Markets watchdog Sebi is “well within its rights” to regulate auditors with respect to activities under its regulations, a senior government official said amid chartered accountants’ apex body ICAI raising concerns about the proposal.
Corporate Affairs Secretary Injeti Srinivas also said that there will be no “cross cutting regulations”.
His comments come against the backdrop of Sebi proposing stricter norms for fiduciaries, including chartered accountants, cost accountants, company secretaries and valuers, in the securities market.
The proposed changes to the Sebi (Fiduciaries in the Securities Market) Regulations are likely to be discussed at the regulator’s board meeting on September 18.
“Sebi is well within its rights to have a regulatory control over auditors with respect of certifications which are required by Sebi under their Act and their regulations,” Srinivas told PTI in an interview.
Asserting that there is a “clear demarcating line”, he said that in every legislative framework, the corresponding regulators would regulate. “There will be no cross cutting regulations,” he noted.
The Corporate Affairs Secretary is also part of the Sebi board.
The Institute of Chartered Accountants of India (ICAI), which comes under the Corporate Affairs Ministry, has raised strong objections to Sebi’s proposal to consider auditors as fiduciaries.
In its submissions on the consultative paper on proposed amendments to the norms for fiduciaries, the ICAI had said that there is no specific statutory provision under the Sebi Act to act against auditors of listed companies, according to a source.
Another submission from the ICAI was that taking action against an individual for the same offence thrice under the ICAI Act, Companies Act and Sebi Act, is against the constitutional provisions.
However, Sebi has maintained that it is empowered to exercise jurisdiction over persons associated with the securities market, the source said.
The amended norms for fiduciaries would be applicable for entities that undertake third-party fiduciary duties, assignments and engagements under the securities law.
Once in place, the regulator would have more powers to take action against fiduciaries in case they have submitted false certificates, reports or violated regulations.
Source: Economic Times