Annual Secretarial Compliance Report

Introduction

On the recommendations made by the Uday Kotak Committee of Corporate governance in its report dated October 05, 2017, SEBI inserted a new regulation i.e. Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) and made effective from the financial year ended March 31, 2019 in the SEBI(LODR) Regulations. SEBI mandated the submission of Annual Secretarial Compliance Report by all the Listed entities and their Material Subsidiaries. 

What is

the Annual Secretarial Compliance Report?

The Annual Secretarial Compliance Report is a report furnished by a Practicing company's secretary or compliance officer of the company that outlines the company's compliance with various applicable SEBI Regulations and circulars/ guidelines issued thereunder. It is a document that summarizes a company's compliance check mechanism. 

Applicability

The Annual Secretarial Compliance Report shall be submitted by every listed entity and all its material unlisted subsidiaries. 

Listed Entity

: According to Section 2(52) of the Companies Act 2013 listed company means a company which has any of its securities listed on any recognized stock exchange.

Material Subsidiary: According to Regulation 16(1)(c) of SEBI(LODR) “material subsidiary” shall mean 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. 

The annual secretarial compliance report shall be submitted by the listed entity to the stock exchanges where the securities of the company are listed, annually within 60 days of the end of the financial year in the format specified by SEBI.   

Why Annual Secretarial Compliance Report? 

The major objective of Annual Secretarial Compliance Report is to Ensure that all the necessary compliances with respect to SEBI laws and regulations are complied by the Listed entity and to identifying the areas of non-compliance.  

How is Secretarial Compliance Report Difference from Secretarial Audit Report? 

The Secretarial Audit Report and the Secretarial Compliance Report are two distinct reports.   

Secretarial Audit Report:

The Secretarial Audit Report is a comprehensive report that evaluates the compliance of a company. 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. 

Secretarial Compliance Report:

The Secretarial Compliance Report is a report that evaluates the compliance of a company with the applicable laws, rules, and regulations only with respect to SEBI.  

So, Secretarial Audit involves a comprehensive examination of a company's compliance with various acts applicable to it, such as the SEBI Act, Companies Act, Depositors Act, FEMA, SCRA, and other laws specific to its industry. On the other hand, the Secretarial Compliance Report focuses only on the SEBI Act and its related regulations and circulars. 

Conclusion

Realizing the need of growing Compliance Reporting mechanism SEBI mandated the Annual Secretarial Compliances report. The report acts as an important tool for companies to ensure that they are operating in compliance with applicable SEBI laws, regulations and promoting good corporate governance.  

SimplyCorp

is a solution that offers comprehensive and end-end management of Corporate Governance & Secretarial Compliances covering all stages of entity life cycle. If you want to know more on the compliance requirements and outsource the same to us, please write to our Product Head – Vaishali Vohra at the mail ID vaishali@simplybiz.in Lead – Corporate Compliances  at vanaja@simplybiz.in or SimplyCorp@simplyBiz.in