Amendment in Companies Act for compulsory appointment of Company Secretary and Secretarial Audit

Ministry of Corporate Affairs vide Notification Dt. 03.01.2020 has eased various provisions and added some new provisions with regard to Pvt ltd companies:

Amendment has been made to Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 wherein the limit for appointment of whole time company secretary has been increased from current limit of paid up share capital of Rs. 5 crores to Rs. 10 crores. It can be read as under:

“8A. Every Private company which has a paid up share capital of ten crore rupees or more shall have a whole-time company secretary.”

Under Rule 9 a new clause i.e. clause (c) shall be inserted for secretarial audit, which will bring all the companies including private companies which have outstanding borrowing or loan from banks or public financial institution of one hundred crore rupees or more under this ambit. Thus all the companies who have borrowing above Rs. 100 crore from bank or financial institution need to submit an audit report from company secretary along with its board report to the ministry.

Earlier such audit were only applicable to public companies with paid up share capital of Rs. 50 crore or more or to those companies who have turnover of Rs. 250 crore or more.

In the above Rule 9 all the limits needs to be checked existing on the last date of latest audited financial statement.

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