Who Requires a Secretarial Audit?
From financial year 2020–21, a secretarial audit is mandatory for:
- Listed companies and their material unlisted subsidiaries
- Public companies with:
- Paid-up share capital ≥ ₹50 cr, or
- Turnover ≥ ₹250 cr
- Any company (public or private) with outstanding loans/borrowings ≥ ₹100 cr from banks/FIS
Additionally, companies with paid-up capital ≥ ₹10 cr must appoint a whole-time Company Secretary, further reinforcing governance .
SEBI LODR / 2024 Amendments: Listed Entities Only
The SEBI LODR Third Amendment Regulations 2024, effective April 1, 2025, significantly strengthen secretarial audit provisions for listed companies:
- Peer-Reviewed Secretarial Auditors
Only peer-reviewed PCS—either individuals or firms—can be appointed. - Tenure & Cooling-off Requirements
- Individuals: 1 term of 5 years
- Firms: 2 consecutive terms of 5 years each
- 5-year cooling-off period before reappointment; firms must not share partners with previous auditor for 5 years
3.Shareholder Approval Required
Appointment/reappointment and removal require approval at the Annual General Meeting (AGM), aligning with statutory auditor processes.
4.Casual Vacancy Filling
Any vacancy must be filled within 3 months by the board; new auditor serves until the next AGM .
5.Secretarial Compliance Report
Must be submitted within 60 days of FY-end; from April 1, 2025, it must be signed only by a peer-reviewed PCS or appointed secretarial auditor
Independence & Prohibited Services
Secretarial auditors cannot offer disallowed services. Disqualification conditions are now enforced; breach leads to automatic vacation
Appointment Process
Listed Companies:
- Recommend auditor in Board meeting
- Pass AGM resolution approving appointment
- Specify tenure, fees, and rationale in notice
- Ensure peer-review compliance
- File casual vacancy, if any, within 3 months
Other Companies:
- Appoint PCS through Board resolution as per Section 204
Reporting Requirements
- Submit Form MR‑3 (Secretarial Audit Report) with Board’s Report; file with ROC
- Listed entities must also submit the Secretarial Compliance Report to stock exchanges within 60 days of FY-end
- Maintain documentation and records for audit trail
Penalties for Non-Compliance
Under Section 204, both the company and officers can face penalties between ₹1 lakh and ₹5 lakhs For listed companies, additional SEBI penalties may apply.
- Correct assessment of thresholds and secretarial audit applicability
- Appointment or reappointment of qualified, peer-reviewed PCS
- Preparation and filing of Form MR‑3 and compliance reports
- Coordination with PCS to address qualifications or compliance gaps
- Oversight of auditor independence and service restrictions
- Board and AGM approval procedures, filings, and record-keeping
- Guidance on SEBI requirements for listed companies
