Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
Section 204(1) of the Companies Act of 2013 governs the Secretarial Audit. Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relates to Secretarial Audit Report, which became effective on April 1, 2014.
The secretarial audit is the examination of the company's non-financial components. Secretarial Audit addresses non-financial components of the business that have an impact on the company's performance and validates compliance with applicable laws, regulations, and guidelines.
Secretarial auditing is the independent verification of records, books, papers, and documents by a Company Secretary to check the company's compliance status and to assure the company's compliance with legal and procedural requirements and processes.
Secretarial Audit is applicable to the following companies, according to Section 204 (1) of the Companies Act, 2013, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:-
1. Each and every listed company
2. Any public company with a paid-up share capital of Rs. 50 crore or more.
3. Any company with outstanding loans or borrowings of Rs. 100 crore or more from banks or public financial institutions.
4. Any public company with a turnover of Rs. 250 crore or more.
These companies must include a Secretarial Audit Report in form MR-3 with their Board of Directors' Report.
The paid-up share capital, turnover, or outstanding loans or borrowings as of the last date of the most recent audited financial statement shall be considered.