In the evolving landscape of corporate governance and compliance, the appointment of a secretarial auditor remains a critical requirement for listed companies in India. As of 2025, this practice continues to be mandated by regulatory frameworks to ensure transparency, accountability, and adherence to statutory obligations. This comprehensive guide explores the key aspects of appointing a secretarial auditor for a listed company, including the significant amendments introduced on December 12, 2024.
1. Understanding Secretarial Audit Requirements for Listed Companies
The requirement for secretarial audit stems from Section 204 of the Companies Act, 2013, and has been further strengthened through Regulation 24A of SEBI (LODR) Regulations for listed entities. As of 2025, the following companies are required to conduct a secretarial audit:
- Every listed company
- Public companies with a paid-up share capital of ₹50 crore or more
- Public companies with a turnover of ₹250 crore or more
- Companies with outstanding loans or borrowings exceeding ₹100 crore from banks or public financial institutions
Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake Secretarial Audit.
2. Step-by-Step Secretarial Auditor Appointment Process
The appointment of a secretarial auditor involves several key steps:
- Qualification Requirements: Only a Peer Reviewed Practicing Company Secretary with a valid Certificate of Practice can be appointed as a secretarial auditor.
- Independence Check: The appointed secretarial auditor should not have any conflicts of interest with the company or its key management personnel.
- Board Resolution: The board of directors must pass a resolution to appoint a practicing company secretary/ firm as the secretarial auditor. Board should also approve the list of services that can be rendered by the Auditor.
- Filing with the Stock Exchange(s): The appointment of Secretarial Auditor needs to be disclosed to the stock exchange(s).
- Filing with Registrar: The appointment details must be filed with the Registrar of Companies (ROC).
- Ordinary Resolution: The appointment of Secretarial Auditor can be done only with the approval of its shareholders in its Annual General Meeting.
- Formal Appointment Letter: After board and shareholders approval, a formal appointment letter specifying the scope, responsibilities, and remuneration is issued to the secretarial auditor.
- Intimate the Stock Exchange(s) & ROC: File necessary disclosure with recognised stock exchange(s) & also intimate the ROC regarding the same.
- Entry in SDD & Depository: Make the necessary entry in Structured Digital Database (SDD) and add the same with designated depository.
3. Key Changes in the December 12, 2024 Amendment
The December 12, 2024 amendment introduced several significant changes to the secretarial audit framework which will be applicable for appointment post April 1, 2025:
3.1 Tenure of Auditor
- Maximum Tenure: The amendment introduced a maximum continuous tenure of a secretarial auditor with the same listed company.
- an individual as Secretarial Auditor for not more than 1 term of 5 consecutive years
- a Secretarial Audit firm as Secretarial Auditor for not more than 2 terms of five consecutive years
- Cooling Period: After completing a 5-year term, a mandatory cooling period of 5 years is required before the same Secretarial Auditor can be reappointed by the company.
- Common Partners: No Secretarial Audit firm having a common partner or partners to the other Secretarial Audit firm, whose tenure has expired immediately preceding the financial year, shall be appointed as Secretarial Auditor of the same listed entity for a period of five years.
- Casual Vacancy: Casual vacancy due to resignation, death or disqualification of a Secretarial Auditor shall be filled by the Board within a period of 3 months and the secretarial auditor so appointed shall hold office till the conclusion of the next annual general meeting.
- One Term of Auditor cannot be of less than 5 years.
- Sole Proprietorship Firm is considered as individual auditor only.
- Any association of the individual or the firm as the Secretarial Auditor of the Company before March 31, 2025 shall not be considered for the purpose of calculating the tenure.
3.2 Enhanced Eligibility and Qualifications
- Peer Review: A person is eligible to be appointed as Secretarial Auditor of Listed Company only if he/ she is peer reviewed.
- Majority of Partners to be qualified: a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be Secretarial Auditor
- Only Peer Reviewed Partners shall sign: In case a firm including LLP is appointed as Secretarial Auditor, only the partners who are Peer Reviewed Company Secretaries shall be authorised to act and sign on behalf of the firm.
3.3 Disqualifications for Secretarial Auditors
Click here to read a list of disqualifications and services not to be rendered by Secretarial Auditor.
3.4 Permitted and Prohibited Services
The amendment clearly delineated services that secretarial auditors can and cannot provide to their audit clients:
I. Services That Can Be Rendered (as per ICSI) to the extent it is not in conflict of interest:
- Appearance or representation services on behalf of the listed entity before quasi-judicial body(ies)
- Impact assessment of CSR or BRSR assessment or assurance
- Certification of Annual Return in Form MGT-8
- Pre-certification of e-forms under the Companies Act, 2013
- Issuance of Secretarial Audit Report
- Issuance of Annual Secretarial Compliance Report
- Certificate of Non-Disqualification of Directors
- Quarterly Reconciliation of Share Capital Audit Report under Regulation 76 of the SEBI (Depositories and Participants) Regulations, 2018
- Acting as Compliance Auditor under third party certification/ Audit Scheme (Amendment), 2018 in the State of Haryana
- Diligence Report for Banks in case of multiple banking/ consortium lending arrangements in terms of the circular issued by RBI
- Issue of Search/ Status Report of listed entity
- Issuance of Certificate in case of the Indian listed entity accepting the investment from a foreign investor
- Corporate Governance Compliance Certificate under Regulation 34(3) of SEBI (LODR) Regulations, 2015
- Certificate relating to shares held by inactive shareholders under the SEBI (Delisting of Equity Shares) Regulations, 2021
- Compliance Certificate under Regulations 10(b), 13, 26, 27, 36 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
- Scrutiniser’s report pursuant to Section 108 of the Companies Act, 2013
- To act as Trade Marks Agent, if registered under the Trade Marks Act,1999
- To carry out valuation services, if registered as Valuer under the Companies Act, 2013
- Services in respect of facilitating Digital Signatures
- Certification of form FC-GPR and ECB 2
- Certification of alteration of Articles of Association and Memorandum of Association of the listed entity
II. Prohibited Services (as per ICSI):
- To act as CSR / ESG Consultant or drafting of CSR / BRSR report
- To act as Advisor to the listed entity for legal or procedural matters
- To act as Advisor for the issue of securities
- Drafting/vetting of Annual Report of a listed entity
- Professional services in respect of drafting of Scheme of arrangement / merger/ demerger and amalgamation
- To act as Insolvency professional / Resolution professional / Bankruptcy of the listed entity as per the provision of IBC
- Services of management consultancy like pay roll management, strategic management, human resource management
- Book keeping and record maintenance
- To manage and assess financial requirements and resources including project finance, forex finance or working capital finance, etc.
- To file the Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999 (A.P. (DIR Series) Circular No. 45 dated March 15, 2011
- Filling of application for obtaining Import Export Code (IEC) on behalf of listed entity
- Vetting of alteration of Articles of Association and Memorandum of Association of the listed entity, however certification of the form for same can be done.
4. Secretarial Audit Reporting Requirements
The secretarial auditor submits the Secretarial Audit Report in Form MR-3, which must be attached to the Board’s Report. This report highlights compliance status and any observations or qualifications. Listed companies must also submit this report to stock exchanges along with their annual reports.
5. Practical Considerations for Companies
When appointing a secretarial auditor, companies should consider:
- The auditor’s experience with companies in similar industries
- List of services provided by Auditor
- List of services that can be rendered by Auditor
- To check it is not disqualified
6. Frequently Asked Questions (FAQs) About Secretarial Auditor Appointment
Q1: When should a listed company appoint a secretarial auditor?
A: Ideally, a listed company should appoint a secretarial auditor at the beginning of the financial year as now, approval of Shareholders is also required at the Annual General Meeting.
Q2: Can a company secretary employed by the company conduct the secretarial audit?
A: No. The secretarial audit must be conducted by an independent practicing company secretary who is not an employee of the company.
Q3: How does the 5-year tenure limitation affect existing secretarial auditor relationships?
A: Currently, any association prior to March 31, 2025 is not counted in tenure, hence, the Company may continue to appoint the same Auditor provided he meets all the criterias of appointment and is not disqualified.
Q4: Can a secretarial auditor provide other services to the same company?
A: Yes, but with significant limitations. The secretarial auditor can only provide specific permitted services as approved by the Board.
Q5: What are the consequences of non-compliance with the new secretarial auditor appointment rules?
A: Non-compliance can result in regulatory penalties, including fines for the company and its officers. Additionally, SEBI may impose separate penalties for listed companies, and there could be negative implications for the company’s governance ratings.
Q6: How many listed companies can a practicing company secretary audit simultaneously?
A: A practicing company secretary can concurrently audit a maximum of 15 listed companies and unlisted companies (both inclusive).
Q7: Does the secretarial audit report need to be filed with any regulatory authority?
A: The secretarial audit report in Form MR-3 must be attached to the Board’s Report, which is filed with the Registrar of Companies. Additionally, listed companies must submit the report to the stock exchanges along with their annual reports.
Q8: What is the timeline to submit Annual Secretarial Compliance Report?
A: It is required to filed within 60 days from end of each financial year.
Q9: Can a company reappoint the same secretarial auditor after the cooling period?
A: Yes, after the mandatory 5-year cooling period following a 5 years / 10 years tenure, a company can reappoint the same practicing company secretary/ firm as its secretarial auditor, provided they continue to meet all eligibility criteria.
Q10: What does the term firm denote for the purpose of appointment of Secretarial Auditor?
A: Firm of Company Secretaries shall include LLP and Partnership firm. Sole Proprietorship whether or not having firm name shall be treated as individual Company Secretary in Practice for the purpose of Secretarial Audit.
7. Conclusion
The appointment of a secretarial auditor, especially with the December 2024 amendments, has become a more structured and regulated process aimed at enhancing independence, objectivity, and professional standards. These changes reflect regulatory authorities’ commitment to strengthening corporate governance and compliance frameworks.
By carefully selecting qualified professionals who meet the enhanced eligibility criteria and respecting the new tenure and service limitation provisions, listed companies can ensure effective secretarial audits that not only fulfill legal requirements but also add meaningful value to their governance practices.
8. Call to Action
For Listed Companies:
- Review Your Current Arrangements: If you haven’t already, assess your current secretarial audit arrangements against the December 2024 amendments immediately. Non-compliance could lead to regulatory penalties.
- Strengthen Independence Protocols: Implement robust independence verification procedures before appointing or re-appointing your secretarial auditor.
- New approvals: Gear up for new appointment w.e.f., April 1, 2025 and obtain Shareholders’ approval as well.
For Practicing Company Secretaries:
- Upgrade Your Credentials: Ensure you meet the new qualification requirements, including obtaining the Peer Review Certificate if you intend to audit listed companies.
- Review Your Client Portfolio: Assess your current client relationships to ensure compliance with the maximum number of concurrent listed company audits and independence requirements.
- Enhance Your Expertise: Invest in specialized knowledge development.
Don’t wait until regulatory scrutiny forces your hand—act now to ensure your secretarial audit practices align with the latest requirements and leverage these changes as an opportunity to strengthen your overall governance
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