Module: | SEBI LODR & Corporate Governance Frameworks
Q6: Consider the following statements regarding the applicability of Secretarial Audit under Section 204 of the Companies Act, 2013 for the year 2025:
1. Every listed company and its material unlisted subsidiaries incorporated in India are required to annex a Secretarial Audit Report to their Board Report.
2. A public company having a paid-up share capital of Rupees 50 Crore or more is exempt from conducting a Secretarial Audit if its turnover is below Rupees 250 Crore.
3. The Secretarial Audit must be conducted exclusively by a practicing Chartered Accountant appointed by the Board.
Which of the above statements is/are incorrect?
2. A public company having a paid-up share capital of Rupees 50 Crore or more is exempt from conducting a Secretarial Audit if its turnover is below Rupees 250 Crore.
3. The Secretarial Audit must be conducted exclusively by a practicing Chartered Accountant appointed by the Board.
Which of the above statements is/are incorrect?
✅ Correct Answer: B
🎯 Quick Answer:
B. Only 2 and 3 are incorrect.Structural Breakdown: Statement 1 is correct.
Statement 2 is incorrect; the thresholds are disjunctive (paid-up capital of Rs 50 Crore OR turnover of Rs 250 Crore), so hitting either makes it mandatory.
Statement 3 is incorrect; a Secretarial Audit can only be conducted by a practicing Company Secretary (PCS). Historical/Related Context: Introduced in the Companies Act 2013, the scope was expanded by SEBI LODR to cover material unlisted subsidiaries.
Causal Reasoning: Entrusting specialized Company Secretaries to audit these processes provides a dedicated check on legal and regulatory adherence.