Introduction
Corporate records and regulatory compliance provide important information about the legal and governance position of a company.
When a company undergoes a transaction, investment process, restructuring or other significant corporate activity, stakeholders may need to review its corporate records, statutory compliance and other relevant information.
This is where Secretarial Audit and Corporate Due Diligence can become important.
What Is a Secretarial Audit?
A Secretarial Audit is a structured examination of applicable corporate and secretarial records and compliance requirements.
The purpose is to review whether applicable legal and regulatory requirements have been followed based on the company’s circumstances and the scope of the audit.
The review may involve areas such as:
- Corporate records
- Statutory registers
- Board and shareholder meetings
- Corporate filings
- Share capital
- Applicable regulatory compliances
- Corporate governance records
What Is Corporate Due Diligence?
Corporate due diligence involves reviewing relevant information about a company to understand its legal, corporate, regulatory and other relevant positions.
Depending on the purpose and scope, due diligence may consider:
- Corporate structure
- Constitutional documents
- Statutory filings
- Shareholding information
- Directors and key management
- Charges and secured interests
- Material agreements
- Regulatory matters
- Compliance records
The exact scope depends on the transaction and requirements of the parties involved.
Why Is Due Diligence Important?
Understanding the Corporate Position
A structured review can provide stakeholders with a clearer understanding of the company’s corporate structure and records.
Identifying Compliance Observations
Reviewing applicable records and filings can help identify areas requiring further attention or clarification.
Supporting Business Transactions
Investors, lenders, acquirers and other stakeholders may require due diligence as part of a proposed transaction.
Reviewing Ownership & Share Capital
Shareholding, share capital and related records can form an important part of a corporate review.
Supporting Informed Decisions
Due diligence provides relevant information to stakeholders so they can evaluate matters within the scope of their transaction or review.
Secretarial Audit vs Due Diligence
While both involve structured review, their purpose and scope can differ.
Secretarial Audit generally focuses on applicable corporate and secretarial compliance.
Due Diligence can have a broader transaction-oriented scope and may involve reviewing corporate, legal, financial, management or regulatory information depending on the assignment.
Our Approach
At Hardik Jetani & Associates, a structured review can broadly follow:
Understand → Collect → Examine → Report → Advise
The specific scope and documents reviewed depend on the nature of the assignment and requirements involved.
When Might a Business Need Due Diligence?
Due diligence may be relevant in situations such as:
- Investment or funding transactions
- Mergers or acquisitions
- Corporate restructuring
- Business or share transactions
- Lending and financing matters
- Strategic partnerships
- Corporate investigations or reviews
Conclusion
Secretarial Audit and Due Diligence can provide structured visibility into corporate records, compliance and other relevant information.
For businesses involved in important corporate transactions, a properly defined review scope can help stakeholders understand the information relevant to the matter being considered.
