FORM ACTIVE INC-22A SHOULD BE AMENDED TO CAPTURE THE DETAILS OF APPOINTMENT OF SECRETARIAL AUDITOR BY LISTED COMPANIES WHICH WOULD ENSURE 100% COMPLIANCE BY LISTED COMPANIES.

FORM ACTIVE INC-22A  SHOULD BE AMENDED TO CAPTURE THE DETAILS OF APPOINTMENT OF SECRETARIAL AUDITOR BY LISTED COMPANIES WHICH WOULD ENSURE 100% COMPLIANCE BY LISTED COMPANIES.

WHAT IS SECRETARIAL AUDIT ?

‘Secretarial Audit’ is introduced by recently enacted Companies Act, 2013. It is a process to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of stated laws and processes. Periodically examination of work is necessary to point out errors & mistakes and to make a robust compliance mechanism system in an organization.,

TO WHICH COMPANIES SECRETARIAL AUDIT IS MANDATORY?

As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form independent practicing company secretary;

(1)   Every listed company

(2)   Every public company having a paid-up share capital of Fifty Crore rupees or more; or

(3)   (b) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

·        “Turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year. [Section 2(91)].

·        Secretarial Audit is also mandatory to a private company which is a subsidiary of a public company, and which falls under the prescribed class of companies

·         

WHO CAN BE APPOINTED AS SECRETARIAL AUDITOR?

Only a member of the Institute of Company Secretaries of India holding certificate of practice (company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial Audit Report to the Company.

APPOINTMENT OF SECRETARIAL AUDITOR

As per Rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014, Secretarial Auditor is required to be appointed by means of resolution passed at a duly convened Board meeting and resolution for appointment shall be filed with Registrar of Companies within 30 days in E-form MGT-14.

It is advisable for Secretarial Auditor to get the letter of engagement from the company. Secretarial Auditor should formally accept the letter of engagement. Further, as a prudent corporate practice, it is advisable that change in the Secretarial Auditor during the year is reported to the members in the Board’s Report.

FAILURE TO APPOINT A SECRETARIAL AUDITOR

Many Listed companies and those companies which has to appoint a secretarial auditor are not adhering the same.

Like not appointing company secretary , secretarial auditor is not being appointed by listed companies and other eligible companies in India.

FORM ACTIVE INC-22A

Now , the Form Active INC-22A  now demands the company secretary details to be filled in the form whose paid-up share capital crosses Rs 5 Crores.

Now,If a company has not appointed a company secretary , then such company cannot file the form Active INC-22A.  

FAILURE TO COMPLY

If the Companies do not intimate on or before 25.04.2019, such Companies shall be marked “ACTIVE NON COMPLIANT “ and shall be liable to action under subsection (9) of Section 12 of the Act .

FORM ACTIVE INC-22A SHOULD CONTAIN THE DETAILS OF THE APPOINTMENT SECRETARIAL AUDITOR.

FORM ACTIVE INC-22A is silent about filling in the details of the appointment of secretarial auditor .

It is suggested the Form Active Inc-22 should be amended to include the details of the secretarial auditor appointment and the details of the Form MGT-14 as regards to the appointment of secretarial auditor.

APPOINTMENT OF SECRETARIAL AUDITOR SHOULD BE IN AGM

Now , Appointment of Statutory Auditor is made in the General Meeting and the company has to file ADT-1 in the regard with the MCA.

It is suggested that the appointment of Secretarial Auditor should be made in the AGM and form for such appointment should be filed with the MCA and SRN number of that form should be filled in the form FORM ACTIVE INC-22A.

This will ensure strict compliance as regards to the appointment of Secretarial Auditor by the listed companies and other eligible companies.