Recent Amendments On Applicability Of Secretarial Audit And Appointment Of Whole Time Company Secretary

Published At: 09-Jan-2020

The Ministry of Corporate Affairs (MCA) has vide an amendment dated 3rd January 2020 to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 amended the thresholds for applicability of Secretarial Audit and the thresholds for mandatory appointment of Whole Time Company Secretary. This amendment is applicable in respect of financial years commencing on or after 1st April 2020.


A. Applicability of Secretarial Audit


1. Thresholds:- 

Hence, secretarial audit is applicable to even private companies which are heavily leveraged as mentioned above (irrespective of whether it is long term or short term borrowing). 


2. From which year Secretarial Audit is applicable?


a. Companies which have already crossed the new threshold:-


Since this Amendment is applicable in respect of financial years commencing on or after 1st April 2020, in case of companies (private or public) which already have outstanding loans or borrowings from banks or public financial institutions of Rs. 100 crores or more, Secretarial Audit will be applicable for the financial year 2020-21 onwards. 


b. Companies which cross the new threshold after 1st April 2020:-


In the above Rules, an Explanation has been inserted to the effect that the paid up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of latest audited financial statement shall be taken into account.


Section 204 states that Secretarial Audit Report shall be annexed to Board’s report, which happens post audit of financial statements of a particular year. Hence, if Secretarial Audit is newly applicable to any Company for a particular financial year, then Secretarial Audit must be undertaken for that particular financial year only, and not beginning from the next financial year. 




As per Section 203 read with Rule 8 and Rule 8A of Companies (appointment and managerial personnel) Rules 2014,

There was recent amendment which has been stated below:

Due to recent amendments, the limits for appointment of whole time company secretary has been increased to double.

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