The weekly messenger | Edition 07.19

Accounting News

FASB proposes targeted transition relief to institutions applying the credit losses standard – 6 February 2019

The Financial Accounting Standard Board (FASB) has issued a proposed Accounting Standard Update (ASU) – ‘Targeted Transition Relief for Topic 326, Financial Instruments - Credit Losses’ that is designed to ease the transition to its new credit losses standard by providing an option to measure certain types of assets at fair value.
 
Comments are to be provided by 8 March 2019.
 
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ITFG Clarification Bulletin 18 – 8 February 2019

The Indian Accounting Standards (Ind AS) Technical Facilitation Group (ITFG) of Ind AS (IFRS) Implementation Committee has been constituted to provide clarification on various issues related to applicability and/or implementation of Ind AS under the Companies (Ind AS) Rules, 2015, raised by preparers, users and other stakeholders. Recently, ITFG has issued the eighteenth set of clarifications. This bulletin contains clarifications on following significant matters:

• Clarification w.r.t. issue whether policy adopted for accounting for exchange differences appearing in paragraph D13AA of Ind AS 101 will include the policy adopted for accounting for exchange differences that qualify as borrowing costs as per paragraph 6(e) of Ind AS 23;
• Clarification w.r.t. accounting treatment of Dividend Distribution Tax (DDT) in the consolidated financial statements of a parent where the parent receives dividend from a subsidiary on which DDT has been paid by the subsidiary and the same is available for set off by the parent;
• Accounting treatment of interest free loan received by subsidiary from its parent;
• Can a company restate its business combination due to difference in accounting treatment of an asset as per the High Court’s scheme of amalgamation and as per Ind AS; and
• Applicability of Ind AS w.r.t. a company which subsequently gets converted into a Limited Liability Partnership (LLP).

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Regulatory News

Companies (Significant Beneficial Ownership) Amendment Rules, 2019 - 8 February 2019

The Central Government (CG) has amended the Companies (Significant Beneficial Ownership) Rules, 2018 with the Companies (Significant Beneficial Ownership) Amendment Rules, 2019 wherein it has made the following modifications:

• In Rule 2 ‘Definitions’, certain new definitions have been added which includes definition of control; form; majority stake; partnership entity; reporting company; section; significant beneficial owner;
• A new rule 2A, ‘Duty of the reporting company’ has been added that provides the duty of the reporting company to find out if there is any significant beneficial owner in relation to them;
• Rule 3, ‘Declaration of significant beneficial ownership under section 90’ and Rule 4, ‘Return of significant beneficial owners in shares’ have been substituted by new rules, wherein certain clarificatory changes have been made;
• In Rule 7, ‘Application to the Tribunal,’ a new clause has been inserted as per which the reporting company shall apply to the Tribunal if any person fails to give the information required by the notice in Form No. BEN – 4, within the specified time;
• Form No. BEN-1, Form No. BEN-2, Form No. BEN-3 and Form No. BEN - 4 have been substituted by new forms etc.

These rules shall come into force from the date of their publication in the official gazette, i.e. 8 February 2019.
 
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Format for annual secretarial audit report and annual secretarial compliance report for listed entities and their material subsidiaries – 8 February 2019

The Securities and Exchange Board of India (SEBI) has come up with a new regulation w.r.t. the listed companies and their material subsidiaries, wherein it has made Secretarial audit compulsory for such class of companies in order to make its listing regulations in line with the Companies Act, 2013. For the purpose of the aforesaid compliance, the SEBI has clarified that in order to avoid duplication, the aforesaid class of companies would be required to use the same Form MR-3 as prescribed by the Companies Act, 2013 and the rules made therein for the purpose of filing Secretarial Audit Report. In addition to this, the SEBI now also requires the listed entities to file an annual secretarial compliance report, which will provide the details of the listed entities compliance with SEBI Regulations and circulars/guidelines issued.
 
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ECB Policy – ECB facility for Resolution Applicants under Corporate Insolvency Resolution Process – 7 February 2019

The Reserve Bank of India (RBI) in consultation with the Government of India has decided to relax the end-use restrictions for resolution applicants under the Corporate Insolvency Resolution Process (CIRP) and allow them to utilise the External Commercial Borrowings (ECBs) proceeds from the recognised lenders, except the branches/ overseas subsidiaries of Indian banks, for the purpose of repayment of Rupee term loans of the target company.
 
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The Insurance Regulatory and Development Authority of India (IRDAI), considering the need for changes in existing reporting formats, returns and statements pursuant to the newly notified IRDAI (Re-insurance) Regulations, 2018 has set up a Reinsurance Working Group for the purpose of reviewing the existing formats for various entities. The terms of reference of the working group will be:

• To review the current reinsurance forms submitted both online and offline for the correctness and completeness of the data and recommend changes if any; and
• To ensure avoid redundancy and to devise relevant forms applicable for Insurers/ Reinsurers/ Branches of Foreign Reinsurers (FRBs)/ Lloyds India/ IIOs/ Exempted Insurers/ Insurance Pools.

For more information, click here.
 

BSE launches XBRL taxonomy for listed insurance companies to file their financial results on the exchange – 8 February 2019

The Bombay Stock Exchange (BSE), has launched the XBRL taxonomy for listed insurance companies for the purpose of filing their financial results with the exchange, thereby making it mandatory for every listed insurance company to file their financial results in the aforesaid format for period ending 31 March 2019 onwards.
 
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Further GST Update

The Central Board of Indirect Taxes and Customs has issued certain updates w.r.t. Goods and Services Tax (GST) whose links are as follows:

• For more information w.r.t exemption of Integrated GST (IGST) on supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees, click here; and
• For more information w.r.t extension of due date for furnishing of FORM GSTR – 7 for the month of January, 2019 till 28 February 2019, click here.