SEBI comes out with format for annual secretarial audit of listed entities and their material subsidiaries

Sebi on February 8, 2019, came out with the format for listed entities for preparing their annual secretarial audit and compliance reports to implement the recommendations put forth by the Kotak Committee with regard to Secretarial Audit.

Every listed entity and its material unlisted subsidiaries incorporated in India shall undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed with effect from the year ended March 31, 2019.

Welcoming the steps of SEBI, Institute of Company Secretaries of India (ICSI) said that secretarial audit will help improve transparency in corporate governance practices as well as empower company secretaries to report “everything” related to compliances.

Important provisions of new Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 introduced by SEBI.

  • Annual secretarial audit report:

The listed entity and its unlisted material subsidiaries shall provide Secretarial Audit Report in Form No. MR-3 as required under Companies Act, 2013 and the rules made thereunder for the purpose of compliance with Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as well.

Note: Currently, Section 204 of the Companies Act, 2013 read with relevant rules mandates for Secretarial Audit Report to be issued by Practicing Company Secretaries (PCS) for listed companies and certain unlisted companies above a certain threshold in Form No. MR-3.

  • Annual Secretarial Compliance Report:

1. While the annual secretarial audit shall cover a broad check on compliance with all laws applicable to the entity, listed entities shall additionally, on an annual basis, require a check by the PCS on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, consequent to which, the PCS shall submit a report to the listed entity in the manner specified in this circular.

2. The format for the annual secretarial compliance report is provided in the Circular itself.

3. The annual secretarial compliance report in the aforesaid format shall be submitted by the listed entity to the stock exchanges within 60 days of the end of the financial year.

Important Dates

Compliance Due Date Explanation
Annual Secretarial Audit Report To form part of Annual Report of Listed Company and its material subsidiary companies Applicable from the Financial Year ending on March 31, 2019
Annual Secretarial Compliance Report Within 60 days from the end of Financial Year.

i.e. May 30th every year.

Applicable to listed entities, with effect from the financial year ended March 31, 2019 onwards.

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