The weekly messenger | Edition 03.20

Accounting News

IRDAI further defers the implementation of Ind AS for Insurance Companies – 21 January 2020

The Insurance Regulatory and Development Authority of India (IRDAI) vide its Circular dated 28 June 2017, had decided to defer the implementation of Ind AS in the Insurance Sector in India by two years, thereby making them effective w.e.f. 1 April 2020.
 
Now, the IRDAI has issued a further Circular, wherein it has clarified that it has decided to implement Ind AS 109 and Ind AS equivalent to IFRS 17 simultaneously, along with all other applicable Ind AS and therefore, decided to defer the implementation of Ind AS in the Insurance Sector till further notice by withdrawing the erstwhile Circular dated 28 June 2017. In addition to this, the requirement of submission of Proforma Ind AS financial statements on a quarterly basis has also been dispensed with.
 
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IASB clarifies requirements for classifying liabilities as current or non-current – 23 January 2020

The International Accounting Standards Board (IASB) has issued narrow-scope amendments to IAS 1 ‘Presentation of Financial Statements’ to clarify how to classify debt and other liabilities as current or non-current. The purpose of these amendments is to promote consistency in applying the requirements by helping companies determine whether in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments also include clarifying the classification requirements for debt a company might settle by converting into equity.
 
The Board has set the effective date at January 2022. However, earlier application of the amendments is permitted.
 
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Regulatory News

Companies (Winding Up) Rules, 2020 – 24 January 2020

The Central Government (CG) has issued the Companies (Winding Up) Rules, 2020, which inter-alia includes:

• General provisions;
• Winding Up by Tribunal;
• Liquidator;
• Winding Up Order;
• Application for stay of suits etc. on Winding Up Order;
• Reports by Company Liquidator under Section 281 etc.

These Rules shall come into force w.e.f. 1 April 2020 (to be published in the Gazette of India).
 
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Companies (Accounts) Amendment Rules, 2020 – 30 January 2020

The CG has amended the Companies (Accounts) Rules, 2014 with the Companies (Accounts) Amendment Rules, 2020, wherein CG has made the following changes:

• a new sub Rule i.e. sub-Rule (1A) has been inserted in Rule 12 ‘Filing of Financial Statements and Fees to be Paid Thereon’ which states that “Every Non-Banking Financial Company (NBFC) that is required to comply with Indian Accounting Standards (Ind AS) shall file the financial statements with Registrar together with Form AOC-4 NBFC (Ind AS) and the consolidated financial statement, if any, with Form AOC-4 CFS NBFC (Ind AS)”.  
• insertion of two newly introduced forms i.e. AOC-4 NBFC (Ind AS) and AOC-4 CFS NBFC (Ind AS).

These Rules shall come into force on the date of their publication in the Official Gazette.
 
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Relaxation of additional fees and extension of last date of filing of AOC-4 NBFC (Ind AS) and AOC-4 CFS NBFC (Ind AS) for F.Y. 2018-19 under CA 2013 – 30 January 2020

The Ministry of Corporate Affairs has clarified that the two new e forms namely, AOC-4 NBFC (Ind AS) and AOC-4 CFS NBFC (Ind AS) for financial year (F.Y.) 2018-19 are likely to be deployed on 31 January 2020 and 17 February 2020 respectively. Therefore, the last date of filing of the said forms for eligible companies for the F.Y. 2018-19 has been extended till 31 March 2020.
 
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MCA notifies applicability of Section 460 of the CA 2013 to LLP – 30 January 2020 

The CG pursuant to sub-section (1) of Section 67 ‘Application of the provisions of the Companies Act’ of the Limited Liability Partnership (LLP) Act, 2008, has directed that the provisions of Section 460 ‘Condonation of Delay in Certain Cases’  of the Companies Act (CA), 2013 shall apply to a LLP w.e.f  1 February 2020.
 
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Non-compliance with certain provisions of the Listing Regulations and the SOP for suspension and revocation of trading of specified securities – 22 January 2020

The Securities and Exchange Board of India (SEBI) had issued a circular bearing reference number SEBI/HO/CFD/CMD/CIR/P/2018/77 dates 3 May 2018 which prescribes the actions to be taken in case of non-compliances with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and the Standard Operating Procedure (SOP) for suspension and revocation of suspension of trading of specified securities to be followed, in the interests of investors and the securities market.
 
Now, pursuant to the amendments to Listing Regulations and to further streamline the SOP for dealing with non-compliances, the SEBI has decided to issue a new circular in supersession of the aforesaid circular.
 
The provisions of the aforesaid Circular shall come into force w.e.f. compliance periods ending on or after 31 March 2020. However, it may be noted that the SOP circular dated 3 May 2018 would be applicable till the time current SOP circular comes into force.
 
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Streamlining the Process of Rights Issue – 22 January 2020

The SEBI has simplified the rights issue process to make it more efficient and effective, by amending the SEBI (Issue of Capital and Disclosure Requirements (ICDR)) Regulations, 2018 (“ICDR Regulations”) and Listing Regulations. Some of the key changes w.r.t the right issue process are as follows:

• The period for advance notice to stock exchange(s) under Regulation 42(2) of Listing Regulations has been reduced from at least 7 working days to at least 3 working days;
• Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, shall be completed by the issuer at least 2 days before the date of opening of the issue; 
• All applications in rights issues are mandatorily required to be done through the ASBA mechanism.

This circular will be applicable for all rights issues and fast track rights issue where the Letter of Offer is filed with the stock exchanges on or after 14 February 2020.
 
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Report of the Working Group on Related Party Transactions – 27 January 2020

The SEBI constituted a Working Group in November 2019 to review the policy space pertaining to related party transactions, which was required to make recommendations to SEBI on certain issues such as review of definition of related party, thresholds for classification of related party transactions as material, process followed by Audit Committee for approval of related party transactions, reviewing the provisions relating to related party transactions in the Listing Regulations vis a vis the Indian Accounting Standards and the CA, 2013 etc.
 
The Working Group has now submitted its report which is open for comments till 26 February 2020.
 
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Guidelines on filing of Re-insurance arrangements with the IRDAI – 31-01-2020 

The IRDAI has issued ‘Guidelines on filing of Re-insurance arrangements with the IRDAI’ wherein the IRDAI has asked the insurers who are governed by the IRDAI (Re-insurance) Regulations, 2018 and are required to submit re-insurance Programme, to comply with some additional conditions.

 
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