Secretarial audit reviews a company’s compliance with the Companies Act, 2013, SEBI regulations and other applicable laws, and is mandatory for listed companies and certain public companies with paid-up capital of Rs. 50 crore or turnover of Rs. 250 crore. Check compliance readiness through structured verification of statutory records and filings conducted by a practising company secretary with reporting in Form MR-3.
In summary
- Secretarial audit is an independent compliance audit conducted by a practising company secretary to verify adherence to the Companies Act, 2013, SEBI regulations, FEMA provisions and Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
- Under Section 204 of the Companies Act, 2013, it is mandatory for all listed companies and specified public companies meeting thresholds of paid-up share capital of Rs. 50 crore or turnover of Rs. 250 crore.
- The audit examines statutory registers, board processes, ROC filings, governance systems and compliance frameworks, with findings reported in Form MR-3 forming part of the Board’s Report.
- Non-compliance identified during audit can attract penalties under applicable corporate and securities laws and may impact regulatory standing and investor confidence.
Secretarial audit is a statutory compliance review conducted by a practising company secretary to assess whether a company is complying with applicable corporate laws, securities regulations and procedural requirements. It focuses on governance systems, statutory filings and adherence to legal frameworks rather than financial verification.
The audit is governed under Section 204 of the Companies Act, 2013. The auditor reviews statutory registers, minutes, resolutions, regulatory filings and internal compliance mechanisms and issues a report in Form MR-3 addressed to the Board of Directors.
Why is the secretarial audit important?
- Ensures compliance with the Companies Act, 2013, SEBI regulations and other applicable corporate laws before regulatory scrutiny occurs
- Strengthens corporate governance by verifying board procedures, statutory disclosures and decision-making processes
- Enhances transparency for shareholders, lenders and regulators through structured compliance reporting
- Identifies procedural lapses such as delayed ROC filings, incomplete disclosures and governance gaps
- Supports risk mitigation by ensuring compliance with related-party transaction rules and statutory requirements
- Improves investor confidence, particularly for listed entities regulated by SEBI
- Reduces exposure to penalties arising from statutory non-compliance
- Helps maintain a consistent compliance framework across jurisdictions and operational units
Secretarial audit applicability criteria
| Company type | Applicability condition | Legal basis |
|---|---|---|
| Listed company | Mandatory for all listed entities | Section 204, Companies Act, 2013 |
| Public company | Paid-up share capital of Rs. 50 crore or more | Rule 9, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 |
| Public company | Annual turnover of Rs. 250 crore or more | Rule 9, Companies Rules, 2014 |
| Private company | Not mandatory unless specifically covered under other regulations | Companies Act, 2013 |
| Government company | Based on sector-specific applicability | Applicable regulatory framework |
| Debt-listed entity | Applicable under SEBI listing obligations where required | SEBI regulations |
Scope of secretarial audit
Secretarial audit covers evaluation of statutory compliance, governance mechanisms and regulatory adherence across applicable laws governing the company.
Key scope areas
- Compliance with the Companies Act, 2013 and allied rules
- Adherence to Secretarial Standards issued by ICSI
- Verification of board meetings, committee meetings and general meetings
- Review of statutory registers and corporate records
- Compliance with SEBI regulations for listed companies
- Examination of ROC filings and statutory submissions
- Compliance under FEMA for foreign investments and transactions
- Review of share capital changes, transfers and allotments
- Assessment of related-party transactions and approvals
- Industry-specific compliance for regulated sectors such as NBFCs and insurance
Appointment of secretarial auditor
- The Board of Directors appoints a practising company secretary through a formal board resolution
- Only a company secretary holding a valid Certificate of Practice issued by the Institute of Company Secretaries of India (ICSI) can be appointed
- Appointment is generally made at the start of the financial year for continuous compliance review
- The auditor is granted access to statutory records, filings, registers and governance documents
- The audit report is submitted in Form MR-3 and included in the Board’s Report
- The auditor operates independently and reports compliance status along with observations
Documents required for secretarial audit
| Category | Documents required |
|---|---|
| Corporate documents | Memorandum of Association, Articles of Association |
| Statutory registers | Register of members, directors, charges, contracts |
| Meeting records | Board minutes, AGM minutes, committee minutes |
| ROC filings | Annual returns, financial statements, DIR and PAS forms |
| Share records | Share certificates, allotment and transfer documents |
| Regulatory filings | SEBI disclosures, stock exchange filings |
| Statutory registrations | GST, labour law registrations |
| FEMA records | Foreign investment filings, overseas remittances |
| Internal policies | Insider trading policy, whistleblower policy, risk framework |
Step-by-step process of secretarial audit
- Appointment of a practising company secretary through board resolution
- Collection of statutory and regulatory documents
- Review of compliance with applicable laws and Secretarial Standards
- Interaction with management for clarification and process understanding
- Identification and documentation of non-compliance or gaps
- Preparation of audit observations and report in Form MR-3
- Submission of report to the Board of Directors for inclusion in annual reporting
Secretarial audit vs. statutory audit: key differences
| Parameter | Secretarial audit | Statutory audit |
|---|---|---|
| Objective | Legal and regulatory compliance | Financial statement accuracy |
| Law governing | Companies Act, 2013 (Section 204) | Companies Act, 2013 (Section 139) |
| Conducted by | Practising company secretary | Chartered accountant |
| Focus | Governance and compliance systems | Financial reporting standards |
| Output | Form MR-3 report | Auditor’s report on financials |
| Applicability | Listed and certain public companies | Most companies |
| Regulatory coverage | SEBI, FEMA, Companies Act | Accounting standards |
| Stakeholders | Regulators, board, investors | Shareholders, lenders |
Conclusion
Secretarial audit is a statutory compliance mechanism under the Companies Act, 2013 that ensures companies maintain governance discipline, regulatory adherence and transparency across operations. It helps identify compliance gaps, strengthen internal processes and support statutory reporting obligations for eligible companies.
Businesses strengthening compliance systems for structured growth and funding readiness, including those applying for a CA loan or a professional loan often use such audits to support due diligence and documentation standards.
