Permissible and Non-Permissible Services by a Secretarial Auditor to Listed Entities
Source Reference
Title: The list of Services that can or cannot be rendered by a Secretarial Auditor as per FAQs issued by ICSI on April 23, 2025 on the SEBI (LODR) Regulations, 2015 read with SEBI Circular dated December 31, 2024
Issued by: SEBI
FAQ via: Institute of Company Secretaries of India (ICSI)
Link to Source PDF: Download PDF
🛡️ Permissible & Prohibited Services by Secretarial and Statutory Auditors: A Complete Professional Advisory
🔍 Introduction
In a regulatory landscape where independence of auditors is paramount, this comprehensive advisory outlines the services that Secretarial Auditors (Company Secretaries) and Statutory Auditors (Chartered Accountants) can and cannot render to listed entities, their holding or subsidiary companies.
This guidance is based on:
- ✅ ICSI FAQs issued on April 23, 2025, read with SEBI Circular dated December 31, 2024 under the SEBI (LODR) Regulations, 2015
- 📘 Section 144 of the Companies Act, 2013 applicable to Chartered Accountants
- 📚 ICAI and ICSI Code of Ethics
📌 Article Summary
This professional advisory includes:
- ✅ List of Services Secretarial Auditors can render (e.g., MGT-8, Secretarial Compliance Report, e-form certifications).
- ❌ Services they cannot render (e.g., legal advisory, CSR consultancy, drafting schemes or annual reports).
- 🧠 Memory techniques like CAPS-CERT-FILE and BAD-VIC-FARM to help professionals recall with ease.
- 📜 Legal provisions explained in plain language with regulation numbers and practical notes.
- 📊 Comparative analysis with Chartered Accountants, focusing on restrictions under Section 144 of the Companies Act, 2013.
- 📚 Case studies and practical examples to illustrate the risks of non-compliance.
- ✅ Best practices for ensuring audit independence and professional ethics.
Whether you are a practicing Company Secretary, Chartered Accountant, compliance professional, or corporate legal advisor, this guide offers clarity, compliance insight, and memorability tools to help you maintain integrity in your professional engagements.
📎 Includes downloadable references, checklists, and regulatory links.
This advisory summarizes the detailed list of services that can or cannot be rendered by a Secretarial Auditor to a listed entity, or its holding, subsidiary, or associate entity, as per FAQs issued by SEBI.
The classification below is intended to guide practicing professionals, particularly Company Secretaries, to remain compliant with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the SEBI Circular dated December 31, 2024.
✅ SERVICES THAT CAN BE RENDERED
These services are allowed for Secretarial Auditors, subject to applicable regulations and professional ethics. Where noted, certain services must not conflict with the Secretarial Audit assignment.
| S. No | Nature of Service(s) | Permissibility |
|---|---|---|
| i. | Appearance or representation services on behalf of the listed entity before quasi-judicial body(ies) | Can be rendered (to the extent it is not in conflict with the assignment of Secretarial Audit) |
| ii. | Impact assessment of CSR or BRSR assessment or assurance | Can be rendered |
| iii. | Certification of Annual Return in Form MGT-8 | Can be rendered |
| iv. | Pre-certification of e-forms under the Companies Act, 2013 | Can be rendered |
| v. | Issuance of Secretarial Audit Report to holding, subsidiaries or associate companies of listed entities | Can be rendered |
| vi. | Issuance of Annual Secretarial Compliance Report to the listed entity or its holding entity, its subsidiaries or its associate companies | Can be rendered |
| vii. | Certificate of Non-Disqualification of Directors | Can be rendered |
| viii. | Quarterly Reconciliation of Share Capital Audit Report under Regulation 76 of the SEBI (Depositories and Participants) Regulations, 2018 | Can be rendered |
| ix. | Acting as Compliance Auditor under third party certification/ Audit Scheme (Amendment), 2018 in the State of Haryana | Can be rendered |
| x. | Diligence Report for Banks in case of multiple banking/ consortium lending arrangements in terms of the circular issued by RBI | Can be rendered |
| xi. | Issue of Search/ Status Report of listed entity | Can be rendered |
| xii. | Issuance of Certificate in case of the Indian listed entity accepting the investment from a foreign investor | Can be rendered |
| xiii. | Corporate Governance Compliance Certificate under Regulation 34(3) of SEBI (LODR) Regulations, 2015 | Can be rendered |
| xiv. | Certificate relating to shares held by inactive shareholders under the SEBI (Delisting of Equity Shares) Regulations, 2021 | Can be rendered |
| xv. | Compliance Certificate under Regulations 10(b), 13, 26, 27, 36 of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 | Can be rendered |
| xvi. | Scrutiniser’s report pursuant to Section 108 of the Companies Act, 2013 | Can be rendered |
| xvii. | To act as Trade Marks Agent, if registered under the Trade Marks Act,1999 | Can be rendered (to the extent it is not in conflict with the assignment of Secretarial Audit) |
| xviii. | To carry out valuation services, if registered as Valuer under the Companies Act, 2013 | Can be rendered |
| xix. | Services in respect of facilitating Digital Signatures | Can be rendered |
| xx. | Certification of form FC-GPR and ECB 2 | Can be rendered |
| xxi. | Certification of alteration of Articles of Association and Memorandum of Association of the listed entity | Can be rendered |
❌ SERVICES THAT CANNOT BE RENDERED
The following services are prohibited for Secretarial Auditors, to preserve their independence and avoid conflicts of interest. Performing these services may result in non-compliance with regulatory provisions.
| S. No | Nature of Service(s) | Restriction |
|---|---|---|
| xxii. | To act as CSR / ESG Consultant or drafting of CSR / BRSR report | Cannot be rendered |
| xxiii. | To act as Advisor to the listed entity for legal or procedural matters | Cannot be rendered |
| xxiv. | To act as Advisor for the issue of securities | Cannot be rendered |
| xxv. | Drafting/vetting of Annual Report of a listed entity | Cannot be rendered |
| xxvi. | Professional services in respect of drafting of Scheme of arrangement / merger/ demerger and amalgamation | Cannot be rendered |
| xxvii. | To act as Insolvency professional / Resolution professional / Bankruptcy of the listed entity as per the provision of IBC | Cannot be rendered |
| xxviii. | Services of management consultancy like payroll management, strategic management, human resource management | Cannot be rendered |
| xxix. | Book keeping and record maintenance | Cannot be rendered |
| xxx. | To manage and assess financial requirements and resources including project finance, forex finance or working capital finance, etc. | Cannot be rendered |
| xxxi. | To file the Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999 (A.P. (DIR Series) Circular No. 45 dated March 15, 2011) | Cannot be rendered |
| xxxii. | Filing of application for obtaining Import Export Code (IEC) on behalf of listed entity | Cannot be rendered |
| xxxiii. | Vetting of alteration of Articles of Association and Memorandum of Association of the listed entity | Cannot be rendered |
Advisory Notes for Professionals
- Conflict Management: Services that potentially conflict with the scope of Secretarial Audit must be avoided unless clearly permitted.
- Regulatory Compliance: Ensure services are rendered by professionals duly registered, e.g., as a Valuer or Trade Marks Agent where required.
- Audit Trail and Documentation: Maintain detailed documentation, including engagement letters, declarations of independence, and work papers.
- Regular Review: Stay updated with SEBI notifications, FAQs, and circulars to ensure continued compliance with evolving guidelines.
Disclaimer:
This advisory is intended for informational purposes only. Professionals are advised to consult the original SEBI and ICSI documentation and seek legal or regulatory guidance for case-specific issues.
📘 How to Remember Permissible & Non-Permissible Services by a Secretarial Auditor
🧠 Memory Technique: “CAPS-CERT-FILE” vs “BAD-VIC-FARM”
To easily remember the services that CAN and CANNOT be rendered, use the following mnemonics:
✅ “CAPS-CERT-FILE” — Services that CAN be rendered
Each letter stands for one or more types of services:
- C – Compliance Certificates (MGT-8, SEBI regulations, CG certificate)
- A – Audit (Secretarial Audit, Share Capital Reconciliation)
- P – Pre-certification of e-forms
- S – Scrutinizer’s Report
- C – CSR/BRSR Assessment (not consulting)
- E – e-forms and FC-GPR/ECB-2 certifications
- R – Representation before quasi-judicial bodies
- T – Trade Marks Agent (if registered)
- F – Foreign Investment Certificate
- I – Issuance of Reports (Status/Search, Diligence, etc.)
- L – Legal valuation services (if registered as Valuer)
- E – Electronic Services (Digital Signatures facilitation)
❌ “BAD-VIC-FARM” — Services that CANNOT be rendered
- B – Bookkeeping and Record Maintenance
- A – Annual Report Drafting/Vetting
- D – Drafting of Scheme of Merger/Demerger
- V – Vetting of MOA/AOA Alteration
- I – Insolvency/Resolution/Bankruptcy Professional
- C – CSR/ESG Consultant
- F – Filing FLA under FEMA / IEC
- A – Advisory for Securities/Procedural Matters
- R – Resource/Finance Management (Project/Forex/Capital)
- M – Management Consultancy (Payroll, HR, etc.)
📜 Legal Provisions and References (Explained)
1. SEBI (LODR) Regulations, 2015
- Regulation 34(3): Requires listed entities to submit a corporate governance compliance certificate.
- Annual Secretarial Compliance Report: Mandated for listed entities under SEBI circulars, must be issued by a qualified Company Secretary in practice.
2. Companies Act, 2013
- Section 108: Mandates the appointment of a scrutinizer for e-voting — a role that a Secretarial Auditor can perform.
- Form MGT-8: Requires certification from a practicing Company Secretary for annual return filing.
3. SEBI (Depositories and Participants) Regulations, 2018
- Regulation 76: Requires reconciliation of share capital audit by a qualified professional.
4. SEBI Circular dated December 31, 2024
- Specifically restricts auditors from engaging in advisory, consultancy, or management roles that may compromise their independence or create conflicts of interest.
5. FEMA 1999 & RBI Circular
- Filing of FLA returns or certification of ECB requires different regulatory approvals. Secretarial Auditors must avoid such filings unless otherwise authorized.
📊 Impact Analysis
🔍 Why these restrictions?
- Independence of Auditor: Allowing advisory or consulting roles compromises auditor neutrality.
- Avoidance of Conflict of Interest: Drafting or vetting documents you’re also auditing creates bias.
- Professional Specialization: Some roles require different registrations (e.g., Valuer, Trade Mark Agent, IP under IBC).
✅ Benefits of Compliance
- Maintains professional credibility.
- Avoids regulatory penalties or debarment.
- Ensures transparency and objectivity in corporate reporting.
📚 Case Study: Secretarial Audit vs Advisory Role
🎯 Scenario:
ABC Ltd., a listed entity, appoints CS Ananya, a practicing Company Secretary, as its Secretarial Auditor. While conducting the audit, the company also requests her to vet the Annual Report and draft a CSR Policy.
🚩 Issue:
- Drafting CSR policy = CSR Consultant ❌
- Vetting Annual Report = Prohibited service ❌
📉 Consequences:
- Violation of SEBI norms
- Possible disqualification of Secretarial Audit Report
- Penalties under SEBI LODR regulations
- Reputational damage to the professional
✅ Correct Approach:
CS Ananya should decline the prohibited services and refer the client to a different consultant. This would uphold her integrity and comply with SEBI regulations.
💡 Conclusion and Takeaway for Professionals
- Always cross-check your scope of work against SEBI’s permissible list.
- When in doubt, consult regulatory guidance or decline overlapping assignments.
- Remember the memory aids — “CAPS-CERT-FILE” for permitted and “BAD-VIC-FARM” for prohibited services.
- Stay compliant, ethical, and aligned with evolving regulatory standards.
🔄 Comparative Analysis: Secretarial Auditor vs Statutory Auditor (CA) – Permissible & Prohibited Services
⚖️ Section 144 of the Companies Act, 2013 – Prohibited Services for CAs
When a Chartered Accountant or a firm is appointed as a Statutory Auditor, they are prohibited from rendering certain services, directly or indirectly, to the company or its holding/subsidiary.
❌ Prohibited Services under Section 144
| S. No | Prohibited Service for CA Auditor |
|---|---|
| 1. | Accounting and book keeping services |
| 2. | Internal audit |
| 3. | Design and implementation of financial information systems |
| 4. | Actuarial services |
| 5. | Investment advisory services |
| 6. | Investment banking services |
| 7. | Rendering of outsourced financial services |
| 8. | Management services |
| 9. | Any other service as may be prescribed |
📌 Note: These services are restricted whether rendered directly or through an associate or related entity.
🧩 Relation to Secretarial Auditor Restrictions
| Theme | Secretarial Auditor (CS) | Statutory Auditor (CA) |
|---|---|---|
| Conflict of Interest Avoidance | Cannot provide legal/advisory/drafting while doing Secretarial Audit | Cannot provide accounting/internal audit or design financial systems while being Statutory Auditor |
| Independence Required | As per SEBI FAQs & Circulars | As per Section 144 of Companies Act, 2013 |
| Scope of Prohibited Services | Legal, consulting, vetting, insolvency, advisory roles | Financial, audit, advisory, investment & management roles |
| Basis of Restriction | SEBI LODR + SEBI Circular + ICSI FAQs | Companies Act, 2013 + ICAI Code of Ethics |
🎯 Why These Similarities Exist?
-
Preserving Independence of Auditors
- Both CS (Secretarial Auditor) and CA (Statutory Auditor) act as watchdogs over compliance and reporting.
- Providing consultancy or management services compromises audit neutrality.
-
Avoiding Self-review Threat
- A CA who designs a financial system should not audit it.
- Similarly, a CS who drafts a CSR Policy should not certify it.
-
Regulatory Trust and Market Confidence
- These restrictions build stakeholder confidence in financial and legal disclosures.
📚 Example: Practical Impact of Violating Section 144 (CA Case)
🚩 Scenario:
MNO & Co., a CA firm, is appointed as the Statutory Auditor of XYZ Ltd. While auditing, they also assist in designing the ERP system and managing payroll.
⚠️ Consequences:
- Violation of Section 144
- Auditor’s report may be invalidated
- Penalties and disciplinary action by NFRA/ICAI
- Legal consequences for the company (non-compliance)
🔍 Final Analysis
Both Secretarial Auditors and Statutory Auditors are bound by functional separation of roles:
| Auditor Type | Role | Must Avoid |
|---|---|---|
| CS (Secretarial Auditor) | Ensures compliance with secretarial and corporate governance laws | Legal advisory, drafting, consultancy |
| CA (Statutory Auditor) | Ensures integrity of financial statements | Accounting, internal audit, investment advisory |
These clear boundaries ensure that the audit function is objective, reliable, and free from undue influence.
✅ Best Practices for All Professionals
- Segregate Audit & Advisory Functions
- Disclose Conflicts of Interest transparently
- Refer Prohibited Assignments to unrelated professionals
- Regularly update on ICAI/ICSI/SEBI circulars
🔗 Related Provisions: