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ICSI defines scope of Secretarial Audit under section 204 of the Companies Act, 2013
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Untitled Document
Section 204 of the Companies Act, 2013 requires every listed company and a company belonging to other class of companies as prescribed in Rule No. 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 to annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed. The format of the Secretarial Audit report has been prescribed as Form no. MR. 3
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| Institute of Company Secretaries (ICSI) of India in this regard vide letter dated December 22, 2014, after taking into consideration the views of members of Corporate Laws and Governance Committee, the Council at its 226th meeting held on November 21, 2014, has decided the Scope of Secretarial Audit under section 204 of the Companies Act, 2013. |
The Scope of Secretarial Audit includes:
- Reporting on compliance of 5 laws as mentioned in form MR-3 (Secretarial Audit report)
- Companies Act, 2013,
- Securities Contracts (Regulation) Act, 1956 (‘SCRA’),
- Depositories Act, 1996,
- Foreign Exchange Management Act,
- Securities and Exchange Board of India Act, 1992;
- Reporting on compliance of ‘Other laws as may be applicable specifically to the company’ which shall include all the laws which are applicable to specific industry for example for Banks- all laws applicable to Banking Industry; for insurance company-all laws applicable to insurance industry; likewise for a company in petroleum sector- all laws applicable to petroleum industry; similarly for companies in pharmaceutical sector, cement industry etc.
- Examining and reporting whether the adequate systems and processes are in place to monitor and ensure compliance with general laws like labour laws, competition law, environmental laws.
- In case of financial laws like tax laws and Customs Act etc., Secretarial Auditor may rely on the Reports given by statutory auditors or other designated professionals
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