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

Meridian Pharma Ltd is a listed company. Its practising company secretary's secretarial audit report contains an observation that two Board meeting notices were sent late. The CFO suggests simply omitting the matter from the Board's report to avoid embarrassment. What does the Companies Act, 2013 require?

The Board must annex the secretarial audit report to its report and explain in full every qualification, observation or other remark made by the practising company secretary. Procedural lapses such as late notices cannot be omitted or explained only partly.

  1. AThe Board must annex the secretarial audit report and explain in full any qualification, observation or remark in its report under section 134(3)Correct
  2. BThe Board may ignore observations that relate only to procedural matters such as notice periods
  3. CThe Board must explain only qualifications, not observations or other remarks
  4. DThe Board need only forward the observation to the Registrar without comment in its report

Explanation

Section 204(1) requires a listed company to annex a secretarial audit report to the Board's report. Section 204(3) requires the Board to explain in full any qualification, observation or other remarks made by the secretary in practice. Limiting the explanation to qualifications alone is wrong because observations and other remarks are also covered.

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