SEBI recently released a consultation paper proposing a series of regulatory changes aimed at strengthening corporate governance at listed companies. The key proposals include revising the annual secretarial compliance report format, setting eligibility criteria for appointing auditors, and introducing monetary thresholds for related party transaction (RPT) approvals. These changes are intended to enhance compliance and transparency in corporate practices. The paper proposes for refining the Annual Secretarial Compliance Report (ASCR) to provide clearer confirmations of compliance with securities laws. It also proposes making the ASCR a mandatory part of the annual report and streamlining exemptions related to corporate governance certifications and secretarial auditor reports. It also recommended introducing eligibility criteria for statutory auditors in the LODR (Listing Obligations and Disclosure Requirements) Regulations, aligning them with the Companies (Audit and Auditors) Rules, 2014. This move aims to ensure that auditors' qualifications and experience match the size and complexity of listed entities.

SEBI has recommended setting monetary thresholds for related party transactions (RPTs) conducted by subsidiaries of listed entities to determine when audit committee approval is required. For subsidiaries with an established financial history, the lower of 10% of turnover or a monetary threshold (Rs. 1,000 crore for main-board listed firms and Rs. 50 crore for SME-listed subsidiaries) would apply. For subsidiaries without a financial track record, the threshold would be 10% of standalone net worth of the subsidiary, certified by a chartered accountant, or the same monetary limits.

Late date of submission of comments is 7^th March, 2025.

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