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The Company Secretaries’ Institute wants secretarial audit to be treated on par with the internal auditor appointment norms spelt out in the final rules under the new company law.
The new company law had stipulated mandatory secretarial audit for all listed companies and other classes of companies to be specified by the rules.
The Corporate Affairs Ministry on Monday issued new rules that stipulate secretarial audit for every public company with paid-up capital of ₹50 crore or more or every public company having a turnover of ₹250 crore or more.
The draft rules had proposed mandatory secretarial audit for public companies with a paid-up capital of ₹100 crore or more. There were no turnover criteria for public companies. For secretarial audit, the interesting part is that rules do not cover private companies. This would mean that such an audit would not be mandatory for these companies.
But the Companies Secretaries’ Institute is keen that large private companies be included within the scope of mandatory secretarial audit.
“We are disappointed that private companies have not been brought under mandatory secretarial audit. Exclusion of private companies may not have been the intention of the Corporate Affairs Ministry,” R Sridharan, President of the Institute of Company Secretaries of India (ICSI), told Business Line .
ICSI will soon write to the Corporate Affairs Ministry requesting that secretarial audit be treated on the same footing as internal auditor appointment norms in the case of private companies, he added.
The effort should be to bring large private companies within the mandatory secretarial audit fold,” Sridharan said.
The draft rules had recommended that all non-listed companies with paid-up capital of ₹100 crore and above be brought under mandatory secretarial audit
However, the Company Secretaries Institute wanted the secretarial audit trigger to be based on multiple factors including bank borrowings of the company.
But the Corporate Affairs Ministry had settled for a criteria based on turnover and paid-up capital only.
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