The weekly messenger | Edition 09.18

India l Accounting News

FASB proposes adding a new benchmark interest rate for hedge accounting – 20 February 2018

The Financial Accounting Standard Board (FASB) has issued a proposal for the purpose of expanding the existing list of U.S. benchmark interest rates permitted in the application of hedge accounting. The existing list contains four eligible benchmark interest rates for the purpose of hedge accounting under FASB Accounting Standards Codification Topic 815, Derivative and Hedging. The proposal would add a fifth benchmark interest rate in the aforesaid list, which would help the companies and other organisations to avoid the potential cost and complexity associated with using different cash flows and discount rates to measure the hedged item and the hedging instrument. The fifth benchmark rate would be the OIS rate based on the Secured Overnight Financing Rate (SOFR).
Comments are to be received by 30 March 2018.

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India l Regulatory News

Companies (Audit and Auditors) Amendment Rules, 2018 – 16 February 2018

The Central Government (CG) has amended the Companies (Audit and Auditors) Rules, 2014 with the Companies (Audit and Auditors) Amendment Rules, 2018 wherein it has substituted the existing forms ADT-1 ‘Notice to the Register by company for appointment of auditor’ and ADT-2 ‘Application for removal of auditor(s) from his/their office before expiry of term’ with the new forms.
These rules shall come into force from the date of their publication in the Official Gazette i.e.16 February 2018.

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Companies (Management and Administration) Amendment Rules, 2018 – 16 February 2018

The CG has amended the Companies (Management and Administration) Rules, 2014 with the Companies (Management and Administration) Amendment Rules, 2018 wherein it has substituted the existing forms MGT-6 ‘Return to the Registrar in respect of declaration under section 89 received by the company’ and MGT-15 ‘Form for filing Report on Annual General Meeting’ with the new forms.
These rules shall come into force from the date of their publication in the Official Gazette.

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Companies (Authorised to Register) Amendment Rules, 2018 – 16 February 2018

The CG has amended the Companies (Authorised to Register) Rules, 2014 with the Companies (Authorised to Register) Amendment Rules, 2018 wherein it has substituted the existing form URC-1 ‘Application by a company for registration under section 366 (conversion from firm into company and LLP into company)’ with a new form URC-1.
These rules shall come into force from the date of their publication in the Official Gazette i.e.16 February 2018.

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Companies (Removal of Difficulties) Order, 2018 – 21 February 2018

The CG has issued the Companies (Removal of Difficulties) Order 2018, wherein it has addressed the difficulty being faced by various stakeholders w.r.t. the requirement of issuance of ordinary resolution (instead of special resolution) in case of removal of director as per Section 169 of the Companies Act (CA), 2013 as against the requirement of passing of special resolution in case of re-appointment of the independent directors given under section 149(10) of the CA 2013. Now, in order to address this issue, the CG has added a proviso before the earlier proviso given under Section 169(1) of the CA 2013 as per which, now an independent director re-appointed for second term under section 149(10) shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard.
This order shall come into force from the date of its publication in the Official Gazette i.e. 21 February 2018.

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Manner of achieving Minimum Public Shareholding – 22 February 2018

The Securities Exchange Board of India (SEBI) vide its Circular No. CIR/CFD/CMD/14/2015 dated 30 November 2015 allowed for various methods that may be used by a listed entity to achieve compliance with the minimum public shareholding requirements mandated under rules 19(2)(b) and 19A of the Securities Contracts (regulation) Rules, 1957 read with regulation 38 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Now, with a view to further facilitate the listed entities to comply with the minimum public shareholding requirements, certain additional methods are allowed which are as follows:

• Open market sale;
• Qualified Institutions Placement.

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 Cabinet approves proposal for Amendment to the MSMED Act, 2006 for change in criteria of classification – 7 February 2018

The Union Cabinet has approved the change in the basis of classifying Micro, Small and Medium enterprises from ‘investment in plant & machinery/equipment’ to ‘annual turnover’ by amending the Section 7 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in order to encourage the ease of doing business, make the norms of classification growth oriented and align them to the new tax regime revolving around Goods and Services Tax (GST). As per the amended act, now a company would be governed by this Act, if it is a unit producing goods and rendering services in terms of annual turnover as follows:

• A micro enterprise will be defined as a unit where the annual turnover does not exceed five crore rupees;
• A small enterprise will be defined as a unit where the annual turnover is more than five crore rupees but does not exceed Rs 75 crore;
• A medium enterprise will be defined as a unit where the annual turnover is more than seventy five crore rupees but does not exceed Rs 250 crore.
• Additionally, the Central Government may, by notification, vary turnover limits, which shall not exceed thrice the limits specified in Section 7 of the MSMED Act.

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Further GST Updates

The Central Board of excise and Customs has issued certain updates w.r.t. GST whose links are as follows:

• For information w.r.t directions under Section 168 of the Central GST (CGST) Act regarding non-transition of CENVAT credit under section 140 of CGST Act or non-utilization thereof in certain cases, click here.