SEBI vide its circular CIR/CFD/CMD1/27/2019 dated February 08, 2019 has specified Format for annual secretarial audit report and annual secretarial compliance report for equity listed entities and their material subsidiaries.
With regard to the report received from the Committee on Corporate Governance, constituted under the chairmanship of Shri Uday Kotak on October 05, 2017, Regulation 24A is introduced in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 w.e.f. 01.04.2019.
According to Regulation 24A, 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 specified with effect from the year ended March 31, 2019.
Wherein, the definition of “material subsidiary” has been amended to include a subsidiary, whose income or net worth exceeds 10% (ten percent) of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. Before amendment, the limit was of 20% (twenty percent).
In order to avoid duplication and compliance with the provisions of Regulation 24A of SEBI (LODR) 2015, the format of Secretarial Audit Report in Form No. MR-3 shall be used as the format of Annual secretarial audit report by every listed entity and its material unlisted subsidiaries.
In furtherance to strengthening the compliance by listed entities, Annual secretarial compliance report as per format specified by the SEBI (attached in the SEBI Circular as Annex-A) is required to be filed by the equity listed entities to the stock exchanges within 60 days of the end of the financial year. The Annual secretarial compliance report is basically a check by the Practising Company Secretary with regard to compliance of all applicable SEBI Regulations and circulars / guidelines issued thereunder. This Annual secretarial compliance report shall be applicable to the equity listed entities with effect from the financial year ended March 31, 2019 onwards.
With regard to Annual secretarial compliance report, the practising company secretary shall certify the following:
- That the equity listed entity has complied with the provisions of SEBI regulations and circulars/guidelines during the review period and shall also disclose the regulation/circular/guideline including specific clause that has not been complied with by the equity listed entity.
- The details of actions taken against the listed entity/ its promoters/ directors/ material subsidiaries either by SEBI or by Stock Exchanges (including under the Standard Operating Procedures issued by SEBI through various circulars.
- Details of the action which has been taken by the entity on the observations made by the Practicing Company Secretary in the previous secretarial compliance reports as well as audit report.
- Comment on such action taken by the listed entity.
Thus, we can say that all the listed entities shall file Annual secretarial compliance report in addition to Secretarial Audit Report (Form MR-3) from the financial year ended March 31, 2019 onwards. In simple words, for the F.Y. 2018-2019, the equity listed entity needs to file secretarial compliance report to the Stock Exchange by May 30, 2019 and annex MR-3 with its Annual Report prepared for the F.Y. 2018-2019.
The Circular can be read from the following link: https://taxguru.in/sebi/sebi-notifies-format-annual-secretarial-audit-report-compliance-report.html
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