A secretarial audit under Section 204 is mandatory for every listed company, every public company with paid-up share capital of ₹50 crore or more or turnover of ₹250 crore or more, and any company, including a private one, that has borrowings from banks or public financial institutions of ₹100 crore or more. A typical early-stage private startup does not need one. The audit is carried out by a practising Company Secretary and reported in Form MR-3, which is attached to the board’s report.
| Company | Secretarial audit required? |
|---|---|
| Listed company | Yes, always |
| Public company, paid-up capital ₹50 crore or more | Yes |
| Public company, turnover ₹250 crore or more | Yes |
| Any company with borrowings of ₹100 crore or more from banks or PFIs | Yes, private companies included |
| Small private startup below these thresholds | No |
What a secretarial audit actually is
A secretarial audit is an independent check of whether a company has followed the laws that govern how it is run. Not the financial numbers, that is the statutory audit. This is about process and compliance: were board and general meetings held and minuted correctly, were filings made on time, were resolutions passed where the law required them, were the rules on related party transactions, deposits, charges and share issues followed.
It is done by a practising Company Secretary, who issues the report in Form MR-3. That report is annexed to the board’s report, so it becomes part of the company’s public record.
Who must get one
Section 204, read with its rules, fixes the thresholds. Every listed company is in, with no exception. A public company is in if its paid-up share capital is ₹50 crore or more, or its turnover is ₹250 crore or more. The threshold that surprises people is the borrowing one: any company, and this explicitly includes private companies, with outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more must have a secretarial audit. So a large, well-funded private company can be pulled in through its debt even though its share capital is modest.
Does your startup need one?
For most startups, the honest answer is not yet. A private company below all of these thresholds is not required to get a secretarial audit. You cross into the requirement when you list, when you convert to a public company and grow past the capital or turnover lines, or when your borrowings from banks and financial institutions reach ₹100 crore. Watch the borrowing figure in particular if you are debt-funded, because it is the one that arrives without anyone flagging it.
When it is worth doing anyway
Plenty of companies that are not required to get a secretarial audit choose to. The reason is usually a transaction on the horizon. Before a large funding round, an acquisition, or an eventual IPO, a buyer or an investor will scrutinise exactly the things a secretarial audit covers. Running one voluntarily a year or two ahead surfaces the gaps while you still have time to fix them quietly, instead of having them found in due diligence. If an IPO is genuinely on your roadmap, a voluntary audit is one of the cheaper forms of preparation.
Frequently asked questions
Does my company need a secretarial audit?
Only if it meets a Section 204 threshold: it is listed, it is a public company with paid-up capital of ₹50 crore or more or turnover of ₹250 crore or more, or it has borrowings of ₹100 crore or more from banks or public financial institutions. A small private startup below these limits does not need one.
Are private companies covered by Section 204?
A private company is not covered by the capital or turnover tests, which apply to public companies. But a private company is covered if its borrowings from banks or public financial institutions reach ₹100 crore or more.
Who can conduct a secretarial audit?
Only a practising Company Secretary can conduct a secretarial audit and issue the report in Form MR-3.
What does a secretarial audit check?
It checks compliance with company law and related regulations: board and general meetings, filings, resolutions, related party transactions, charges, deposits and share issues. It is about legal process, not financial figures.
Reviewed by CS Sapna Malpani, a practising Company Secretary in Bangalore who conducts secretarial audits and pre-transaction compliance reviews. This is general information, not legal advice. About Sapna Malpani.
Last reviewed: May 2026.