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

Nirmal Pharma Ltd's managing director argues that, since the company has a full-time company secretary and also gets a secretarial audit under Section 204, the MD and the Board are relieved of their own responsibility for compliance. Which statement is correct?

The MD's argument is wrong. Section 205(2) says that Sections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time director under the Act or any other law, so their compliance responsibility continues.

  1. ASections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time director under the Act or any other lawCorrect
  2. BThe company secretary's functions replace the duties of the managing director for compliance matters
  3. CThe secretarial audit under Section 204 transfers the Board's compliance duties to the auditor
  4. DThe Board's duties are reduced to the extent the company secretary reports on compliance

Explanation

Section 205(2) provides that Sections 204 and 205 do not affect the duties and functions of the Board, chairperson, managing director or whole-time director. The CS's reporting and the audit supplement, but do not displace, those duties. The other options wrongly suggest a transfer or reduction of responsibility.

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