FAQs on Secretarial Compliance Report By CS Dhaval Gusani


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 February 8, 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 the Secretarial Audit Report

  • Every Listed Entity;
  • Material unlisted Subsidiary of Listed Entity;
  • Every Public Company having share capital more than Rs. 50 Crore;
  • Every Public Company having turnover more than Rs. 250 Crore;
FAQ-2: What is Material Unlisted Company?

Ans: “Material Unlisted Subsidiary” 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 the 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 the SEBI regulation angel.
 
FAQ-5: What is the difference between the Secretarial Audit and the 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 the 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 the 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 the listed entity on deviation pointed out in a previous compliance report.
 
FAQ-9: What is the format of the Secretarial Compliance Report?

 
FAQ-10: What is the time limit of Submission of the Secretarial Compliance Report?

Ans: Within 60 days from the closure of Financial Year.
 
FAQ-11: Whether the 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 the Annual Report after the Secretarial Audit Report.
 
FAQ-12: Can the same PCS who performs Secretarial Audit can issue the 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. 

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