The latest norms of markets regulator Sebi on secretarial audit will help improve transparency in corporate governance practices as well as empower company secretaries to report "everything" related to compliances, according to company secretaries' apex body ICSI.
Every listed entity and its material unlisted subsidiaries have to undertake secretarial audit and also submit a secretarial audit report along with its annual report with effect from the year ending March 31, 2019. The secretarial audit and the report has to be done by a practising company secretary, as per the Sebi.
Regarding the circular, the regulator said that would help improve governance and transparency.
"One of the most important component of (corporate) governance is transparency. You should be transparent and fair to your stakeholders. Transparency will improve as far as compliance and governance are concerned," ICSI President Ranjeet Pandey told PTI.
While secretarial audit is still done at companies, the report is submitted to a company's management is not in an elaborate format.
Acknowledging that accountability is less in the current framework for secretarial audit, Pandey said if general statements are given, then the point of interpretation becomes more than the substance.
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"Now, we (company secretaries) will have to be very clear about our thoughts about what we are reporting. It will be supported by annexures, which will be more detailed ones," he noted.
Generally, secretarial audit looks at compliances with respect to Companies Act, Sebi regulations, industrial and labour legislations as well as system and process of compliance.
The latest requirements put in place by the Sebi will provide more depth and quality to secretarial services, the ICSI President said, adding that the current three-page report format was more about giving static information.
"The detailed information which we (company secretaries) were submitting internally to the board was not coming into the public... Now, this will be made public and more transparent report. The qualitative aspect will be highlighted...," he said.
On a quarterly basis, he said that company secretaries are giving the audit report and on that basis the management is taking care and doing the needful.
"In the final reporting, the format is not that elaborate... the management generally comes to the company secretary and says this is not fitting into the format, then why are you reporting it. You don't report it.... now, everything will be reported. Company secretaries will be empowered," Pandey said.
The Institute of Company Secretaries of India (ICSI) has around 57,000 members.