Government of India through/by means of various amendments in legislations time to time recognized the importance of Secretarial Audit of companies through Section 204 in the Companies Act. Section 204, prescribes for preparation and submission of a Secretarial Audit Report from a Practising Company Secretary duly appointed by the Board, which in a summarized form ensures compliance of all applicable laws and provisions by the company. It is the duty of Board of Directors (BOD) of the company to ensure due diligence of all compliance by the company and its members and the practicing company secretary appointed makes sure hat the same are duly abided by.
Earlier, with application of Corporate Governance Voluntary Guidelines, 2009 the requirement for Secretarial Audit was voluntary on companies, but with Introduction of Section 204 Read with rules made in the Act, it was made mandatory for specified class of companies. As per the section, every public company which is registered under the Companies Act, 2013 and where the annual turnover of business is Rs 250 crore or more or with paid capital of Rs. 50 crore or more or every company whose outstanding loans, borrowings from banks or financial institution of Rs. 100 crore or more, mandatorily have to obtain and submit Secretarial Audit Report.