The Securities and Exchange Board of India (SEBI) vide notification dated 18th October 2019, has issued Circular on resignation of statutory auditors from listed entities and material subsidiaries . This Circular shall come into force with immediate effect.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 lays down certain disclosures to be made as part of the notice to the shareholders for an AGM, where the statutory auditors are proposed to be appointed or re-appointed, including their terms of appointment. The information concerning changes of auditors are treated to be significant for investors to make informed decisions.
Sebi has pointed out certain conditions to be complied upon resignation of the statutory auditor of a listed entity or material subsidiary with respect to limited review or audit report as per SEBI LODR Regulations, those are:-
- Conditions while appointing/re-appointing an auditor:
- As per the norms, in case the auditor resigns within 45 days from the end of quarter of a financial year, then there’s a requirement to submit the limited review or audit report for such quarter. In case if he resigns after 45 days he shall submit the limited review or audit report for such quarter as well as for the next quarter.
- If the auditor has signed the limited review or audit report for the first three quarters of a financial year, then the auditor shall, before such resignation, issue the limited review or audit report for the last quarter of such financial year as well as the audit report for such financial year
- Other conditions relating to resignation shall include
- Reporting of concerns with respect to the listed entity or its material subsidiary to the Audit Committee.
- Disclaimer in case of non-receipt of information.
The listed entity /its material subsidiary shall obtain information from the auditor in the format specified in Annexure A and during the period from when the auditor proposes to resign till the auditor submits the report for such quarter, the listed entity shall continue to provide all such documents necessary for the audit. And the concerns raised by the resigning statutory auditors have to be considered by the Audit Committee without any delay, and the outcome of such deliberations along with its views have to be informed to the management
4. In absence of Audit Committee, the Board of Directors of the company is to comply with this law.
5. In case the auditor is rendered disqualified due to operation of any condition mentioned in Section 141 of the Companies Act, 2013, then the provisions of this Circular shall not apply
Click here to read the Circular
