Secretarial audit
Guest
(Querist) 07 March 2017
This query is : Resolved
Whether applicability of secretarial audit depends upon the turnover and paid up capital of the current F.Y. or the previous F.Y.? Has MCA/ICSI given any clarification in this regard?
Guest
(Expert) 07 March 2017
Secretarial audit denotes audit of secretarial procedures and practices adopted, whether or not according to set norms and administrative law. That has no relation with the finance, turnover or paid up capital.
Guest
(Expert) 08 March 2017
Usha ji,
Thanks for agreeing with me.
Guest
(Expert) 08 March 2017
Actually every company is required to do annual compliance of secretarial work under company act .
Most Pvt Ltd. Company don't do and recently all companies have received notice that they have not done compliance for so many years and whether the procedure under companies act of winding should be started against them (Exact words myself did not state properly)
All Company requires to conduct meeting every 3-4 months its resolution updated in MCA portal etc. Annual share holding statement too required to be submitted to MCA but due to lack of knowledge or half knowledge most Pvt Ltd Company don't do and lakhs of company have become defunct/shell company in MCA records
I would suggest you start doing compliance with clearing backlog immediately before MCA takes strict action which is taking against all defaulting company last few days.
Guest
(Expert) 08 March 2017
Already if your email which you submitted in MCA record is available kindly check it , you may have received some legal notice under companies act from MCA
Guest
(Expert) 08 March 2017
After compliance you may think to convert Pvt. Ltd to LLP , I read LLP has less compliance as compared to Pvt. Ltd. Company require checking from some one
Guest
(Querist) 08 March 2017
As per section 204(1) of Companies Act 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014, following are the companies required to obtain Secretarial Audit Report;
1) Every listed company,
2) Every public company having a paid up share capital of Rs 50 Crore rupees or more, or
3) Every public company having a turnover of Rs 250 Crores or more.
As per Section 2(91) of Companies Act 2013, "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.
For the purpose of this section the immediately preceding, financial statement, which is available should be referred for determining the turnover.
The section cannot be applied based on expected turnover.
Thus for determining the applicability of the provisions of section 204 to a company for 2015-16,the reference will be to "turnover" as per the financial statements of 2014-15.
Guest
(Expert) 08 March 2017
Sir , since you are CS you are dealing more in company law than us , so certainly your information is more reliable .
But some of my friends recently got email from MCA telling that they have not filled annual returns -- filling balance sheet / P& L statement so they are in default with MCA
Various forms they have not filled annually with MCA for many years ?
Can you please guide them
Guest
(Expert) 08 March 2017
Dear Arun Kumar,
From you latest post, I am unable to make out as for what specific object you have discussed the provisions of the sections 204(1) read with section 2(1)?
Please be clear what you want to convey with your statement.
But, if your doubt is towards audit of capital or sales (turnover) with reference to secretarial audit that is quite unfounded. The reference of capital/ turnover is merely to indicate the qualifying norms for the companies with such amount or upward limit of capital and turnover to obtain such audit report, but has no link with audit of capital or turnover, which essentially comes within the purview of financial audit.
Needless to emphasize, secretarial audit is meant to curb malpractices in secretariat functions that has no direct link with financial audit of the companies.
Guest
(Querist) 08 March 2017
Respected Mr.Dhingra please go through section 204 of the Companies Act alongwith the relevant rules thereon.Thereafter,make your comment,if any.Perhaps you are not aware that applicability of secretarial audit to unlisted companies depend upon their paid-up capital or turnover.
Guest
(Expert) 08 March 2017
Mr. Arun Kumar,
I wonder whether you have asked your query to enhance your own knowledge and to solve your problem, or to teach company law to the experts?
Instead of replying to my query, "Please be clear what you want to convey with your statement," you preferred to teach me the provisions of Section 204 along with related rules.
I wonder further, from where the context of UNLISTED companies cropped up?
Still further, I wonder, as if as a company secretary you are not aware of the ICSI clarification, rather a very long document about the guidelines on secretarial audit
OK, if you are really a company secretary and want to impart me the knowledge on the company law, more specifically about section 204 read with rules on company law, you may please like to enlighten me on the compliance of which of the five specific laws the Secretarial Auditor needs to examine and report?
Guest
(Expert) 09 March 2017
Dear Shri Yogen Kakde,
Thanks for agreeing with me.
Guest
(Querist) 09 March 2017
Mr.Dhingra we are just sharing our knowledge on the relevant matter and I have no intention to teach you.You are a very sr. and experienced lawyer.I have only suggested you to go through section 204 of the Companies Act alongwith the relevant rules thereon so that you may understand my query properly.
Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 has prescribed certain limits on paid-up capital/turnover for determining the applicability of section 4 to an unlisted company.
I have only expressed my views on the matter and desired to know the views of other experts.
Merely because I am a CS that does not mean I cannot have any query on Company Law.
Guest
(Expert) 09 March 2017
Mr. Arun Kumar Maitra,
Probably, you are in a misunderstanding, as if I do not understand English language and the tone of question/ conversation made, specifically when you have directed me to go through section 204 and that too raising a finger through your statement, "Perhaps you are not aware that applicability of secretarial audit to unlisted companies depend upon .... "
Please be aware, I do not respond to any such question, which I do not understand or not have any knowledge on the topic.
To be frank, I am least interested in imparting tutorials to the students or that type of people and to call for an unending supplementary questions. You are welcome, if you really face any problem during practising your profession as a company secretaryship.
Sorry to point out, if it is hard for you to distinguish between secretariat functions and finance & accounts functions and their distinct audit, nobody can help you.
If you are really a company secretary, I would rather like to advicse you were supposed to be a membership of the ICSI, and would not have asked a question, " Has MCA/ICSI given any clarification in this regard?" ICSI etc., provide sufficient knowledge on the related topics from time to time to its members.
Guest
(Querist) 09 March 2017
I got the answer from a reference book written by a reputed Company Law Expert.So I need no further advice from you in the matter.I am fully aware about my duties as a CS and I need not have to learn it from anybody.
Guest
(Expert) 09 March 2017
Mr. Arun Kumart maitra,
OK, if you are fully aware of your duties as a CS, what is your reply to my question, "compliance of which of the five specific laws the Secretarial Auditor needs to examine and report?"
Guest
(Querist) 10 March 2017
I got the answer from a reference book written by a reputed Company Law Expert.So no further discussion is necessary for me.
Guest
(Expert) 10 March 2017
At last, good sense seemed to have prevailed on you. Better, you could have referred the said book before asking your question.
Anyway, may further discussion be not necessary for you, but since you raised question on my knowledge, you could better have proved your stance to be correct by appropriately discussing on that point.
