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  • Writer's pictureShruti Sharma

Section 204 of the Companies Act-Secretarial audit for bigger companies

Updated: Oct 7, 2022




Section 204 of the Companies Act of 2013 mandates secretarial audits for larger corporations. It was praised as a significant step toward enhancing corporate governance and ensuring effective compliance with the company's laws and regulations.

Secretarial audits are performed to ensure compliance with numerous legislations applicable to the company, including but not limited to Company law.

The clauses are as mentioned below:-

The first clause states that Every listed company and any other class of company as prescribed shall annex to its Board's report issued in accordance with subsection (3) of section 134, a secretarial audit report delivered by a company secretary in practice, in such form as prescribed.

The Second clause specifies that it is the company's responsibility to provide all support and facilities to the company secretary in practice for auditing the business's secretarial and associated records.

The next clause is regarding the Board of Directors to explain in detail any qualification, observation, or other remarks made by the company secretary in practice in his report under sub-section (3) of section 134 in their report (1).

The final clause deals with penalties for violating Section 204 of the Companies Act 2013 regarding secretarial audits of larger companies. If a company, any officer of the company, or the company secretary in exercise violates the provisions of this section, the company, every officer of the company, or the company secretary in practice who is in default shall be punished with a fine, not less than one lakh rupees but not less than five lakh rupees.

This section should be read in conjunction with Rule 9 of the Amendment To Companies (Appointment And Remuneration Of Managerial Personnel) Rules, 2014, which deals with the Secretarial Audit Report.

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