The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been amended to include the following 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.
Secretarial Compliance Report
SEBI also come out with the circular CIR/CFD/CMD1/27/2019 date 08th¬†February, 2019 mandating all listed companies to submit, in addition to Secretarial Audit Report, Secretarial Compliance Report to the stock exchanges within 60 days of closure of financial year.
¬†FAQ -1:¬†Secretarial Audit applies to whom?
Ans: The following class of companies requires Secretarial Audit Report
FAQ-2:¬†What is Material Unlisted Company?
Ans: ‚ÄúMaterial Unlisted Subsidiary‚ÄĚ¬†means a subsidiary of a listed company whose income or net worth exceeds 10 % of the consolidated income or net worth, respectively, of the Company and its Subsidiaries in the immediately preceding accounting year.
FAQ-3:¬†What is the format of Secretarial Audit Report?
Ans: Format of Secretarial Audit Report will continue to be MR-3.
FAQ-4: What is Secretarial Compliance Report?
Ans: It is report on compliance of SEBI act, regulations, circulars, guidelines etc. So, it specifically deals with SEBI regulation angel.
FAQ-5:¬†What is the difference between Secretarial Audit and Secretarial Compliance Report?
Ans:¬†Secretarial Audit covers broad check on compliances of overall applicable acts to the Company like SEBI Act, Companies Act, Depositors Act, FEMA, SCRA and other industry specific laws while Secretarial Compliance Report covers only SEBI Act and its regulations, circulars issued thereunder.
FAQ-6: Who will issue Secretarial Compliance Report?
Ans:¬†A whole time Practicing Company Secretary.
FAQ-7:¬†Secretarial Compliance Report applies to whom?
Ans:¬†Every Listed Entity. (Not applicable to Material Unlisted Subsidiary)
FAQ-8:¬†What points must be kept in mind while issuing Secretarial Compliance Report?
Ans: A PCS must independently check and track compliance with the applicable SEBI regulations. He/she has to report on applicable SEBI regulations, its compliance, deviation, if any and his/her independent remark of particular deviation. A PCS has to not only audit previous F.Y but he/she has to comment on action taken by listed entity on deviation pointed out in previous compliance report.
FAQ-9:¬†What is the format of Secretarial Compliance Report?
FAQ-10:¬†What is the time limit of Submission of Secretarial Compliance Report?
Ans:¬†Within 60 days from the closure of Financial Year.
FAQ-11:¬†Whether Secretarial Compliance Report is required to be filled with RoC?
Ans:¬†No. As of now, it is required to be filed only with Stock Exchanges. However, it is advisable to attach it in MGT-7 and must be incorporated in Annual Report after Secretarial Audit Report.
FAQ-12:¬†Can same PCS who performs Secretarial Audit can issue Secretarial Compliance Report?
Ans:¬†Yes. There are no restrictions in the SEBI circular for the same. However, it is advisable to retain different PCS for Secretarial Audit and Secretarial Compliance Report to independent check and balance of each other.
FAQ-13:¬†From When, Secretarial Compliance Report is applicable?
Ans:¬†From F.Y ending 31st¬†March, 2019.