PENALTY ON SECRETARIAL AUDITOR ₹2,00,000 (TWO LAKHS) FOR CRITICAL REPORTING FAILURES IN THE SECRETARIAL AUDIT REPORT.
ESSAR SHIPPING LTD VS ROC GUJARAT PENALTY ON SECRETARIAL AUDITOR
The Registrar of Companies (ROC), Gujarat, imposed a penalty of ₹2,00,000
(Two Lakhs) on the Secretarial Auditor of Essar Shipping Limited for violating
Section 204 of the Companies Act, 2013. The order, dated May 18, 2023, followed
an inspection that revealed critical reporting failures in the Secretarial Audit
Report.
KEY FINDINGS OF THE VIOLATION
The inspection, ordered by the Ministry of Corporate Affairs (MCA), identified that the Secretarial Auditor failed to report the following in the audit report for the financial year ended March 31, 2019:
|
SECTION 186
NON-COMPLIANCE: |
The auditor did not
mention the company's failure to comply with provisions regarding loans and
investments by the company. |
|
SECRETARIAL STANDARDS: |
The auditor failed to
report that the Minutes Books for Board Meetings and Audit Committee meetings
were not maintained in accordance with the Secretarial Standards issued by
the Institute of Company Secretaries of India (ICSI). |
PENALTY DETAILS
Imposed On: The Practicing Company Secretary (PCS) acting as the
Secretarial Auditor.
Amount: ₹2,00,000, which is the maximum penalty prescribed under Section
204(4) for such contraventions.
Adjudication Process: The Secretarial Auditor's representative argued
that the company had no operations and was in loss, claiming the omissions were
"inadvertent errors" with no unfair gain. However, the Adjudicating
Officer held that professional diligence is mandatory and imposed the penalty.
SIGNIFICANCE
This case is considered a landmark "eye-opener" for
professionals, as it reinforces that Secretarial Auditors are held strictly
accountable for ensuring all regulatory non-compliances are qualified in their
reports, regardless of the company's operational status.
#YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295,
No comments:
Post a Comment