The weekly messenger | Edition 04.21

ACCOUNTING NEWS

Educational Material on Ind AS 23, Borrowing Costs – 27 January 2021
 
The ICAI has issued an ‘Educational Material on Ind AS 23 Borrowing Costs’, which provides adequate guidance for recognising borrowing costs by entities. The publication inter-alia includes:

• Summary of Ind AS 23;
• Frequently Asked Questions (FAQs);
• Major Differences between Ind AS 23 and AS 16;
• Major Differences between Ind AS 23 and IAS 23.

For more information, click here.
 
FASB simplifies how private company franchisors evaluate certain performance obligations – 28 January 2021
 
The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU), wherein a new practical expedient has been introduced that simplifies the application of the guidance about identifying performance obligations. As per the new practical expedient, the franchisors (that are not public business entities) have now been permitted to account for pre-opening services provided to a franchisee as distinct from the franchise license, subject to certain conditions.
 
For more information, click here.

AUDITING NEWS

ICAI releases SAE 3410 - Assurance Engagements on Greenhouse Gas Statements – 27 January 2021
 
The ICAI has issued Standard on Assurance Engagements (SAE) 3410 ‘Assurance Engagements on Greenhouse Gas Statements’, which deals with assurance engagements to report on an entity’s greenhouse gas statement.
 
The effective date of the aforesaid SAE has not been prescribed yet.
 
For more information, click here.
 
Extension of Condonation Scheme to regularise UDINs – 31 January 2021
 
The ICAI vide its announcement dated 28 December 2020, had announced the ‘Condonation Scheme to regularise UDINs’, wherein the members could regularize the non-generation of Unique Document Identification Number (UDIN), if they earlier missed to generate the same for the documents signed between 1 February 2019 to 31 December 2020 till 31 January 2021.
 
Now, the ICAI has further extended the aforesaid period, wherein it has allowed its members to generate all the missed UDINs between the period 1 February 2019 to 31 January 2021 till 28 February 2021.
 
For more information, click here.

REGULATORY NEWS

GN on General Meetings and GN on Meetings of the Board of Directors (amended upto 31.12.2020) – 1 February 2021
 
The Institute of Company Secretaries of India has issued the revised versions of Guidance Notes (GN) on ‘General Meetings’ and ‘Meetings of the Board of Directors’ (amended upto 31.12.2020), thereby incorporating the legal amendments brought in by the Companies (Amendment) Act, 2017; various relaxations issued by Ministry of Corporate Affairs (MCA) due to COVID-19 etc.
 
For GN on General Meetings, click here;
 
For GN on Meetings of the Board of Directors, click here.
 
Companies (Incorporation) Amendment Rules, 2021 – 25 January 2021
 
The MCA has issued the Companies (Incorporation) Amendment Rules, 2021, wherein certain procedural changes have been made in Rule 41 ‘Application under section 14 for conversion of public company into private company’.
 
These Rules shall come into force w.e.f. 25 January 2021.
 
For more information, click here.
 
Relaxation on levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AOC Non-XBRL for the FY ended on 31 March 2020 under the Companies Act, 2013 – 28 January 2021
 
Pursuant to the various representations received from the stakeholders, the MCA has extended the timelines for filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AOC Non-XBRL in respect of financial year (FY) ended on 31 March 2020 till 15 February 2021.
 
For more information, click here.
 
Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021 – 1 February 2021
 
The MCA has issued the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021, wherein a new Sub-Rule (1A) has been inserted in Rule 25 ‘Merger or Amalgamation of certain companies’, which states that:
 
“A scheme of merger or amalgamation under section 233 of the Act may be entered into between any of the following class of companies, namely:
 
(i) two or more start-up companies; or
(ii) one or more start-up company with one or more small company  
 
Explanation- For the purposes of this sub-rule, “start-up company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognised as such in accordance with notification number G.S.R. 127 (E), dated the 19 February 2019 issued by the Department for Promotion of Industry and Internal Trade.”
 
These Rules shall come into force w.e.f. 1 February 2021.
 
For more information, click here.
 
Companies (Specification of Definitions Details) Amendment Rules, 2021 – 1 February 2021
 
The MCA has issued the Companies (Specification of Definitions Details) Amendment Rules, 2021, wherein the limits w.r.t. paid up share capital and turnover provided in the definition of small companies have been revised to ₹ 2 Crores and ₹ 20 Crores respectively.
 
These Rules shall come into force w.e.f. 1 February 2021.
 
For more information, click here.
 
Consultation Paper on introduction of provisions relating to appointment or re-appointment of persons who fail to get elected as Whole-time directors or Managing Directors at the general meeting of a listed entity – 27 January 2021
 
As per the Companies Act, 2013, the board cannot appoint a person who fails to get elected as a director at a general meeting as an additional director. However, the Companies Act, 2013 does not explicitly prohibit the board from re-appointing a person as a Managing Director or Whole-time Director, after subsequent rejections by the shareholders at the general meeting. Therefore, a need was felt for a policy intervention to include some specific provisions in the Listing Regulations, to deal with such circumstances.
 
So, the Securities and Exchange Board of India (SEBI) has issued a Consultation Paper w.r.t. introduction of certain provisions in the Listing Regulations to deal with the aforesaid situation.
 
Comments are to be provided by 12 February 2021.
 
For more information, click here.
 
RBI releases framework for strengthening the grievance redress mechanism in banks – 27 January 2021
 
In order to further strengthen the customer grievance redress mechanism in banks, the Reserve Bank of India (RBI) has decided to put in place a comprehensive framework, which inter-alia comprises of:

• enhanced disclosures by banks on customer complaints;
• recovery of cost of redress from banks for the maintainable complaints received against them in the Offices of Banking Ombudsman (OBOs) in excess of the peer group average; and
• undertaking intensive review of the grievance redress mechanism and supervisory action against banks that fail to improve their redress mechanism in a time bound manner.

For more information, click here.
 
Prudential Guidelines on Capital Adequacy and Market Discipline - New Capital Adequacy Framework (NCAF) - Eligible Credit Rating Agencies – CRISIL Ratings Limited – 27 January 2021
 
As per the erstwhile RBI’s Circular, the banks were allowed to use the ratings of various notified credit rating agencies (including CRISIL Limited) registered with SEBI, for the purposes of risk weighting their claims for capital adequacy purposes.
 
Now, since, the rating business of CRISIL Limited has been transferred to CRISIL Ratings Limited, therefore it has been further notified that banks may use the ratings of the CRISIL Ratings Limited for the aforesaid purpose.
 
For more information, click here.
 
Central Government approves the Start-up India Seed Fund Scheme to provide financial assistance – 28 January 2021
 
In order to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market entry and commercialization, the Central Government has approved the ‘Start-up India Seed Fund Scheme’. Under this Scheme, a financial assistance would be provided to start-ups via corpus of Rs. 945 Crore that will be disbursed through selected incubators across India in 2021-25.
 
For more information, click here.
 
FAQs – System driven disclosures under SEBI (Prohibition of Insider Trading) Regulations, 2015 – 29 January 2021
 
The SEBI has informed the Exchange that there have been few queries, being received from market participants seeking clarification about System Driven Disclosures. Therefore, in order to address those queries, the Bombay Stock Exchange (BSE) has issued certain FAQs.
 
For, more information, click here.