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Secretarial audit applicability checker

Does your company need a Secretarial Audit Report under Section 204? Test the Rule 9 thresholds — every listed company, the ₹50 crore paid-up capital / ₹250 crore turnover limbs for public companies, and the ₹100 crore outstanding-borrowings limb that pulls in private companies too — then see who can sign Form MR-3, where it gets annexed, and how it differs from the SEBI LODR Annual Secretarial Compliance Report.

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Company profile

Company category — the capital & turnover limbs apply only to public companies

Listed company?

Equity or debt listed with a stock exchange — Sec 204(1) applies unconditionally

Material unlisted subsidiary of a listed company?

SEBI LODR Reg 24A can require secretarial audit even if Rule 9 isn't met

Paid-up share capital

Turnover

Outstanding loans/borrowings — banks or PFIs

Why this matters in audit

Secretarial audit is a governance check that sits next to the statutory governance trail

CORAA keeps the statutory-compliance thresholds your engagement depends on — Section 204, CARO, XBRL, CSR — in one working file, so a crossed threshold shows up in review instead of in a Board's Report qualification.

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Also checking whether your company must file its financial statements in XBRL? Run the XBRL applicability checker next — a different Rule 3 threshold set, same annual-filing season.

How secretarial audit applicability is determined

Section 204(1) of the Companies Act, 2013 requires every listed company, and every company belonging to such other class of companies as may be prescribed, to annex a Secretarial Audit Report to its Board's Report. The "other class of companies" is prescribed by Rule 9(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which sets out three independent limbs: (a) every public company with paid-up share capital of ₹50 crore or more; (b) every public company with turnover of ₹250 crore or more; and (c) every company — public or private — with outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more.

The borrowings limb at Rule 9(1)(c) was inserted by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 (notified as G.S.R. 13(E) on 3 January 2020, effective for financial years commencing on or after 1 April 2020), and is the one route through which a private company can be pulled into Section 204 on its own facts — the paid-up capital and turnover limbs at 9(1)(a) and 9(1)(b) are worded "every public company" and do not reach a private company by themselves. The same 2020 amendment inserted an Explanation to Rule 9(1) fixing how all three limbs are tested: paid-up share capital, turnover and outstanding loans/borrowings are taken as they stood on the last date of the latest audited financial statement — a point-in-time test against the most recent balance sheet, not a running "at any time during the year" test like the CARO 2020 small-company exemption. A private company that is neither listed nor crosses the ₹100 crore borrowings figure on that date falls outside Section 204 even if its capital or turnover would otherwise look large.

Separately, Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 does two distinct things. Regulation 24A(1) requires every listed entity, and its material unlisted subsidiaries incorporated in India, to undertake secretarial audit, with that report annexed to the listed entity's annual report — a subsidiary counts as "material" under Regulation 16(1)(c) once its income or net worth exceeds 10% of the consolidated income or net worth of the listed entity and its subsidiaries in the immediately preceding accounting year, so this can reach a subsidiary well under every Rule 9 threshold. Regulation 24A(2) separately requires every listed entity to submit an Annual Secretarial Compliance Report to the stock exchanges within 60 days of the financial year-end — filed directly with the exchange rather than annexed to the Board's Report, and an additional SEBI obligation on top of, not a substitute for, the Section 204 MR-3.

Worked example — private company pulled in by the borrowings limb

A private limited company is not listed, has paid-up share capital of ₹8 crore and turnover of ₹40 crore, but has outstanding term loans and working-capital borrowings from three banks totalling ₹120 crore.

Inputs

CategoryPrivate limited (not listed)

Paid-up share capital₹8 crore (below ₹50 Cr threshold — irrelevant, private co.)

Turnover₹40 crore (below ₹250 Cr threshold — irrelevant, private co.)

Outstanding bank borrowings₹120 crore (≥ ₹100 Cr ✓)

Output

Secretarial audit required?Yes — Rule 9(1)(c)

Report formatForm MR-3, signed by a PCS

Where it goesAnnexed to the Board's Report (Sec 204(1) / 134(3))

The paid-up capital and turnover limbs never come into play because they apply only to public companies. The company is caught solely because its outstanding bank/PFI borrowings are ₹100 crore or more — the one limb of Rule 9 that reaches every company regardless of whether it is public or private, or listed or unlisted.

Common mistakes

Assuming Section 204 is a "listed company" or "big public company" rule

Since the 2020 amendment inserted Rule 9(1)(c), a private company with no public shareholders at all can be brought into Section 204 purely on the strength of its outstanding bank/PFI borrowings — the capital and turnover limbs are not the only route in.

Applying the capital/turnover limbs to a private company

Rule 9(1)(a) and 9(1)(b) are both worded "every public company" — they do not apply to a private company even if its paid-up capital or turnover would cross ₹50 crore / ₹250 crore. Only the borrowings limb at 9(1)(c) is category-neutral.

Treating the SEBI Annual Secretarial Compliance Report as the same filing as MR-3

A listed entity's Section 204 Secretarial Audit Report (MR-3, annexed to the Board's Report) and its SEBI LODR Annual Secretarial Compliance Report (filed directly with the stock exchanges) are two distinct obligations with different formats, different recipients and different filing windows — completing one does not discharge the other.

Skipping secretarial audit for a "small" unlisted subsidiary of a listed company

If the subsidiary is a material unlisted subsidiary of a listed company under SEBI LODR Regulation 24A(1), it needs a secretarial audit report annexed to the parent's annual report even when its own capital, turnover and borrowings sit well under every Rule 9 threshold. "Material" has a fixed test under Regulation 16(1)(c) — income or net worth exceeding 10% of the consolidated income or net worth of the listed entity and its subsidiaries in the immediately preceding accounting year — so check that ratio rather than assuming size alone decides it.

Not retesting the borrowings figure every year

The ₹100 crore borrowings figure — like the capital and turnover figures — is tested as it stood on the last date of the latest audited financial statement, per the Explanation inserted into Rule 9(1) with effect from financial years commencing on or after 1 April 2020. It is not a running check of the borrowings ledger through the year. Retest against each new audited balance sheet and document the working paper afresh every year rather than relying on last year's conclusion.

Frequently asked questions

What is a secretarial audit under Section 204?+

A compliance audit conducted by a Company Secretary in Practice (PCS) that verifies a company's adherence to applicable corporate and securities laws, and reports the result in Form MR-3, which is annexed to the company's Board's Report.

Which companies must get a secretarial audit done?+

Every listed company (no threshold test), plus — under Rule 9(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 — every public company with paid-up share capital of ₹50 crore or more, every public company with turnover of ₹250 crore or more, and every company (public or private) with outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more.

Can a private company be required to do a secretarial audit?+

Yes, but only through the borrowings limb at Rule 9(1)(c) — a private company with outstanding bank/PFI borrowings of ₹100 crore or more is covered even though it is neither listed nor a public company. The paid-up-capital and turnover limbs apply only to public companies.

As on what date are the Rule 9 thresholds tested?+

As on the last date of the latest audited financial statement. An Explanation inserted into Rule 9(1) by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2020 (G.S.R. 13(E), 3 January 2020, effective for financial years commencing on or after 1 April 2020) fixes paid-up share capital, turnover and outstanding loans/borrowings to the figures in that latest audited balance sheet — a point-in-time test, not a running check through the year.

Who can sign the secretarial audit report?+

Only a Company Secretary in Practice — a member of the Institute of Company Secretaries of India (ICSI) holding a valid Certificate of Practice. The PCS is appointed by the Board of Directors, similar to how a statutory auditor is engaged, but by Board resolution rather than shareholder vote.

Where does the secretarial audit report get filed?+

It is annexed to the company's Board's Report under Section 204(1) read with Section 134(3) — it is not filed as a standalone e-form with the ROC. Any qualification, reservation or adverse remark made by the PCS must be explained by the Board in its report.

Is the SEBI Annual Secretarial Compliance Report the same as Form MR-3?+

No. The Section 204 Secretarial Audit Report (MR-3) is annexed to the Board's Report and covers compliance broadly. The SEBI Annual Secretarial Compliance Report, required under Regulation 24A(2) of the SEBI LODR Regulations 2015, is a separate, additional PCS certification specific to a listed entity's compliance with SEBI regulations, circulars and guidelines, filed directly with the stock exchanges within 60 days of the financial year-end. Both can be required of the same listed company in the same year.

Do material unlisted subsidiaries of listed companies need a secretarial audit?+

Yes — under Regulation 24A(1) of the SEBI LODR Regulations 2015, a listed entity's material unlisted subsidiaries incorporated in India must undertake secretarial audit, and that report is annexed to the listed holding company's annual report, independent of whether the subsidiary itself meets the Rule 9 thresholds. A subsidiary counts as "material" under Regulation 16(1)(c) once its income or net worth exceeds 10% of the consolidated income or net worth of the listed entity and its subsidiaries in the immediately preceding accounting year.

Authoritative sources

MCA

Companies Act, 2013 — Section 204 — Requires listed companies, and other prescribed classes of companies, to annex a Secretarial Audit Report to the Board's Report.

MCA

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 — Rule 9 — Prescribes the public-company capital/turnover thresholds and the company-neutral outstanding-borrowings threshold; Rule 9(2) fixes the MR-3 format. The ₹100 crore borrowings limb, and the Explanation fixing all three thresholds to the last date of the latest audited financial statement, were inserted by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2020 (G.S.R. 13(E), 3 January 2020), effective for financial years commencing on or after 1 April 2020.

SEBI

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 — Regulations 16(1)(c) and 24A — Regulation 24A(1) requires secretarial audit for the listed entity and its material unlisted subsidiaries, annexed to the annual report; Regulation 24A(2) requires the Annual Secretarial Compliance Report filed with stock exchanges within 60 days of financial year-end; Regulation 16(1)(c) defines a "material subsidiary" as one crossing 10% of consolidated income or net worth in the immediately preceding accounting year.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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Last reviewed: 2026-07-29 · For informational purposes only — not professional advice.