Secretarial Audit (Form MR-3)

What is Secretarial Audit (Form MR-3)?

Mandatory for listed companies and companies above ₹50cr paid-up capital or ₹250cr turnover — get your Form MR-3 audit from a Practising Company Secretary.

Secretarial Audit was introduced in India by the Companies Act, 2013 as a tool to strengthen corporate governance, promote transparency, and provide an independent check on a company's compliance with the complex web of laws that govern its operations. Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 mandates the secretarial audit for prescribed classes of companies and requires that the audit report in Form MR-3 be annexed to the Board's Report, making it a publicly available document filed with the Registrar of Companies. The Institute of Company Secretaries of India has issued the Guidance Note on Secretarial Audit and the Secretarial Standards, which together define the professional framework within which the audit is conducted. Only a Practising Company Secretary holding a Certificate of Practice issued by the ICSI is authorised to conduct a secretarial audit and sign Form MR-3. The auditor expresses an opinion on whether the company has complied with the provisions of the Companies Act, 2013 and the Rules made thereunder; the Securities Contracts (Regulation) Act, 1956 and its Rules; the Depositories Act, 1996; the Foreign Exchange Management Act, 1999 and its Rules in so far as they relate to Foreign Direct Investment, Overseas Direct Investment, and External Commercial Borrowings; the Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992, including the SEBI (LODR) Regulations, 2015 for listed companies, the SEBI (ICDR) Regulations, and the Takeover Code; the Secretarial Standards issued by ICSI; and other laws specifically applicable to the company depending on its nature of business. The audit covers the entire financial year and examines the company's registers, minutes books, resolutions, filings with the Registrar of Companies, disclosures made to stock exchanges, related party transactions, board composition and committee structures, appointment and remuneration of directors and key managerial personnel, share capital transactions including allotments, buybacks, and transfers, and any corporate actions taken during the year. The auditor also reviews whether the Board of Directors has met with the requisite frequency, whether notice periods have been observed, whether quorum requirements have been satisfied at Board and general meetings, and whether required disclosures have been made under the Insider Trading Regulations. The Board of Directors is required to appoint the Secretarial Auditor for a financial year before the end of that financial year, although the report itself is typically completed and annexed to the Board's Report after the year-end. If the auditor has observed any non-compliance, qualification, or adverse remark, such observations must be specifically explained in the Board's Report. The appointment of the Secretarial Auditor is itself a board-level decision and must be recorded in the minutes of the Board meeting. Common compliance gaps identified during secretarial audits include delays in filing annual returns and financial statements with the Registrar of Companies, non-compliance with the mandatory CSR spending requirements under Section 135, lapses in maintaining statutory registers in the prescribed format, failure to file required intimations with stock exchanges within the prescribed timelines, incorrect composition of Audit Committees and Nomination and Remuneration Committees, and gaps in related party transaction disclosures. Expert assistance is critical in secretarial audit not only because the statutory mandate requires a Practising Company Secretary, but also because the scope of laws reviewed is broad and the inter-linkages between corporate law, securities law, foreign exchange law, and sector-specific regulations require specialist knowledge. A well-conducted secretarial audit provides the Board of Directors with an independent assurance that the company's compliance machinery is functioning effectively and flags emerging risk areas before they escalate into regulatory action.

How It Works

1. 1

   Appoint the Secretarial Auditor

   The Board of Directors must pass a resolution appointing a Practising Company Secretary as Secretarial Auditor for the financial year. The appointment should ideally be made at the beginning of the financial year to allow the auditor to review compliance on a running basis rather than only at year-end.

2. 2

   Initial Planning and Scoping Meeting

   The Secretarial Auditor meets with the company's Company Secretary and compliance team to understand the company's business, applicable laws specific to its sector, any corporate actions taken during the year, and any known compliance issues. The auditor prepares a list of documents and information required for the audit.

3. 3

   Document Collection and Review

   The company provides the auditor access to all statutory registers, minutes books, ROC filings, stock exchange disclosures, board and committee resolutions, share capital records, and other documents for the financial year under review. The auditor verifies each compliance requirement against the evidence of compliance.

4. 4

   Issue of Queries and Management Responses

   Where the auditor identifies gaps, delays, or potential non-compliances, the auditor raises queries with management. The company's compliance team provides clarifications and supporting evidence. This iterative process allows genuine errors to be distinguished from systemic non-compliance.

5. 5

   Draft Report and Management Comments

   The auditor prepares a draft Form MR-3 report setting out the scope, findings, and any qualifications or observations. Management is given an opportunity to review the draft and provide comments on factual accuracy before the report is finalised.

6. 6

   Finalise and Submit Form MR-3

   The Practising Company Secretary signs and dates the final Form MR-3 report and provides it to the company for annexure to the Board's Report. The Board's Report must specifically comment on any qualifications or adverse remarks in the secretarial audit report. The signed report is then filed as part of the annual filings with the Registrar of Companies.

Government Fees

Professional Fees