Secretarial Audit Report and Secretarial Compliance Report By CS Aakansha Singh


The committee on Corporate Governance, constituted under the Chairmanship of Mr.Uday Kotak in its report dated October 5, 2017, recommended following in view of efficient board functioning:
 
Secretarial Audit:

a) It was made compulsory for all listed entities under SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 along with the provisions of The Companies Act, 2013.

b) Also applicable to all material unlisted Indian subsidiaries in order to improve compliance at a group level for listed entities.
 
As per Regulation 16(c) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 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.
 
In order to implement the same, the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 have been amended to include the following Regulation 24A:
 
“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
 
Accordingly following shall be complied by the listed entity and its material unlisted subsidiaries, as applicable:
 
A. Annual Secretarial Audit Report-

I. 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 company and
  • Every public company having paid up share capital of Rs. 50 Crores or more or Every public company having a turnover of Rs. 250 Crore or more.
Requires secretarial audit by Practicing Company Secretaries (PCS) in Form MR-3

II. In order to avoid duplication, Both listed entity and unlisted material subsidiaries shall continue to use the same Form MR-3 as required under the Companies Act for the purpose of compliance of Regulation 24A.
 
B. Annual Secretarial Compliance Report-

I. As per SEBI circular dated: 8th Feb, 2019 the format for the annual secretarial compliance report is mentioned asAnnex-A in the circular.


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


III. SEBI circular shall come into force as under

  • With respect to the annual secretarial audit report, in the annual reports of the listed entities and the material unlisted subsidiaries from the financial year ended March 31, 2019, onwards
  • With respect to the annual secretarial compliance report, applicable to listed entities, with effect from the financial year ended March 31, 2019, onwards.
SEBI vide its circular dated 8th February, 2019 has disclosed the format for annual secretarial audit report and annual secretarial compliance report for listed entities and their material subsidiaries in Annex-A. Which is mentioned below.
 
Annex A
(On the letter head of the Practicing Company Secretary)
Secretarial compliance report of [•] [Name of the listed entity] for the year ended ____

I/We……………. have examined:

(a) all the documents and records made available to us and explanation provided by [•] [Name of the listed entity] (“the listed entity”),

(b) the filings/ submissions made by the listed entity to the stock exchanges,

(c) website of the listed entity,

(d) any other document/ filing, as may be relevant, which has been relied upon to make this certification,
 
for the year ended [?] (“Review Period”) in respect of compliance with the provisions of:

(a) the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and the Regulations, circulars, guidelines issued thereunder; and

(b) the Securities Contracts (Regulation) Act, 1956 (“SCRA”), rules made thereunder and the Regulations, circulars, guidelines issued thereunder by the Securities and Exchange Board of India (“SEBI”);
 
The specific Regulations, whose provisions and the circulars/ guidelines issued thereunder, have been examined, include:-

(a) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

(b) Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018;

(c) Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(d) Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018;

(e) Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;

(f) Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(g) Securities and Exchange Board of India(Issue and Listing of Non-Convertible and Redeemable Preference Shares) Regulations,2013;

(h) Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(i) …………(other regulations as applicable) and circulars/ guidelines issued thereunder;

(Note: The aforesaid list of Regulations is only illustrative. The list of all SEBI Regulations, as may be relevant and applicable to the listed entity for the review period, shall be added.)

and based on the above examination, I/We hereby report that, during the Review Period:
 
(a) The listed entity has complied with the provisions of the above Regulations and circulars/ guidelines issued thereunder, except in respect of matters specified below:-
 

Sr.No

Compliance Requirement (Regulations/ circulars / guidelines including specific clause)

Deviations

Observations/ Remarks of the Practicing Company Secretary

 

 

 

 

 

 

 

 

 
b.) The listed entity has maintained proper records under the provisions of the above Regulations and circulars/ guidelines issued thereunder insofar as it appears from my/our examination of those records.
 
c.) The following are 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)under the aforesaid Acts/ Regulations and circulars/ guidelines issued thereunder:
 

Sr. No.

 

Action taken by

 

Details of violation

 

Details of action taken E.g. fines, warning letter, debarment, etc.

 

Observations/ remarks of the Practicing Company Secretary, if any.

 

 

 

 

 

 

 

 

 

 

 

 
d.) The listed entity has taken the following actions to comply with the observations made in previous reports:
 

Sr. No.

 

Observations of the Practicing Company Secretary in the previous reports

 

Observations made in the secretarial compliance report for the year ended…

(The years are to be mentioned)

Actions taken by the listed entity, if any

 

Comments of the Practicing Company Secretary on the actions taken by the listed entity

 

 

 

 

 

 

 

 

 

 

 

 
(Note:
  1. Provide the list of all the observations in the report for the previous year along with the actions taken by the listed entity on those observations.
  2. Add the list of all observations in the reports pertaining to the periods prior to the previous year in case the entity has not taken sufficient steps to address the concerns raised/ observations.
E.g. In the report for the year ended 31st Mar, 2021, the PCS shall provide a list of:
  • all the observations in the report for the year ended 31st Mar, 2020 along with the actions taken by the listed entity on those observations.
  • the observations in the reports pertaining to the year ended 31st Mar,2020 and earlier, in case the entity has not taken sufficient steps to address the concerns raised/ observations in those reports.)
 
Place:
Signature:
Date:
 
Name of the Practicing Company Secretary
ACS/ FCS No.:
C P No.:

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