File DPT-3 and MSME-1 before it’s late

Do not forget to file DPT-3 and MSME-1 before it is late. Speaking of timely compliance, there are recent amendments on secretarial compliances made by SEBI.

In this edition, we will be seeing about the Annual Secretarial Audit Report and Annual Secretarial Compliance Report for Listed Entities and their material subsidiaries. This topic is suggested by CS Gayatri Bhide-Phatak, Proprietor of G.S.Bhide & Associates, Practicing Company Secretaries. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

Saranya Deivasigamani,
CEO

Secretarial Audit & Secretarial Compliance Report

To regulate the secretarial functions and compliance management, the Committee on Corporate Governance, constituted under the Chairmanship of Shri Uday Kotak, in its report dated October 05, 2017, recommended to add Secretarial Compliance report in addition to regular Secretarial Audit report by ever listed Company. The Committee has recommended

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.

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.

SEBI accepted the aforesaid recommendations and amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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.”

Accordingly, every listed entity and its material unlisted subsidiaries, as applicable has to comply with the following:

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.

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.

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.
ICSI may consider issuing a guidance note to Practising Company Secretaries to enable them to undertake certifications in accordance with the Regulations and in letter and in spirit.
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.
This amendments 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.

Key points to note in the annual secretary compliance report:

The PCS has to examine the following:

All documents and records are made available and provided by the Company.
The filings/ submissions made by the listed entity to the stock exchanges,
Website of the listed entity,
Any other document / filing, as may be relevant, which has been relied upon to make this certification, for the year in respect of compliance with provisions of SEBI Act and SCRA.

The specific Regulations, whose provisions and the circulars/ guidelines issued thereunder, should be examined, include:-

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015;
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018;
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
SEBI (Buyback of Securities) Regulations, 2018;
SEBI (Share Based Employee Benefits) Regulations, 2014;
SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
SEBI (Issue and Listing of Non-Convertible and Redeemable Preference Shares) Regulations,2013;
SEBI (Prohibition of Insider Trading) Regulations, 2015;
(other regulations as applicable).

Click here for ICSI guidelines / SEBI Cicular

Legal Term

Transpired

(of a secret or something unknown) come to be known; be revealed.

MCA Updates

SEBI Updates

RBI Updates

Extension of relaxation on the guidelines to NBFCs on securitisation transactions.

IT Updates

GST Updates

No major updates.