typically includes examining:

• Compliance with the Companies Act and related rules.

• Adherence to corporate governance standards.

• Fulfillment of obligations under various securities laws, such as SEBI regulations.
  

Other applicable laws depending on the industry and geography of the organization.

Secretarial Audit Applicability

The secretarial audit applicability criteria has been laid under Section 204 of the Companies Act, 2013. According to this section, the following types of companies are required to conduct a secretarial audit:

1. Listed Companies: All domestic and foreign issuers of depositary receipts of all categories of shares that are listed on a recognized stock exchange.

2. Public Companies: Unlisted public companies with a paid up share capital of ₷ 50 crore or more.

3. Secretarial Audit Applicability Unlisted public companies, who have a turnover of two hundred and fifty crore ₹ or more.
   

It may be dynamic basing on; changes in the law or the kind of specific notices which have been provided to the organizations by certain authorities.

What Are Impacts of Secretarial Audit?

1. Ensures Legal Compliance: Consequently, through secretarial audit, corporate legal compliance can be tested, as well as legal implications such as penalties, legal cases, and damaging reputations can be averted.

2. Enhances Corporate Governance: Through secretarial audits, good governance practices are achieved because the company becomes accountable.

3. Identifies Non-Compliance Risks: The audits reveal tendencies of non compliance and prompt action to prevent is taken.

4. Boosts Stakeholder Confidence: A compliance record speaks volumes with stakeholders ranging from investors, regulatory authorities to customers in terms of the company’s credibility.
   

Role of Secretarial Compliance in a Company

Secretarial compliance encompasses all the efforts made by a company to adhere to the statutory requirements of corporate governance. It includes:

• Timely filing of returns and reports.

• Maintaining accurate records of meetings and resolutions.

• Ensuring compliance with industry-specific regulations.
  

Secretarial compliance acts as the backbone of the secretarial audit process, providing the foundation for evaluating a company’s adherence to its legal obligations.

Benefits of Secretarial Audit

• Proactive Problem Solving: Secretarial audits thus draws the attention of companies to some matters which may turn into severe problems before they surge to this level and therefore facilitate their probable solution.

• Regulatory Approval: Legal compliance usually results from secretarial audits thus enabling organizations, to get approvals from the legal authorities to undertake various operations.

• Improved Decision-Making: This is why the secretarial aspects of compliance need to be reviewed extensively, so that the management draws insights from the process.
  

Conclusion It should e emphasized that secretarial audit goes beyond a mere compliance measure, but a corporate weapon meant to enhance efficient operation of a firm within the laws of the land. In the light of the authorities and the stakeholders’ pressures, the role of secretarial compliance grows increasingly significant. A combination of circumstances includes Secretarial Audit Applicability Guidelines and proper compliance with better organizational techniques, which are necessary to ensure organizational integrity and sustainable development. Original Source