Complete Guide to Secretarial Audit in India (2026)
A secretarial audit is a comprehensive examination of a company’s compliance with the Companies Act, 2013, SEBI regulations, and other applicable laws. Mandated under Section 204 of the Companies Act, it is conducted by a Practising Company Secretary (PCS) who evaluates whether the company has followed all statutory requirements and governance norms.
This guide covers everything about secretarial audits — who needs them, the audit process, Form MR-3 requirements, penalties for non-compliance, and how to prepare your company for a smooth audit.
What is a Secretarial Audit?
A secretarial audit examines compliance with:
- Companies Act, 2013 and rules made thereunder
- Securities Contracts (Regulation) Act, 1956
- Depositories Act, 1996
- FEMA, 1999 and rules/regulations
- SEBI regulations (for listed companies)
- Secretarial Standards (SS-1 and SS-2) issued by ICSI
- Listing Agreements and LODR Regulations
Who Needs a Secretarial Audit? (Section 204 Applicability)
Secretarial audit under Section 204 is mandatory for:
| Company Type | Threshold | Requirement |
|---|---|---|
| All Listed Companies | No threshold — always mandatory | Annual MR-3 filing |
| Public Companies | Paid-up capital ≥ ₹50 crores OR Turnover ≥ ₹250 crores | Annual MR-3 filing |
| Private Companies | Paid-up capital ≥ ₹50 crores OR Turnover ≥ ₹250 crores | Annual MR-3 filing |
| Companies with outstanding loans/borrowings | ₹100 crores or more from banks/financial institutions | Annual MR-3 filing |
Important: Even companies below these thresholds may voluntarily undergo secretarial audit for governance best practices, investor confidence, and due diligence readiness.
Who Can Conduct a Secretarial Audit?
Only a Practising Company Secretary (PCS) holding a valid Certificate of Practice from the Institute of Company Secretaries of India (ICSI) can conduct secretarial audits. Neither Chartered Accountants nor Cost Accountants are authorized for this purpose.
Form MR-3: The Secretarial Audit Report
The secretarial audit report is filed in Form MR-3 and must include:
- Statement of compliance with applicable laws and regulations
- Details of board meetings, committees, and quorum compliance
- Director appointment, resignation, and disqualification records
- Share capital changes, allotments, and transfers
- Related party transactions and their approval process
- Statutory registers and records maintenance
- Filing compliance with ROC, SEBI, RBI
- Qualifications, observations, or adverse remarks by the auditor
Secretarial Audit Process: Step-by-Step
- Appointment: Board appoints PCS as Secretarial Auditor by board resolution
- Engagement Letter: PCS issues formal engagement letter defining scope, fees, timeline
- Document Collection: Company provides all statutory records, minutes, filings, registers
- Compliance Verification: PCS examines each compliance area against statutory requirements
- Management Representation: Company provides written representation on completeness of records
- Draft Report: PCS prepares draft MR-3 report with findings
- Discussion: Draft shared with management for response to observations
- Final Report: MR-3 report finalized and signed by PCS
- Board Approval: Report placed before board for noting
- Filing: MR-3 attached to board’s report filed with ROC
Penalties for Non-Compliance
| Default | Penalty on Company | Penalty on Officers |
|---|---|---|
| Not appointing secretarial auditor | ₹1 lakh to ₹5 lakhs | ₹1 lakh to ₹5 lakhs on every officer in default |
| Not filing MR-3 with annual report | ₹1 lakh to ₹5 lakhs | ₹50,000 to ₹5 lakhs |
| PCS providing false report | N/A | Fine + imprisonment up to 1 year for PCS |
Documents Required for Secretarial Audit
- Certificate of Incorporation and MOA/AOA
- Minutes of Board Meetings and General Meetings (last 3 years)
- Statutory registers (members, directors, charges, contracts)
- All ROC filing receipts and acknowledgments
- Share allotment letters and transfer deeds
- Related party transaction details
- FEMA filings (FC-GPR, FLA returns) if applicable
- SEBI filings and disclosures (for listed companies)
- Annual reports and financial statements
Frequently Asked Questions
What is the difference between statutory audit and secretarial audit?
Statutory audit (conducted by a Chartered Accountant) examines financial statements and accounting records. Secretarial audit (conducted by a Practising CS) examines legal and regulatory compliance — board governance, ROC filings, SEBI compliance, FEMA filings, and statutory register maintenance. Both are mandatory for qualifying companies but serve different purposes.
Is secretarial audit mandatory for private limited companies?
Secretarial audit is mandatory for private companies only if paid-up capital is ₹50 crores or more, OR turnover is ₹250 crores or more, OR outstanding borrowings from banks exceed ₹100 crores. Smaller private companies are exempt but may opt for voluntary audit.
How much does a secretarial audit cost?
Secretarial audit fees vary based on company size and complexity. For small-mid companies, fees typically range from ₹25,000 to ₹75,000. For large public or listed companies, fees can range from ₹1 lakh to ₹5 lakhs depending on the scope and number of entities involved.
Can the statutory auditor also do the secretarial audit?
No. Secretarial audit can only be conducted by a Practising Company Secretary (PCS) with a Certificate of Practice from ICSI. Chartered Accountants and Cost Accountants are not authorized to conduct secretarial audits under Section 204.