The weekly messenger | Edition 01.20

Accounting News

FASB issues standard to improve accounting for Income Taxes – 18 December 2019

The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) that is expected to reduce cost and complexity related to accounting for income taxes. The ASU removes specific exceptions to the general principles in Topic 740—Income Taxes in Generally Accepted Accounting Principles (GAAP). The ASU also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, etc.
 
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Regulatory News

Relaxation of additional fees and extension of last date of filing of CRA-4 (cost audit report) for FY 2018-19 under the Companies Act, 2013 – 30 December 2019

The Ministry of Corporate Affairs (MCA), pursuant to the several representations received from various stakeholders, has further extended the last date of filing CRA-4 (cost audit report) for all eligible companies for the Financial Year (FY) 2018-19 from 31 December 2019 till 29 February 2020.  
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Relaxation of additional fees and extension of last date of filing of Form No. BEN-2 and BEN-1 under the Companies Act, 2013 – 01 January 2020

The MCA has also extended the time limit for filing of e-form BEN – 2 ‘Return to the Registrar in respect of declaration under Section 90’ from 31 December 2019 to 31 March 2020. Consequently, the date of filing of form BEN – 1 ‘Declaration by the beneficial owner who holds or acquires significant beneficial ownership in shares’ may be construed accordingly.
 
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Format on Statement of Deviation or Variation for proceeds of public issue, rights issue, preferential issue, QIP etc. – 24 December 2019

In order to bring consistency in the format and frequency of reporting as required under regulation 32 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015, SEBI has prescribed the uniform format for disclosing the statement or deviation on a quarterly basis indicating deviations in the use of proceeds of public issue, rights issue, preferential issue, Qualified Institutions Placement (QIP)  etc. and the category wise variation between projected utilisation of funds and the actual utilisation of funds.
 
The first such submission shall be made by the listed entities for the quarter ending 31 December 2019 and subsequent submissions shall be made quarterly within 45 days of end of each quarter/60 days from the end of the last quarter of the financial year along with the declaration of financial results.
 
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SEBI (LODR) (Fifth Amendment) Regulations, 2019 – 26 December 2019

The SEBI has further amended the SEBI (LODR) Regulations, 2015 with the SEBI (LODR) (Fifth Amendment) Regulations, 2019, wherein the following changes have been introduced:

• As per erstwhile regulation 34(2)(f), the annual report of top 500 listed entities shall contain a business responsibility report describing the initiatives taken by them from an environmental, social and governance perspective. Now the aforesaid business responsibility statement is to be provided by top 1000 listed entities.
• After sub-regulation (2) of regulation 42 which provides that a listed entity shall give notice in advance of atleast seven working days(excluding the date  of  intimation  and  the  record  date) to  stock exchange(s)  of  record  date  specifying the purpose of the record date, the following proviso has been inserted, namely- Provided that in the case of rights issues, the listed entity shall give notice in advance of atleast three working days (excluding the date of intimation and the record date).’

These regulations came into force on the date of their publication in the official gazette i.e., 26 December 2019.
 
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SEBI (ICDR) (Sixth Amendment) Regulations, 2019 – 26 December 2019

The SEBI has amended the SEBI (Issue of Capital and Disclosure Requirements (ICDR)) Regulations, 2018 with the SEBI (ICDR) (Sixth Amendment) Regulations, 2019, wherein the SEBI has made certain modifications in the aforesaid regulations which includes:

• Regulation 70 ‘Disclosures in the draft letter of offer and letter of offer’;
• Regulation 76 ‘ASBA’;
• Regulation 77A ‘Credit of rights entitlements and allotment of specified securities’ (newly added);
• Regulation 84 ‘Issue-related advertisements’;
• Regulation 87 ‘Period of subscription’;
• Regulation 88 ‘Payment options’;
• Schedule V ‘Formats of Due Diligence Certificates’;
• Schedule VI ‘Disclosures in the Offer Document, Abridged Prospectus and Abridged Letter of Offer’.

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Extension of relaxation on the guidelines to NBFCs on securitisation transactions – 31 December 2019

The Reserve Bank of India (RBI) had issued a notification in November 2018, wherein in order to encourage Non-Banking Financial Companies (NBFCs) to securitise/assign their eligible assets, it was decided to relax the Minimum Holding Period (MHP) requirement for originating NBFCs, in respect of loans of original maturity above 5 years, to receipt of repayment of six monthly instalments or two quarterly instalments (as applicable), subject to the prudential requirement that ‘Minimum Retention Requirement (MRR) for such securitisation/assignment transactions shall be 20% of the book value of the loans being securitised/20% of the cash flows from the assets assigned’.
The above dispensation was earlier applicable to securitisation/assignment transactions carried out during a period of six months from the date of issuance of the original circular i.e. 29 November 2018.
 
Consequently, in May 2019, the RBI decided to extend the dispensation provided therein till 31 December 2019.
 
Now, once again the aforesaid relaxation has been extended till 30 June 2020.
 
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