Secretarial audit: checking a company's legal compliance
Beyond checking the numbers, larger companies must have their legal compliance reviewed through a secretarial audit. This guide explains what a secretarial audit is and why it matters.
Quick answer
A secretarial audit is a review that checks whether a company has followed company law, market rules and other legal requirements. It is carried out by a qualified professional, usually a company secretary in practice. A secretarial audit adds assurance that a company is legally compliant, not just financially sound.
Key takeaways
- A secretarial audit checks legal and rule compliance.
- It goes beyond financial matters.
- It is done by a qualified professional.
- It applies to larger companies.
- It adds assurance of legal compliance.
What is a secretarial audit?
A secretarial audit is a review that checks whether a company has followed the laws and rules that apply to it, such as company law and market regulations. It focuses on legal compliance.
Unlike a financial audit, which checks the accounts, a secretarial audit looks at whether the company met its legal and procedural duties across the year.
Who carries it out?
A secretarial audit is carried out by a qualified professional, typically a company secretary in practice. This independent expert reviews the company's compliance and reports on it.
Because the reviewer is independent and qualified, the audit carries weight as an objective check rather than the company's own claim.
What does it check?
The audit checks compliance with a range of requirements, including company law, listing rules, and various filings and approvals the company must obtain.
| Area | What is checked |
|---|---|
| Company law | Legal duties met |
| Listing rules | Market compliance |
| Filings and approvals | Done correctly and on time |
The result is a report that states whether the company complied and highlights any gaps, giving a clear picture of legal health.
Why does it matter?
A secretarial audit matters because legal compliance is as important as financial soundness. A company can look profitable yet face risks if it breaks laws or rules.
By having an independent check, the company and its investors get assurance that legal duties were met, or a warning if they were not.
What should investors know?
For investors, a secretarial audit is a sign of good governance. A clean report supports confidence, while flagged issues are worth looking into more closely.
Understanding secretarial audits helps you value legal compliance. Any investment decision should be your own after proper research and reading all related documents.
Frequently Asked Questions
What is a secretarial audit?
A secretarial audit is a review that checks whether a company has followed company law, market rules and other legal requirements, focusing on legal compliance rather than the accounts.
Who carries out a secretarial audit?
It is carried out by a qualified professional, typically a company secretary in practice, who independently reviews the company's compliance and reports on it.
What does a secretarial audit check?
It checks compliance with company law, listing rules, and various filings and approvals, and reports whether the company complied or highlights any gaps.
Why does a secretarial audit matter?
Because legal compliance is as important as financial soundness, since a company can look profitable yet face risks if it breaks laws or rules, so an independent check adds assurance.
How does it help investors?
A clean secretarial audit report supports confidence as a sign of good governance, while flagged issues are worth looking into more closely before investing.
Disclaimer: Investments in the securities market are subject to market risks. Please read all related documents carefully before investing. This article is intended for informational and knowledge purposes only and should not be considered tax, financial, or investment advice. Tax laws and deductions may vary based on individual circumstances and regulatory changes. Readers are advised to consult a qualified tax advisor or financial professional before making any investment or tax planning decisions.
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