In order to make sure that businesses operate in compliance with relevant laws, rules, regulations, and defined corporate governance standards, the Companies Act of 2013 established Secretarial Audit as a statutory compliance tool. It serves as an evaluation of a business’s operations and decision-making procedures from a legal and procedural standpoint. Promoting accountability, openness, and sound corporate governance is the main goal of secretarial auditing.
The Ministry of Corporate Affairs (MCA), Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), and other sectoral regulators are just a few of the authorities that oversee various laws that apply to businesses in the current regulatory environment. Secretarial auditing is a valuable tool for verifying adherence to these regulations and identifying deviations or non-compliances promptly, enabling remedial action before such mistakes result in fines or legal action.
An impartial, independent assessment of a business’s adherence to relevant corporate, securities, and related regulations is known as a secretarial audit. In compliance with Section 204 of the Companies Act, 2013 and the applicable regulations, it is carried out by a Practicing Company Secretary. Section 204 of the Companies Act, 2013, says that:
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The following explains the mandatory clauses pertaining to Secretarial Audit application.
Over Rs. 250 Crores in turnover, a secretarial audit is also required if any of the requirements are met. A secretarial audit can be performed by a practicing company secretary.
The following is a list of Secretarial Audit’s goals:
If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this secretarial audit, then,
Who is in default, shall be punishable with fine
It verifies compliance with applicable corporate, securities, and allied laws, ensuring that the company operates strictly within the prescribed legal framework.
Secretarial Audit helps identify procedural lapses and statutory defaults at an early stage, enabling timely corrective actions.
By ensuring adherence to Secretarial Standards and governance norms, it promotes transparency, accountability, and ethical management practices.
Timely identification and rectification of non-compliances help avoid penalties, prosecution, and regulatory actions.
It supports the Board in discharging statutory and fiduciary duties by providing an independent and objective compliance assessment.
A clean Secretarial Audit Report builds confidence among shareholders, investors, regulators, and other stakeholders.
It strengthens internal compliance mechanisms and promotes a culture of legal discipline across the organization.
Proactive compliance through Secretarial Audit reduces the likelihood of disputes, investigations, and regulatory interventions.
Accurate compliance reporting enables management to take informed, lawful, and risk-mitigated business decisions.
Strong governance and compliance practices enhance reputation, sustainability, and long-term growth prospects of the company.
Secretarial Audit plays a vital role in ensuring legal compliance and promoting sound corporate governance under the Companies Act, 2013. It serves as an effective mechanism to examine whether a company has complied with applicable laws, rules, regulations, and prescribed procedures. By identifying non-compliances at an early stage, Secretarial Audit enables companies to take timely corrective action and avoid legal penalties, regulatory scrutiny, and reputational damage.
Beyond statutory compliance, Secretarial Audit strengthens transparency, accountability, and ethical standards in corporate functioning. It assists the Board of Directors in fulfilling their statutory and fiduciary responsibilities and enhances stakeholder confidence in the company’s governance framework. In an increasingly regulated corporate environment, Secretarial Audit is not merely a legal requirement but a strategic tool that supports risk management, sustainable growth, and long-term corporate credibility.
It ensures compliance with corporate and business laws and strengthens governance.
It is compulsory only for specified classes of companies under section 204.
A practicing company Secretary with a valid certificate of practice.
It is the prescribed format of the Secretarial Audit report.
Yes. Internal Audit focuses on internal controls and operational efficiency, whereas Secretarial Audit focuses on legal and procedural compliance.
The company is required to provide explanations and corrective actions in the Board’s Report and take steps to rectify the non-compliances.
Yes. By identifying compliance risks early, Secretarial Audit plays a significant role in legal risk management and governance assurance.
Can Secretarial Audit prevent penalties?
Generally, no unless prescribed.
Appointment of auditor and compliance rectification.
