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CS Professional · Compliance Management, Audit and Due Diligence · Signing and Certification

Nilgiri Tea Ltd, a listed company, appointed CS Arjun Rao, a practising company secretary, to give its secretarial audit report. The Board's report omitted any response to a qualification in his report. The company also refused him access to minute books. Which statement is correct under section 204?

The Board must explain in full every qualification in the secretarial auditor's report, and the company must give all assistance and facilities for the audit. A contravention makes the company, its officers or the practising secretary in default liable to a penalty of two lakh rupees.

  1. AOnly the company is liable, since the practising secretary has no duty in the matter
  2. BThe Board need not explain qualifications, as the report is only annexed
  3. CRefusing access is allowed because the secretarial audit is voluntary for listed companies
  4. DThe Board must explain every qualification in its report, and the company must give all assistance and facilities; contravention attracts a penalty of two lakh rupees on those in defaultCorrect

Explanation

Section 204 requires listed companies to annex a secretarial audit report, obliges the company to give all assistance and facilities, and requires the Board to explain in full any qualification or observation. Contravention makes the company, officers or the practising secretary in default liable to a penalty of two lakh rupees. Secretarial audit is mandatory for listed companies, so the voluntary option is wrong.

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