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The Committee on Corporate Governance (also known as Kotak Committee) had recommended in its report dated 5th October, 2017, that Secretarial Audit be made compulsory for all listed entities and its material unlisted subsidiary companies. The recommendation was accepted by Notification dated 9th May, 2018 by which a new regulation has been inserted in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,

Regulation 24A: 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.”

As per Regulation 16, as amended by the aforesaid Notification,material subsidiary” shall mean a subsidiary, whose income or net worth exceeds ten percent of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.

Currently, as per Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed companies and certain unlisted companies above a certain threshold shall annex with its Board’s report a secretarial audit report, given by a company secretary in practice (PCS), in Form No. MR-3.

SEBI has issued a Circular dated 8th February, 2019 has stated that, for the purpose of compliance of Regulation 24A the same Form No. MR-3 as required under Companies Act, 2013, shall be used.

Further, in addition to the Secretarial Audit Report, listed entities shall 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 the Circular. The listed entity shall submit to the stock exchanges the Annual Compliance Report within 60 days of the end of the financial year.

To summarize now,

  • Every Listed Company and every material unlisted subsidiary (incorporated in India) of listed company has to submit Secretarial Audit Report in Form MR-3 in its Annual Report.
  • Every Listed Company has to submit an Annual Compliance Report to the Stock Exchanges within 60 days of the end of the Financial Year.

The reports have to be made from the financial year ended March 2019, onwards.


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July 2024