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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Board Processes through Secretarial Standards

Deepak Menon, managing director of Orion Steels Ltd, argues that since a secretarial audit under section 204 exists, the Board and managing director are relieved of their own compliance duties. Which statement is correct?

Sections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time director. A secretarial audit does not shift their compliance responsibility to the practising company secretary, even where the report is clean.

  1. ASections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time directorCorrect
  2. BThe secretarial audit transfers compliance responsibility to the practising company secretary
  3. CThe managing director's duties are replaced by those of the company secretary under section 205
  4. DThe Board is relieved if the audit report contains no qualification

Explanation

Section 205(2) states that sections 204 and 205 shall not affect the duties and functions of the Board, chairperson, managing director or whole-time director under the Act or other laws. Hence the audit does not shift responsibility, whether or not the report is qualified.

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