With new Companies act, company secretaries can now act as whistleblowers

KOLKATA: With the new Companies Act in place, company secretaries (CS) like other statutory auditors can now act as whistleblowers if they detect any fraud.

"There is a provision of whistle blower in the new Companies Act. It is now mandated in the act of 2013," Institute of Company Secretaries of India (ICSI) President Atul Mehta said.

Practising company secretaries, he added, will be mandatorily required to carry out the secretarial audit of companies whose paid-up capital is more than Rs 50 crore and a turnover exceeding Rs 250 crore.

This was akin to the kind of audit carried out by statutory auditors for financial audit and cost accountants for cost audit for listed companies, he told reporters here today.

Mehta said that if any fraud was detected by the practising CS, it will have to be reported either to the audit committee or the Corporate Affairs Ministry, depending on the quantum of the money involved.

"The new Act has made this mandatory," Mehta said adding that the secretarial auditor will also have to attach his report, along with the board of directors statement in the annual report.

The secretarial auditor will be allowed to make any qualifying remarks in the report like the statutory auditor.

The corporates will have to follow the secretarial standards and need to comply by July 1, 2015.

Meanwhile, ICSI is setting up a centre of excellence for corporate governance in the city.