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About Us
The founder members of the KLS Advisors have more than 20 years of experience in Corporate Law. KLS Advisors provides advisory services for business registration, legal & regulatory services to businesses on a global level. KLS has expertise in registration of entities and business management under applicable laws in India.
KLS’s core field includes corporate legal matters and IPR-related matters such as protection of business at various levels like trademark registration, patent registration, copyright registration, and liaison with government offices.
About UsContact Info
- Gurugram: 07, 2nd Floor, Krishna Mansion, Civil Lines, Gurgaon, Haryana Delhi: 151, 1st Floor, Kakrola Housing, Metro Pillar No. 789, Dwarka Mor, Delhi
- +91-9717720616
- info@klsadvisors.in
📋 Secretarial Audit in India
Ensuring Legal and Regulatory Compliance of Companies (Secretarial Audit)
A Secretarial Audit is an independent verification of a company’s compliance with various corporate laws, rules, regulations, and procedures as prescribed under Indian law.
It is conducted by a Practicing Company Secretary (PCS) and is mandatory for certain classes of companies as per the Companies Act, 2013.
⚖️ Legal Basis
The Secretarial Audit is governed by:
- Section 204 of the Companies Act, 2013
- Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
The audit is submitted in Form MR-3, which must be annexed to the company’s Board Report.
🧾 Objective of Secretarial Audit
The primary goal is to ensure legal compliance and promote good corporate governance. It helps companies:
- Detect non-compliance early
- Avoid penalties and litigation
- Strengthen internal control systems
- Build trust with stakeholders and regulators
🏢 Applicability of Secretarial Audit (Mandatory)
As per law, Secretarial Audit is mandatory for the following:
| Company Type | Applicability |
|---|---|
| Listed Companies | All listed companies must undergo Secretarial Audit |
| Unlisted Public Companies | If any of the following conditions are met: |
| – Paid-up capital ≥ ₹50 crore | |
| – Turnover ≥ ₹250 crore | |
| Private Companies | Not mandatory unless they are subsidiaries of listed companies or meet specific criteria under SEBI regulations |
📚 Scope of Secretarial Audits
A Secretarial Auditor verifies compliance under multiple laws, including:
- Companies Act, 2013
- SEBI Regulations (LODR, Insider Trading, Takeover Code, etc.)
- Depositories Act, 1996
- FEMA & RBI Guidelines
- Labour laws (to some extent)
- Environmental laws (if applicable)
- Industry-specific regulations (insurance, banking, etc.)
The audit also checks:
- Maintenance of statutory registers
- Filing of forms with ROC
- Board and committee meeting procedures
- Appointment and remuneration of directors
- Shareholder communications and disclosures
- Secretarial standards compliance (SS-1 & SS-2)
🧭 Process of Secretarial Audits
- Appointment of Secretarial Auditor
- Must be a Practicing Company Secretary (PCS)
- Appointed by the Board of Directors via resolution
- Preliminary Review
- Auditor reviews company’s structure, past filings, and applicable laws
- Document Verification & Interviews
- Examine registers, resolutions, e-forms, meeting minutes, etc.
- Interact with directors, KMPs, and compliance officers
- Gap Analysis & Observations
- Identify non-compliances, if any, and suggest corrective actions
- Issue Secretarial Audit Report (MR-3)
- Includes observations, qualifications (if any), and recommendations
- Must be filed with the ROC and included in the Annual Report
🧠 Importance of Secretarial Audits
| Benefit | Impact |
|---|---|
| Legal Risk Mitigation | Helps avoid penalties, prosecution, or legal notices |
| Corporate Governance Assurance | Promotes transparency and accountability |
| Stakeholder Confidence | Boosts trust among investors, lenders, and regulators |
| Better Compliance Culture | Encourages good internal practices |
| Useful During M&A / IPO Due Diligence | Shows strong compliance history |
⚠️ Penalty for Non-Compliance
Failure to conduct a Secretarial Audit (when applicable) or not including the MR-3 Report in the Board Report can result in:
- Penalty up to ₹5 lakh for the company
- Penalty up to ₹1 lakh for every officer in default
- May also impact director disqualification or future regulatory approvals
🛠️ How KLS Advisors Can Help
At KLS Advisors, we offer expert-led Secretarial Audit services:
- Appointment of qualified Company Secretary
- Detailed legal compliance audit
- Issue of MR-3 Report with observations and remedies
- Support in resolving non-compliance
- Advisory on good governance and regulatory updates
📧 Email: info@klsadvisors.in 🌐 Website: www.klsadvisors.in
✅ Conclusion
Secretarial Audit is a vital tool for companies to maintain legal compliance, protect reputation, and ensure smooth governance. It is not just a regulatory requirement but a strategic practice for long-term business sustainability.
Let KLS Advisors help you stay compliant, confident, and audit-ready.