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CMA Intermediate · Corporate Accounting and Auditing · Secretarial Audit

Wellspring Foods Ltd, a listed company, receives a secretarial audit report containing qualifications and observations from the company secretary in practice. What does section 204 require of the Board of Directors?

The Board must explain in full, in its report under section 134(3), every qualification, observation or other remark made by the company secretary in practice in the secretarial audit report. Section 204(3) imposes this duty without restricting it to monetary items or requiring any member resolution.

  1. AExplain in full, in the Board's report, every qualification, observation or other remark made in the secretarial audit reportCorrect
  2. BRemove the secretarial auditor and appoint another one before the report is annexed
  3. CExplain only those qualifications that involve a monetary loss to the company
  4. DPlace the qualifications before the members for approval by special resolution

Explanation

Section 204(3) states that the Board, in its report under section 134(3), shall explain in full any qualification, observation or other remark made by the company secretary in practice. It is not limited to monetary matters, and no special resolution is required.

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