Description

BSE introduces a framework for Trading Members to submit Action Taken Reports for non-compliances reported in internal audit reports, with specific deadlines and electronic filing requirements.

Summary

BSE has introduced a new framework for Trading Members to submit Action Taken Reports (ATR) for non-compliances identified in internal audit reports. This framework aims to provide ease of doing compliance and ensure timely closure of non-compliances. Trading Members must close all non-compliances within 2 months from the due date of internal audit report submission through electronically filed ATRs certified by empanelled internal auditors. The framework is applicable for internal audit reports from the half year ended September 30, 2025 onwards.

Key Points

  • Action Taken Reports must be submitted within 2 months from the end of the due date for internal audit report submission
  • ATR for Internal Audit Period ended March 31 due by July 31
  • ATR for Internal Audit Period ended September 30 due by January 31
  • ATRs must be certified by empanelled Internal Auditor confirming compliance status
  • Certification must cover at least one month period for sample verification
  • Electronic submission required through BEFS (BSE Electronic Filing System) under Internal Audit Report Module
  • Monetary penalties and disciplinary actions will be initiated for non-submission or incomplete closure
  • Framework complements existing SEBI requirements under Master Circular dated June 17, 2025

Regulatory Changes

This circular introduces a new compliance framework in consultation with SEBI that modifies the existing internal audit reporting process. Previously, Trading Members submitted internal audit reports on a half-yearly basis (by May 31 for March 31 period and November 30 for September 30 period) as per SEBI Circular Ref. No. MIRSD/DPSIII/Cir-26/08 dated August 22, 2008. The new framework adds a mandatory Action Taken Report requirement with specific closure timelines. The framework aligns with Clause 13.2.4 and Clause 13.2.5 of SEBI Master Circular dated June 17, 2025.

Compliance Requirements

For Trading Members:

  • Submit internal audit reports half-yearly (existing requirement)
  • Close all non-compliances reported in internal audit reports within 2 months from due date
  • Submit Action Taken Reports electronically through BEFS
  • Ensure ATRs are certified by empanelled Internal Auditor
  • Inform internal auditors about new requirements
  • Maintain compliance to avoid monetary penalties/disciplinary actions per Exchange notice no. 20251010-20 dated October 10, 2025

For Internal Auditors:

  • Certify Action Taken Reports confirming status of compliance
  • Conduct sample verification covering at least one month period
  • Ensure proper documentation for closure of non-compliances

Important Dates

  • Effective Date: Applicable for internal audit reports from half year ended September 30, 2025 onwards
  • July 31: Due date for ATR submission for Internal Audit Period ended March 31
  • January 31: Due date for ATR submission for Internal Audit Period ended September 30
  • Existing Internal Audit Report Due Dates:
    • May 31: For half year ended March 31
    • November 30: For half year ended September 30

Impact Assessment

Market Impact: Medium - Does not directly affect trading operations but enhances compliance oversight.

Operational Impact: High - Trading Members must implement new processes for tracking, closing, and reporting non-compliances within strict timelines. Requires coordination with internal auditors and implementation of electronic filing procedures through BEFS.

Compliance Impact: High - Creates additional compliance burden with strict deadlines and potential penalties. Trading Members must ensure internal audit findings are addressed promptly and documented properly. Failure to submit ATR or close observations will result in monetary penalties and disciplinary actions.

Benefits: The framework provides structured approach for compliance closure, reduces uncertainty about remediation timelines, and aligns with SEBI’s ease of doing business initiative.

Contact Information:

Impact Justification

Introduces new mandatory compliance framework for all Trading Members with strict deadlines and penalties for non-compliance, affecting internal audit reporting procedures.