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Section 204 Companies Act 2013 & Rule 9 Companies (Appointment & Remuneration) Rules

Secretarial Audit under Section 204: Mandatory Form MR-3 Audit Checklist for High-Growth Public Companies

Published: February 26, 20256 min readEffective: Annual Requirement for Governing Entities

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Executive Regulatory Summary

Secretarial Audit is a statutory assurance mechanism conducted by an independent Practicing Company Secretary (PCS) in Form MR-3. Overview of applicability thresholds (listed companies, public companies with ₹50 Cr+ capital or ₹250 Cr+ turnover), core compliance checkpoints, and board report annexation.

Key Statutory Takeaways

Mandatory for all listed companies, public companies having paid up capital of ₹50 Crore+, or turnover of ₹250 Crore+.
Also applies to companies having outstanding loans/borrowings from banks or PFIs of ₹100 Crore or more.
Secretarial Auditor examines compliance across Companies Act, SEBI Acts, SCRA, Depositories Act, FEMA, and industry-specific regulations.
Form MR-3 must be annexed to the Board's Report and uploaded with Form AOC-4.

Actionable Compliance Checklist for Businesses

Step-by-step advisory measures prescribed by ASGR and CO for immediate adherence:

1Pass Board Resolution in first board meeting appointing a Practicing Company Secretary as Secretarial Auditor.

2Provide full access to electronic minutes books, statutory registers, filing challans, and FEMA filings.

3Verify compliance with ICSI Secretarial Standards SS-1 (Board Meetings) and SS-2 (General Meetings).

4Incorporate board's explanation in the Director's Report for any qualifications or adverse remarks in Form MR-3.

1. The Scope of Secretarial Assurance

While statutory financial audits verify numbers, the Secretarial Audit examines the institutional legality of corporate actions. A clean Form MR-3 report is an indispensable prerequisite for institutional equity fund-raising, loan syndications, and IPO filings.

Target Entities Governed by this Notification:

Public Limited Companies & Pre-IPO EntitiesPracticing Company Secretaries (PCS)Chief Compliance Officers & Legal DirectorsCorporate Governance Committees

Advisory Published By

CA Sanjay Agarwal

Senior Partner & Co-Founder • B. Com, FCA, CS Inter, FAFD (ICAI)

ASGR and CO, Chartered Accountants (Peer Review Certified: #018Xxx)

Statutory Disclaimer: This publication is compiled by ASGR and CO solely for general informational and educational purposes to assist corporate clients and peers in understanding statutory notifications. It does not constitute legal, tax, or formal secretarial advice. Before acting upon any provisions, specific professional counsel should be sought.

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