In today’s corporate world, it is crucial to maintain transparency and comply with statutory requirements. One such requirement is the appointment of a Secretarial Auditor. The Secretarial audit applicability is prescribed under Section 204 of the Companies Act, 2013, which makes it mandatory for certain companies to conduct a secretarial audit. In this blog, we will discuss the importance of the re-appointment of a Secretarial Auditor and its significance in the corporate world.
What is Secretarial Audit?
Secretarial Audit is a comprehensive review of the compliances made by a company under various corporate laws. It is conducted by a qualified company secretary and covers a wide range of areas, including the Companies Act, 2013, and other applicable laws. The objective of Secretarial Audit Applicability is to ensure that the company is complying with all the applicable laws and regulations, and the governance framework of the company is in place.
Secretarial Audit Applicability
As per Section 204 of the Companies Act, 2013, the following companies are required to conduct a Secretarial Audit:
- Every listed company
- Every public company having a paid-up share capital of fifty crore rupees or more, or
- Every public company having a turnover of two hundred fifty crore rupees or more.
The Secretarial Audit report is submitted to the board of directors of the company, and it forms part of the Board’s Report. It is a critical document for stakeholders as it provides assurance that the company is complying with all applicable laws.
Re-Appointment of Secretarial Auditor
The Secretarial Auditor is appointed for a period of one year, and his re-appointment is necessary every year. Re-appointment of Secretarial Auditor is equally important as the initial appointment because it ensures that the same level of professionalism and expertise is maintained throughout the years. It also helps to establish continuity, consistency, and trust in the audit process.
The process of re-appointment of Secretarial Auditor is similar to that of the initial appointment. The Board of Directors needs to pass a resolution proposing the re-appointment of the Secretarial Auditor and obtain his consent. The resolution should be passed at least 30 days before the Annual General Meeting (AGM) so that it can be included in the notice of the AGM. The shareholders then need to approve the re-appointment at the AGM.
Significance of Re-appointment of Secretarial Auditor
Re-appointment of Secretarial Auditor is critical for maintaining the continuity and consistency of the audit process. The Secretarial Auditor has an in-depth understanding of the company’s operations and compliances, and his re-appointment ensures that this knowledge is not lost. It also helps in building trust and credibility with stakeholders, as they know that the same level of professionalism and expertise is maintained year after year.
Moreover, the Secretarial Audit report is a critical document for stakeholders, and any changes in the audit process or the Secretarial Auditor can create uncertainty and raise concerns. Re-appointment of the Secretarial Auditor helps to mitigate such concerns and assures stakeholders that the audit process is consistent and reliable.
Conclusion
In conclusion, Secretarial Audit Applicability is mandatory for certain companies as per the Companies Act, 2013. Re-appointment of Secretarial Auditor is equally important as the initial appointment as it ensures continuity, consistency, and trust in the audit process. It helps to maintain the level of professionalism and expertise, and stakeholders can rely on the same level of assurance year after year. Therefore, companies must ensure timely re-appointment of the Secretarial Auditor to comply with statutory requirements and maintain the confidence of stakeholders.
