By S&S Co. Advocates & Solicitors · Published 25 September 2026 · Informational content, not legal advice: see our disclaimer
Which Companies Need a Secretarial Audit
Section 204 of the Companies Act, 2013 mandates a secretarial audit for every listed company and for certain classes of public companies prescribed under the rules, based on thresholds such as paid-up share capital, turnover, or outstanding loans and borrowings from banks or public financial institutions. A company that meets these thresholds must obtain a Secretarial Audit Report from a Company Secretary in Practice and annex it to its Board's Report.
What the Audit Actually Examines
A secretarial audit is a compliance-focused review, distinct from a financial audit: it examines whether the company has complied with the Companies Act and its rules, the Securities Contracts (Regulation) Act, the Depositories Act, SEBI regulations applicable to the company, and other laws specifically applicable to that company's sector, as well as the secretarial standards issued by the Institute of Company Secretaries of India. The auditor reports on Board and general meeting processes, statutory registers, filings with the Registrar, and related-party and other approval processes, among other areas.
Qualified Reports and What Follows
Where the Company Secretary in Practice identifies non-compliance, the Secretarial Audit Report is typically qualified, and the Board is required to explain the qualification in its own Board's Report. A pattern of qualified secretarial audit reports, left unaddressed over successive years, is a recurring red flag that regulators, and in listed companies, institutional investors and proxy advisors, tend to scrutinise closely, since it points to unresolved governance and compliance gaps rather than an isolated lapse.
Companies subject to secretarial audit benefit from engaging the practising Company Secretary early in the financial year, rather than treating the exercise as a year-end formality, since many of the compliance gaps an audit identifies, missed filings, defective Board processes, inadequate related-party documentation, are far easier to correct prospectively than to explain retrospectively in a qualified report.
Frequently Asked Questions
Is secretarial audit mandatory for all companies?
No: it is mandatory for every listed company and for prescribed classes of public companies that meet specified thresholds for paid-up capital, turnover, or outstanding borrowings from banks and public financial institutions.
Who can conduct a secretarial audit?
Only a Company Secretary in Practice, holding a valid certificate of practice, can issue a Secretarial Audit Report under Section 204.
What happens when a Secretarial Audit Report is qualified?
The company's Board must explain the qualification, reservation, or adverse remark in its own Board's Report, and unresolved qualifications recurring over successive years tend to draw closer regulatory and investor scrutiny.
Is secretarial audit the same as a statutory financial audit?
No: secretarial audit focuses on compliance with company law, securities law and applicable sectoral regulations and secretarial standards, and is entirely separate from the statutory audit of financial statements.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Companies Act, 2013, Section 204, and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
- Secretarial Standards issued by the Institute of Company Secretaries of India.