10 July 2013
one of my client has defaulted in the provisions of section 383a of the Companies Act, 1956 and has not appointed a whole time company secretary.
does this default should be reported in the Audi report as per the new format of Audit report under SA 700.
where this default should be reported as this incurs the liability of Rs. 500/- per day for the default continues.
The Paid up Share Capital is 5 Crores and company is running into gud profits.i.e. company is financially sound. in that position can we qualify the Audit report for non Compliance of Sec. 383a of the Companies Act.
Failure to comply with section 383A Where a company having paid-up share capital of Rupees Two Crores or more fails to employ a whole-time secretary, the company and every officer of the company who is in default shall be punishable with fine upto Rs. 500 for every day during which the default continues: Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that all reasonable efforts to comply with the provisions of section 383A(1) were taken or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary.
You can take the benefit of financial weak position to appoint CS.
As per my knowledge the Prescribed limit u/s 383a is 5 crores and not 2 crores. more over my client in financially sound with gud reserves and still earning.
my question is can auditors report be qualified for non compliance of sec. 383a of the Companies Act, 1956 under new Audit report format as per SA 700, which requires reporting on regulatory framework of the company.
CAclubindia
