Recent Amendment in Companies Act 2013
Private Companies with debts have to undergo mandatory secretarial Audit
Now private Co.s indebted with Rs. 100 crores to come under ambit of Secretarial Audit
The ministry of corporate affairs (MCA) has made it mandatory for unlisted companies, or private firms, with outstanding loans of Rs 100 crore or more to file their financial audit reports for financial year 2020-21 onwards. Such private companies will have to conduct a secretarial audit and submit the findings with the government.
Brief provision of applicability of Secretarial Audit Report with amendment in rules vide Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2020
The applicability of the Secretarial Audit is on the bigger Companies as per the Section 204(1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
- Every listed company;
- For public company;
- Having a paid-up share capital of fifty crore rupees or more; or
- Having a turnover of two hundred fifty crore rupees or more.
- Every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more. (new provision)*
*Note: as per published notification of MCA dated 03rd January 2020, the aforesaid point-3 shall be applicable in respect of financial year commencing on or after 01st April 2020, clause inserted as Rule 9 (1) (c).
Under the Companies (appointment and remuneration of managerial personnel) Rules, 2020, which will come into effect from April 1, 2020, a private company that has a paid-up share capital of Rs 10 crore or more would have to have a company secretary (CS) on its rolls.