What companies are required to get a Secretarial Audit under Section 204?

Secretarial Audit is mandatory for: (1) every listed company, (2) every public company with a paid-up share capital of ₹50 crore or more, (3) every public company with a turnover of ₹250 crore or more, and (4) every company having outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more. The secretarial audit report (Form MR-3) must be annexed to the Board's Report in the Annual Report.

What is the Annual Secretarial Compliance Report required by SEBI?

SEBI mandates all listed companies to submit an Annual Secretarial Compliance Report from a Practising Company Secretary (PCS) covering compliance with all SEBI regulations, circulars, and guidelines applicable to the company. Unlike MR-3 (which covers all laws broadly), the SEBI-specific annual report focuses only on SEBI regulations compliance — LODR, PIT, SAST, ICDR, etc. It must be submitted to stock exchanges within 60 days of the financial year end.

CS Professional Compliance Management, Audit and Due Diligence Classes

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CS Professional Paper 3 - Compliance Management, Audit and Due Diligence

Syllabus note: under the ICSI New Syllabus 2022 this paper was renamed from "Secretarial Audit, Compliance Management and Due Diligence" to "Compliance Management, Audit and Due Diligence", with compliance management moved to the front of the paper. Secretarial audit under Section 204 and Form MR-3 remains the technical core.

Secretarial Audit is the signature function of the Company Secretary profession — only a CS in practice can conduct a Secretarial Audit under Section 204 of the Companies Act 2013 and issue Form MR-3. This paper teaches you to perform this function with professional rigour. It is a 100-mark paper in Module 2.

Secretarial Audit

Section 204 of Companies Act 2013 — Mandatory secretarial audit for listed companies and unlisted public companies above a threshold; every listed company must annex MR-3 to its annual report
Form MR-3 — Secretarial Audit Report format, scope of audit (laws audited: Companies Act, SEBI LODR, SEBI SAST, PIT, FEMA, Secretarial Standards), observations and qualifications
Secretarial Audit Process — Engagement planning, audit programme, evidence gathering (board minutes, statutory registers, filings, exchange disclosures), report issuance
Annual Secretarial Compliance Report — SEBI's requirement for listed companies to submit an annual secretarial compliance report from a PCS (Practising Company Secretary)
Peer Review of CS Firms — ICSI Peer Review Board mandate, review process for CS firms with secretarial audit clients

Compliance Management

Compliance calendar — Monthly, quarterly, half-yearly, and annual statutory compliance obligations under Companies Act, SEBI, RBI, FEMA, GST, Labour Laws
Compliance management system design — Policy, procedure, monitoring, reporting, escalation framework
Technology in compliance — MCA21 portal, SEBI SCORES platform, BSE/NSE filing portals, automated compliance tools
Consequence management — Compounding of offences, adjudication, condonation of delay

Due Diligence

Types — Legal due diligence, financial due diligence, compliance due diligence, IP due diligence
Secretarial due diligence process — Verification of incorporation documents, board/shareholder resolutions, statutory registers, ROC filings, pending litigation, encumbrances on assets
Red flags in secretarial due diligence — Unauthorised share allotments, missing charge registrations, non-compliant board compositions, pending SEBI notices
Due diligence report — Structure, materiality threshold, representations and warranties

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