Format for annual secretarial audit report and annual secretarial compliance report for listed entities and their material subsidiaries - SEBI - CIR/CFD/CMD1/27/2019

CIRCULAR CIR/CFD/CMD1/27/2019 February 08, 2019 To All Listed Entities (whose equity shares are listed) and their material subsidiaries All the Recognized Stock Exchanges Institute of Company Secretaries of India (ICSI) Madam / Sir, Sub: Format for annual secretarial audit report and annual secretarial compliance report for listed entities and their material subsidiaries 1. The Committee on Corporate Governance, constituted under the Chairmanship of Shri Uday Kotak, in its report dated October 05, 2017, recommended the following in view of the criticality of secretarial functions to efficient board functioning: a. Secretarial audit to be made compulsory for all listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ( Regulations ) in line with the provisions of the Companies Act, 2013. b. Secretarial audit to be extended to all material unlisted Indian subsidiaries in line with the recommendations of the Committee on strengthening group oversight and improving compliance at a group level for listed entities. 2. The aforesaid recommendations were accepted and in order to implement the same, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been amended to include the following Regulation 24A: 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. 3. Accordingly, the following shall be complied with by a listed entity and its material unlisted subsidiaries, as applicable: a. Annual secretarial audit report: (i) Currently, Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires Secretarial Audit by Practicing Company Secretaries (PCS) for listed companies and certain unlisted companies above a certain threshold in From No. MR-3. (ii) In order to avoid duplication, the listed entity and its unlisted material subsidiaries shall continue to use the same Form No. MR-3 as required under Companies Act, 2013 and the rules made thereunder for the purpose of compliance with Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as well. b. Annual secretarial compliance report: (i) While the annual secretarial audit shall cover a broad check on compliance with all laws applicable to the entity, listed entities shall additionally, 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 this circular. (ii) The format for the annual secretarial compliance report is placed at Annex-A. (iii) The annual secretarial compliance report in the aforesaid format shall be submitted by the listed entity to the stock exchanges within 60 days of the end of the financial year. c. The listed entities and their material subsidiaries shall provide all such documents/information as may be sought by the PCS for the purpose of providing a certification under the Regulations and this circular. 4. ICSI may consider issuing a guidance note to Practising Company Secretaries to enable them to undertake certifications in accordance with the Regulations and this circular in letter and in spirit. 5. The Stock Exchanges are advised to bring the provisions of this circular to notice of the listed entities and also to disseminate on their websites. 6. This circular shall come into force as under: a. 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. b. With respect to the annual secretarial compliance report, applicable to listed entities, with effect from the financial year ended March 31, 2019 onwards. 7. The circular is issued in exercise of the powers conferred under sections 11 and 11A of the Securities and Exchange Board of India Act, 1992 read with Regulations 24A and 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 8. The circular is available on SEBI website at www.sebi.gov.in under the category 'Legal Circulars'. Pradeep Ramakrishnan Deputy General Manager Compliance and Monitoring Division-1 Corporation Finance Department +91-22-26449246 [email protected] 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.: