The weekly messenger: Edition 02.16

Accounting news

Companies (Accounts) Amendment Rules- 28 July 2016

The Ministry of Corporate Affairs (MCA) has issued these Rules (the Companies (Accounts) Amendment Rules, 2016).

As per the existing provisions of the Companies Act 2013 (the Act 2013), the consolidated financial statements of the company are required to be prepared by the company as per Schedule III of the Act 2013 and the applicable accounting standards. To make these Rules compliant with the Indian Accounting Standards Rules, 2015 (Ind AS), together with the other existing relaxations, further exception has been now provided to the companies with respect to preparation of consolidated financial statements, if following conditions are met:

• it is a wholly-owned subsidiary, or is a partially-owned subsidiary of another company and all its other members, including those not otherwise entitled to vote, having been intimated in writing and for which the proof of delivery of such intimation is available with the company, do not object to the company not presenting consolidated financial statements;
• it is a company whose securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India and
• its ultimate or any intermediate holding company files consolidated financial statements with the Registrar which are in compliance with the applicable Accounting Standards.

 Further, with respect to matters to be included in Board’s report, currently, the report contains a separate section giving report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in its consolidated financial statement. Now, this requirement has been slightly relaxed and a report on the highlights of performance of these affiliates and their contribution to the overall performance of the company would be a sufficient compliance.

Form no. AOC-1 has been substituted with the new one (Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures).

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Proposed ASU-Employee Benefit Plan Master Trust Reporting- 28 July 2016

The Financial Accounting and Standards Board (FASB) has issued a draft Accounting Standards Update (ASU) on Plan Accounting, comprising of Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962) and Health and Welfare Benefit Plans (Topic 965).  

This ASU has been issued to improve the usefulness of the information reported to users of employee benefit plan financial statements. This ASU is issued with respect to the reporting by an employee benefit plan for its interest in a master trust. The amendments in this ASU would clarify presentation requirements for a plan’s interest in a master trust and require more detailed disclosures of the plan’s interest in the master trust. The proposed amendments would also eliminate a redundancy with respect to certain account disclosures.

Comments are open until 26 September 2016.

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Proposed improvements to disclosure requirements for Income Taxes-26 July 2016

FASB has issued a proposed ASU to enhance disclosure requirements on income taxes. This ASU forms integral part of FASB’s broader disclosure framework project, which is intended to improve the effectiveness of disclosures in notes to financial statements presenting the most important information to users of the financial statements.
The proposed modifications and additions include describing an enacted change in tax law, disaggregating certain income tax information between foreign and domestic, and explaining the circumstances that caused a change in assertion about the indefinite reinvestment of undistributed foreign earnings. It also will require disclosing the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries.
Comments are open until 26 September 2016.

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Regulatory news

Companies (Incorporation) Third Amendment Rules-28 July 2016

MCA has issued these Rule (the Companies (Incorporation) Third Amendments Rules, 2016). The summary of these Rules is detailed as below:

• It has been clarified that a natural person shall not be a nominee of more than one OPC.
• With respect to signing of memorandum and articles, in case a subscriber is illiterate, further explanation has been added.
• Certain modifications have been done with respect to particulars of subscribers to be filed with the ROC at the time of incorporation.
• The central government has additionally notified the other documents/ places on which the name of the company shall be printed.
• Slight amendments have been done with respect to shifting of registered office within the same state, relaxing certain provisions.
• With respect to alteration of memorandum by change of names, certain relaxations are provided on post facto corrections.
• Some procedural changes are made regarding shifting of registered office from one state or union territory to another state.
• Form No. INC-10 (Form for verification of signature of subscribers) shall be omitted.
• Certain forms with respect to registration/ conversion of a company (Form no. INC 11, INC-27 and INC-27A) are substituted with new ones.

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Relaxation of additional fees and extension of last day of filing of certain forms-29 July 2016

As per the Act 2013, the financial statements and annual return of a company are required to be filed with ROC within 30 and 60 days respectively after conclusion of AGM. This period has been extended by MCA upto 29 October 2016 without additional fee, in cases where due date for holding AGM falls on or after 1 April 2016.

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Designation of Special Courts- 27 July 2016

The Central Government has designated a specified Court as Special Court for the purposes of providing speedy trial of offences punishable under the Act 2013 with imprisonment of two years or more under the Act 2013, which shall exercise the jurisdiction as Special Court in respect of the specified jurisdiction.

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