Secretarial Audit in India 2026 Applicability, Form MR-3 & What Triggers a Qualification

BALI NAGAR, India - June 12, 2026 - PRLog -- Corporate compliance in India has evolved far beyond routine Roc filings and board meetings. Here, the secretarial audit is one of the critical compliances for companies in general, especially for public or regulated ones. In this landscape, secretarial audit has become one of the most important compliance checks for companies, particularly those operating in regulated or public-facing sectors.

Introduced under Section 204 of the Companies Act, 2013, secretarial audit acts as an independent verification mechanism to examine whether a company is complying with applicable corporate and securities laws. More importantly, it helps identify governance gaps before they become regulatory disputes or penalties.

Which Companies Require Secretarial Audit in 2026?

Secretarial audit is mandatory for:

1. Every listed company;
2. Every public company having a paid-up share capital of Rs. 50 crore or more; and
3. Every public company having a turnover of Rs. 250 crore or more.

Additionally, Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also extends applicability to certain private companies having outstanding loans or borrowings from banks or public financial institutions of Rs. 100 crore or more.

The audit must be conducted by a practicing company secretary (PCS), who independently reviews the company's compliance framework and governance practices for the relevant financial year.

Understanding Form MR-3

The secretarial audit report is issued in Form MR-3, which forms part of the Board's Report circulated to shareholders. The format is prescribed under the Companies Act and contains observations regarding compliance with various laws applicable to the company.

In practice, the PCS examines:

1. Board and committee composition;
2. Maintenance of statutory registers and records;
3. Filing of forms with the ROC and other regulators;
4. Compliance with FEMA, SEBI regulations, and sector-specific laws;
5. Conduct of board and shareholder meetings;
6. Disclosure obligations and approval mechanisms.

The auditor also verifies whether adequate systems and processes exist to monitor legal compliance within the organisation.

Typically, the process begins with issuance of an engagement letter, followed by preparation of compliance checklists and document review. The company is required to provide records such as minutes books, statutory registers, annual filings, policies, resolutions, and approvals obtained during the year.

Once the review is complete, the PCS issues the MR-3 report with either clean observations or qualifications/adverse remarks wherever non-compliances are identified.

What Usually Triggers a Qualification in MR-3?

A qualification in secretarial audit (https://www.corpzo.com/guidance-to-general-meetings-a-com...) does not necessarily mean fraud or major misconduct. In many cases, it reflects procedural lapses or delayed compliances that could expose the company to future regulatory scrutiny.