risk issues. It helps the companies to build their corporate image. Secretarial Audit facilitates monitoring compliances with the requirements of law through a formal compliance management programme which can produce positive results to the stakeholders of a company:
Secretarial Audit assures the promoters of a company that those in-charge of its management are conducting its affairs in accordance with the requirements of laws and the owners‟ stake is not being exposed to unintended risk.
(b) Non-executive/Independent directors
Secretarial Audit provides comfort to the Non-executive/Independent Directors that appropriate mechanisms and processes are in place to ensure compliance with laws applicable to the company, thus mitigating any risk from a regulatory or governance perspective.
(c) Government authorities/regulators
It also facilitates reducing the burden of the regulators in ensuring compliances and they can take timely actions against the offenders.
Secretarial Audit helps the investors in taking informed investment decision, as it evaluates the company in terms of compliance and governance norms being followed by the company.
(e) Other Stakeholders
It is an effective due diligence exercise for the prospective investors or joint venture partners. Further Financial Institutions, Banks, Creditors and Consumers can measure the law abiding nature of company management.
(f) Benefits to the company itself
— Companies that go the extra mile with their compliance programs lay the foundation for good governance. — Companies with an effective compliance management programme have lesser chance of receiving penalties, both monetary and by way of imprisonment. — Companies that imbibe business and personal ethics and an effective compliance management programme within their work culture often enjoy employee and customer loyalty and public respect for their brand, which can translate into better market capitalization and shareholder returns.
– Recognition for the company as a good corporate citizen.
The Secretarial Audit provides an in-built mechanism for enhancing corporate compliance generally and help restore the confidence of investors in the capital market through greater transparency in corporate functioning.
- Published in What are the benefits of Secretarial Audit?
Which companies are required to undergo Secretarial Audit?
As per section 204(1) of Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following companies are required to obtain Secretarial Audit Report:
– Every listed company;
– Every public company having a paid-up share capital of fifty crore rupees or more; or
– Every public company having a turnover of two hundred fifty crore rupees or more.
“Turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year. [Section 2(91)]
- Published in What is Secretarial Audit?
India is one of the fastest growing economies in the world. However, India’s position in the ‘Doing Business’
- Starting a business – Procedures, time, cost and minimum capital to open a new business
- Dealing with construction permits – Procedures, time and cost to build a warehouse
- Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
- Registering property – Procedures, time and cost to register commercial real estate
- Getting credit – Strength of legal rights index, depth of credit information index
- Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
- Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
- Trading across borders – Number of documents, cost and time necessary to export and import
- Enforcing contracts – Procedures, time and cost to enforce a debt contract
- Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding
- Distance to frontier – Shows the distance of each economy to the “frontier,” which represents the highest performance observed on each of the indicators across all economies included in Doing Business since each indicator was included in Doing Business
- Entrepreneurship – Measures entrepreneurial activity. The data is collected directly from 130 company registrars on the number of newly registered firms over the past seven years
- Good practices – Provide insights into how governments have improved the regulatory environment in the past in the areas measured by Doing Business
- Transparency in business regulation – Data on the accessibility of regulatory information measures how easy it is to access fee schedules for 4 regulatory processes in the largest business city of an economy