 "Securities and Exchange Board of India, SEBI")
The Securities and Exchange Board of India (Sebi) has clarified norms on the appointment and tenure of secretarial auditors for listed companies.
The regulator has stated that the tenure of appointment of a secretarial auditor cannot be for a period less than five years. Further, the appointment of the secretarial auditor needs to be done at the annual general meeting (AGM) starting from the financial year 2025–26.
The market regulator issued frequently asked questions (FAQs) on the Listing Obligations and Disclosure Requirements (LODR) in this regard on Wednesday.
Industry experts said that the FAQs provide important clarifications, as many companies saw frequent changes or approvals for the appointment of secretarial auditors, which raised concerns around consistency and deeper checks of the listed company.
An individual company secretary can be appointed as a secretarial auditor for one term of five consecutive years, while a secretarial audit firm can be appointed for two terms of five years.
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“Any association of the individual or the firm as the secretarial auditor of the listed entity before March 31, 2025, shall not be considered for the purpose of calculating the tenure of the secretarial auditor under the LODR regulations,” said Sebi.
S N Ananthasubramanian, practising company secretary and former president, Institute of Company Secretaries of India (ICSI), said that the FAQs issued by Sebi provide much-needed clarity and aid in understanding the regulatory intent and purpose.
“It has also clarified unambiguously the non-audit services which can be rendered to the company in which the secretarial auditor is appointed. Incidentally, the list of services which can and cannot be rendered has also been provided by ICSI, as mandated in the FAQ,” added Ananthasubramanian.
Some of the prohibited businesses include investment advisory services, investment banking, outsourced compliance management, internal audit, among others.
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