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CS Professional · Compliance Management, Audit and Due Diligence · Secretarial Audit

Meridian Pharma Ltd, a listed company, appointed CS Kavita Rao as secretarial auditor. She suspected a large fraud by employees but did not report it to anyone, believing it was outside her scope. What consequence does the Act provide for such non-compliance?

She is liable to a penalty of five lakh rupees. Section 143(15) imposes this on a company secretary in practice who fails to comply with the fraud-reporting duty in a listed company, while the penalty is one lakh rupees for other companies.

  1. ANo penalty, since secretarial audit is not covered by section 143
  2. BPenalty of one lakh rupees because she is a professional
  3. CPenalty of five lakh rupees, as the company is listedCorrect
  4. DPenalty of five lakh rupees only if the fraud is proved in court

Explanation

Section 143(14)(b) applies section 143 to a company secretary in practice conducting secretarial audit. Under section 143(15), non-compliance with sub-section (12) attracts a penalty of five lakh rupees for a listed company and one lakh rupees for any other company. Meridian is listed, so the higher penalty applies, and no proof of fraud in court is required by the provision.

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