The government may soon make it mandatory for private companies with outstanding debts to undergo a secretarial audit, as mentioned by a senior government official. Speaking at the 51st foundation day of the Institute of Company Secretaries of India, Corporate Affairs Secretary Injeti Srinivas said, "Mandatory secretarial audit is right now restricted to listed companies, but I think it may have to get extended to private companies which have outstanding debts beyond a threshold."
He further added that it might be necessary in cases where companies have heavily borrowed from banks.
Under the Companies Act, all listed companies are required to provide a secretarial audit report annually.
In February, the Securities and Exchange Board of India (SEBI) had said that a mandatory secretarial audit and an annual secretarial compliance report must be filed by a practicing company secretary as part of disclosure requirements for listed entities.
Speaking at the same event, President Kovind said that companies and stakeholders must understand the difference between profit and profiteering as well as foster responsible business and balance economic objectives with larger socio-economic goals.
"We have seen how some business enterprises have broken the trust of the people. Companies have either faltered or have come to a standstill. In the process, common people have had to suffer," he said. Transparency, accountability, integrity and fairness are the four pillars of corporate governance, President Kovind said. He stressed that company secretaries should responsibly determine how these principles are put into practice.