SEBI establishes new standards with detailed regulations for Secretarial Auditors
January 08, 2025

Securities and Exchange Board of India (“SEBI”) vide Notification No. SEBI/LAD-NRO/GN/2024/218 had introduced ‘Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2024’ to establish detailed norms governing the appointment, re-appointment, and removal of secretarial auditors in listed entities, effective from December 31, 2024.
Prior to the amendment, there were no provisions prescribed either in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 or in the Companies Act 2013, specifying criteria for appointment or reappointment or removal for secretarial auditors of a listed entity.
Post the enactment of the amendment, SEBI has revised Regulation 24A, with the following:
- Requirement of Secretarial Audit [Regulation 24A (1)(a)]
- Every Listed Entity and its material unlisted subsidiaries in India must conduct a Secretarial Audit;
- The Secretarial Auditor must be a Peer Reviewed Company Secretary;
- The Secretarial Audit Report should be attached to the entity's annual report.
- Key Definitions [Regulation 24A(1)(a)(i) and Regulation 24A(1)(a)(ii)]
- Secretarial Auditor: A practicing Company Secretary or a firm of Company Secretaries conducting the audit;
- Peer Reviewed Company Secretary: A Company Secretary who holds a valid peer review certificate from the Institute of Company Secretaries of India.
- Appointment & Re-appointment of Secretarial Auditor [Regulation 24A(1)(b)]
A Listed Entity shall appoint or re-appoint:
- An individual Secretarial Auditor who can serve only 1 (one) term of 5 (five) consecutive years; or
- A Secretarial Audit firm as Secretarial Auditor which can serve for up to 2 (two) terms of 5 (five) consecutive years.
- Shareholder approval for appointment/re-appointment
- Approval of shareholder is required for the appointment/re-appointment of individual Secretarial Auditor or Secretarial Audit firmin its Annual General Meeting (AGM).
- Restrictions on Re-appointment [Proviso to Regulation 24A(1)(b)]
- If a Secretarial Audit firm has a common partner with another firm whose term has ended, they cannot be reappointed to the same listed entity for 5 (five) years.
- Removal or Resignation of Secretarial Auditor [Proviso to Regulation 24A(1)(b)]
- The listed entity can remove the Secretarial Auditor with shareholder approval at an AGM.
- The Secretarial Auditor can resign anytime from their position.
- Filling Casual Vacancy [Regulation 24A(1)(c)]
- If the Secretarial Auditor resigns, dies, or is disqualified, the Board of Directors must fill the vacancy within 3 (three) months and the new auditor will serve until the next AGM.
- Eligibility, Qualifications and Disqualifications of Secretarial Auditor [Regulation 24A(1)(1A)]
- A person shall be eligible for appointment as a Secretarial Auditor of the listed entity only if such person is a Peer Reviewed Company Secretary and has not incurred any of the disqualifications as specified by the Board.
- If a firm, including a limited liability partnership, is appointed as the Secretarial Auditor for the listed entity, only the partners who are Peer Reviewed Company Secretaries will be authorized to act and sign on behalf of the firm.
- Secretarial Auditor Not to Render Certain Services [Regulation 24A(1B)]
- A Secretarial Auditor can only provide additional services to the listed entity if the Board of Directors approves them.
- The auditor cannot provide certain services as specifically prohibited by the Board.
- Compliance from April 1, 2025 [Regulation 24A (1C)]
- From April 1, 2025, every listed entity must ensure they follow the rules for the appointment, reappointment, and continuation of the Secretarial Auditor (as outlined in sub-regulations (1), (1A), and (1B)).
- Any appointment or association of the Secretarial Auditor before March 31, 2025, will not count towards calculating the tenure limits.
Source:
Securities and Exchange Board of India, Notification No. SEBI/LAD-NRO/GN/2024/218 dated 12th December 2024. The official notification can be accessed at below link:
https://www.sebi.gov.in/legal/regulations/dec-2024/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-third-amendment-regulations-2024_89956.html