1. Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board's report made in terms of sub-section (3 ) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.
2. It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.
3. The Board of Directors, in their report made in terms of sub-section (3 ) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1 ).
4. If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Legal Commentary & Landmark Judgments: Section 204
Section 204 mandates secretarial audits by independent practicing Company Secretaries (Form MR-3) for listed companies and large public entities, evaluating total compliance across all corporate and commercial statutes.
Sub-section (4) prescribes fines of one lakh to five lakh rupees for default by the company, officers, or secretarial auditor.
Secretarial audit under Section 204 goes far beyond the Companies Act: the auditor must verify compliance with SEBI Regulations, FEMA guidelines, SCRA, labor laws, and environmental statutes. The Secretarial Audit Report (Form MR-3) is publicly available on the MCA portal, and adverse remarks trigger immediate scrutiny from SEBI, stock exchanges, and credit rating agencies.