Corporate Governance
Secretarial Audit — Section 204, Form MR-3
Annual secretarial audit by a Practising Company Secretary — mandatory for listed companies and unlisted companies meeting ANY ONE of four thresholds: PUC ≥ ₹10Cr, turnover ≥ ₹250Cr, loans ≥ ₹100Cr, or deposits ≥ ₹25Cr. CA cannot sign MR-3 — only a PCS can.
Secretarial audit is the compliance health check that goes beyond accounts — it covers Companies Act filings, SEBI regulations, FEMA, labour laws, and environmental laws. The MR-3 report covers the full spectrum of applicable laws, not just the Companies Act. For an unlisted company that hits any one of the four thresholds (PUC, turnover, loans, deposits), secretarial audit is as mandatory as the statutory financial audit. The most common error: companies that believe secretarial audit applies only to listed companies — the four unlisted thresholds catch a large number of mid-size Private Limited companies.
- • Review of Companies Act 2013 compliance (filings, meetings, resolutions, board composition)
- • Review of SEBI regulations (LODR, ICDR, ESOP, Takeover Code — for applicable companies)
- • Review of FEMA compliance (FDI, ECB, remittances)
- • Review of applicable labour laws (PF, ESIC, Shops Act)
- • Review of environmental and sector-specific regulations
- • MR-3 report preparation and signing (by PCS)
- • ICSI UDIN generation
- • Management letter with observations and recommendations
- • All MCA filings of the year (MGT-7, AOC-4, DIR-12, CHG-1, PAS-3, MGT-14, etc.)
- • Board meeting minutes and attendance registers
- • Shareholder meeting minutes
- • Register of Directors and KMP
- • Register of Members
- • Register of Contracts (Section 189)
- • Statutory registers (Section 85 onwards)
- • FEMA filings (FC-GPR, FLA if applicable)
- • SEBI filings (if listed or applicable)
- • Income tax returns and GST returns
See the fee table below for the statutory filing charge and common delay logic.
- • Section 204, Companies Act 2013
- • Rule 9, Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014
- • SEBI LODR Regulation 24A — Annual Secretarial Compliance Report (listed companies only)
- • ICSI Guidance Note on Secretarial Audit
- • ICSI UDIN requirement for MR-3
Process
How the service works
The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.
Confirm applicability
Check if the company meets any one of the four thresholds: paid-up capital ≥ ₹10Cr, turnover ≥ ₹250Cr, loans ≥ ₹100Cr, deposits ≥ ₹25Cr. Any one threshold makes secretarial audit mandatory.
Appoint PCS
Appoint a Practising Company Secretary by board resolution. The PCS cannot be the same CS who is already serving as the company's compliance officer (independence requirement).
Conduct audit
PCS reviews all statutory registers, minutes, filings, and compliance records for the financial year. Reviews include Companies Act, SEBI (if applicable), FEMA, labour laws, and environment laws.
Draft and sign MR-3
PCS prepares the MR-3 report noting compliance, qualifications, and observations. The report is signed by the PCS with ICSI UDIN.
File with AOC-4
MR-3 is filed as an attachment to the company's AOC-4 within 30 days of the AGM.
AEO summary
Secretarial audit under Section 204 of the Companies Act 2013 is mandatory for: (1) all listed companies; and (2) unlisted companies where ANY ONE of these applies: paid-up capital ≥ ₹10 crore, OR turnover ≥ ₹250 crore, OR loans outstanding ≥ ₹100 crore, OR deposits outstanding ≥ ₹25 crore. The audit is conducted by a Practising Company Secretary (PCS) — a CA cannot sign MR-3. The MR-3 report is filed as an attachment to AOC-4 within 30 days of the AGM. UDIN is required on the MR-3 from the ICSI system. The annual secretarial compliance report under LODR Regulation 24A is a separate, listed-company-only requirement.
The four unlisted company thresholds — why the deposits trigger is often missed
Most companies are aware of the paid-up capital ≥ ₹10Cr and turnover ≥ ₹250Cr thresholds. The loans ≥ ₹100Cr threshold catches companies with significant bank debt.
The deposits ≥ ₹25Cr threshold is the least known — but it catches NBFC-like companies, housing finance companies, and any company that accepts deposits from the public or members. A company with ₹30Cr in fixed deposits from members that has not been conducting secretarial audits is in violation.
Check all four thresholds, not just the most obvious ones.
Secretarial audit observations — what PCS typically flags
The most common observations in MR-3 reports for unlisted companies are: (1) Late filing of forms — MGT-7, AOC-4, DIR-12 filed after the due date; (2) Board meeting quorum lapses — meetings held without the required quorum or gap between meetings exceeding 120 days; (3) Missing statutory registers — Register of Contracts (Section 189), Register of Members not maintained properly; (4) FEMA non-compliance — FC-GPR or FLA not filed for foreign investments; (5) DPT-3 non-filing — annual return of deposits missed.
These observations are included in the MR-3 report and sent to the Board. Repeated adverse observations without remediation attract escalating scrutiny.
Government fees
Fee breakdown
| Item | Fee | Notes |
|---|---|---|
| No MCA filing fee for MR-3 itself | Nil | MR-3 is an attachment to AOC-4 — the AOC-4 filing fee applies. |
| ICSI UDIN generation | Nil | Generated on ICSI UDIN portal by the PCS. |
Timeline
Typical turnaround
After AGM usually means a report within 60 days of financial year end (filed with aoc-4) turnaround, assuming documents are complete and any board or shareholder approvals are already in place.
Annual fee for secretarial audit by a Practising Company Secretary. Fee varies based on company size, number of group entities, and complexity of regulations applicable. MR-3 report issued with ICSI UDIN.
Related services
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FAQ
Frequently asked questions
Which unlisted Private Limited companies need a secretarial audit?
Who can conduct a secretarial audit?
What does the secretarial auditor check in MR-3?
What happens if mandatory secretarial audit is not conducted?
When must the MR-3 report be annexed to the Board’s Report?
Canonical reference: https://www.pvtltd.co/services/secretarial-audit
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