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CMA Intermediate · Corporate Accounting and Auditing · Secretarial Audit

A listed company's secretarial audit report contains an adverse observation about delayed filing of a statutory return. Under Section 204, what must the Board of Directors do?

Section 204(3) requires the Board of Directors to explain in full, in its Board's report under Section 134(3), any qualification, observation or other remark made by the company secretary in practice in the secretarial audit report. It cannot ignore or suppress the observation.

  1. AExplain in full the observation in its Board's report made under Section 134(3)Correct
  2. BIgnore it, as secretarial audit observations are advisory only
  3. CAsk the company secretary in practice to withdraw the observation
  4. DReport it only to the shareholders at the next general meeting, not in the Board's report

Explanation

Section 204(3) requires the Board, in its report under Section 134(3), to explain in full any qualification, observation or other remark made by the company secretary in practice. Withdrawal or omission from the Board's report is not permitted by the section.

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