Additional affirmations by Practicing Company Secretaries (PCS) in Annual Secretarial Compliance Report (ASCR)

As per Regulation 24A of SEBI (LODR) Regulation,2015 the Annual Secretarial Compliance report is applicable to all listed entities. This report is to be submitted by the listed entities to the stock exchange(s) within sixty days from end of the financial year. ASCR postulates for independent verification of records, books, papers and documents by a Company Secretary in Practice to check the compliance status of the company with provisions of all applicable SEBI laws, Regulations and circulars/guidelines issued thereunder.

SEBI vide circular no. CIR/CFD/CMD1/27/2019 dated February 08, 2019 issued the format of the Annual secretarial compliance report for listed entities and their material subsidiaries which was effective from March 31, 2019 onwards.

Background

With a view to further improve corporate governance standards now Bombay Stock Exchange ('BSE') and National Stock Exchange ('NSE') ['Stock Exchanges'] have revised the format for ASCR.

Amendment: Following additional certifications have now been added to Annual Secretarial Compliance Report

• Secretarial Standard: The compliances of listed entities are in accordance with the Auditing Standards issued by ICSI, namely CSAS-1 to CSAS-3: Auditing Standards need to be complied with by the secretarial auditor. But here obligation is shifted to listed entity to comply with this provision. This needs to be reviewed by Stock Exchanges again.
• Adoption and timely updation of the Policies: All applicable policies under SEBI Regulations are adopted with the approval of the board of directors of the listed entities. All the policies are in conformity with SEBI Regulations and have been reviewed & in a timely updated as per the regulations/circulars/guidelines issued by SEBI.
• Maintenance and disclosures on Website: The Listed entity is maintaining a functional website. Timely dissemination of the documents/ information under a separate section on the website. Web links provided in annual corporate governance reports under Regulation 27(2) are accurate and specific which redirect to the relevant document(s)/ section of the website.
• Disqualification of Director: None of the Director of the Company are disqualified under Section 164 of the Companies Act, 2013.
• To examine details related to Subsidiaries of listed entities: Identification of material subsidiary companies. Requirements with respect to the disclosure of material as well as other subsidiaries. Identification of material subsidiaries especially at the end of the financial year would now become mandatory as it would now be subject to audit.
• Preservation of Documents: The listed entity is preserving and maintaining records as prescribed under SEBI Regulations and disposal of records as per Policy of Preservation of Documents and Archival policy prescribed under SEBI LODR Regulations, 2015. Preservation of documents is mandated to be done as per Archival Policy framed as per Reg 9 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further, there are certain records that are required to be kept permanently by listed entity. It now needs to be checked whether all the above-referred records have been kept updated.
• Performance Evaluation: The listed entity has conducted a performance evaluation of the Board, Independent Directors and the Committees at the start of every financial year as prescribed in SEBI Regulations.
• Related Party Transactions: The listed entity has obtained prior approval of the Audit Committee for all Related party transactions. In case no prior approval is obtained, the listed entity shall provide detailed reasons along with confirmation of whether the transactions were subsequently approved/ratified/rejected by the Audit committee.
• Disclosure of events or information: The listed entity has provided all the required disclosure(s)under Regulation 30 along with Schedule III of SEBI LODR Regulations, 2015 within the time limits prescribed thereunder.
• Prohibition of Insider Trading: The listed entity is in compliance with Regulation 3(5) & 3(6) SEBI (Prohibition of Insider Trading) Regulations, 2015
• Actions taken by SEBI or Stock Exchange(s), if any: No Actions taken against the listed entity/ its promoters/directors/ subsidiaries either by SEBI or by Stock Exchanges (including under the Standard Operating Procedures issued by SEBI through various circulars) under SEBI Regulations and circulars/ guidelines issued thereunder
• Additional Non-compliances, if any: No any additional non-compliance observed for all SEBI regulations/circular/guidance notes etc.

Stock Exchanges have further clarified that Observations/Remarks by PCS are mandatory if the Compliance status is provided as 'No' or 'NA'

Stock Exchanges have further released the Revised Format of ASCR. The new format of ASCR is effective from the financial year ending March 31, 2023 onwards.

Copy of the NSE circular in this regard can be accessed at below-mentioned link:
Click Here

Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement