The weekly messenger | Edition 15.21

ACCOUNTING NEWS

Effective date of Ind AS Amendments – 12 June 2021 

The Ministry of Corporate Affairs (MCA) vide its notification dated 24 July 2020 had issued the Companies (Indian Accounting Standards) Amendment Rules, 2020 wherein certain amendments were notified in some of the Ind ASs.

Now, in order to invite the attention of the preparers and auditors of Ind AS framework financial statements, the ICAI has hosted a document on its website, thereby reiterating that the following Ind AS amendments, which were issued through the aforesaid amendment Rules are effective for annual reporting periods beginning on or after 1 April 2020:

• Definition of Business (Amendments to Ind AS 103, Business Combinations)
• Definition of Material (Amendments to Ind AS 1, Presentation of Financial Statements and Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors)
• Interest Rate Benchmark Reform- Pre-placement Issues (Amendments to Ind AS 109, Financial Instruments and Ind AS 107 Financial Instruments: Disclosures)
• COVID-19 Related Rent Concessions (Amendments to Ind AS 116, Leases)

For more information, click here.

REGULATORY NEWS

Companies (Incorporation) Fourth Amendment Rules 2021 – 7 June 2021
 
The MCA has issued the Companies (Incorporation) Fourth Amendment Rules, 2021, wherein the following changes have been made:

• In Rule 38A ‘Application for registration of Goods and Service Tax Identification Number (GSTIN). Employee State Insurance Corporation (ESIC) registration, Employees’ Provident Fund organisation (EPFO) Registration and profession Tax Registration and Opening of Bank Account’:

1. the words, ‘and Opening of Bank Account’ have been substituted with the words ‘Opening of Bank account and Shops and Establishment Registration’;
2. Form ‘AGILE-PRO’ has also been replaced by the form ‘AGILE-PRO-S’.

• In the annexure to the said rules, the e-Form No. INC-35 has been substituted with a new form.

These Rules shall come into force w.e.f. 7 June 2021.
 
For more information, click here.
 
Format of compliance report on Corporate Governance by Listed Entities – 31 May 2021
 
The Securities and Exchange Board of India (SEBI) has made certain changes in the format for ‘Compliance Report on Corporate Governance’, wherein the listed entities have been directed to make additional disclosure about loans and guarantees provided by them to promoter or any other entity controlled by them on a half-yearly basis.
 
The format of disclosure in this regard shall be effective from financial year 2021-22.
 
This circular would supersede the erstwhile SEBI’s Circulars dated 24 September 2015 and 16 July 2019 issued on the aforesaid format. 
For more information, click here.
 
SEBI (Delisting of Equity Shares) Regulations, 2021 – 10 June 2021
 
The SEBI has issued the SEBI (Delisting of Equity Shares) Regulations, 2021, which would be applicable to delisting of equity shares of a company including equity shares having superior voting rights from all or any of the recognised stock exchanges where such shares are listed.
 
These Regulations shall come into force w.e.f. 11 June 2021 and from that date the erstwhile SEBI (Delisting of Equity Shares) Regulations, 2009 would stand repealed.           .
 
For more information, click here.
 
Resolution Framework - 2.0: Resolution of Covid-19 related stress of MSMEs, Individuals and Small Businesses – Revision in the threshold for aggregate exposure – 4 June 2021
 
The Reserve Bank of India (RBI) vide its notification dated 5 May 2021 had announced the ‘Resolution Framework 2.0 for COVID-19 related stressed assets of Micro, Small and Medium Enterprises (MSMEs), individuals and small businesses’, wherein certain restructuring measures were announced targeting the aforesaid group of borrowers.
 
Now, the RBI has expanded the coverage of borrowers under the aforesaid schemes by increasing the maximum aggregate exposure threshold from ₹25 crore to ₹50 crore.
 
For notification w.r.t. revision in threshold of MSMEs, click here.
 
For notification w.r.t. revision in threshold of individuals and small businesses, click here.
 
Transactions in Government securities by FPI: Reporting   – 7 June 2021 
 
The RBI has decided to provide operational flexibility for reporting of Over the counter (OTC) transactions in government securities undertaken by the Foreign Portfolio Investors (FPIs) in the following manner:

• FPIs/custodian banks shall report their transactions to the Negotiated Dealing System – Order Matching (NDS-OM) platform within three hours after the close of trading hours for the Government securities market.
• Information about trades undertaken by domestic counterparties with FPIs shall be disseminated by the Clearcorp Dealing Systems (India) Ltd. (CDSL) after one leg of the trade is reported on the NDS-OM platform by the domestic counterparty with a suitable qualifier to indicate that the trade is awaiting counterparty confirmation.
• Domestic market participants, including domestic counterparties to transactions with FPIs, shall continue to report transactions to the NDS-OM platform as per extant practice.

The Directions shall come into effect from 14 June 2021.
 
For more information, click here.
 
Risk Based Internal Audit – 11 June 2021 
 
The RBI vide its circular dated 3 February 2021 had issued guidelines on Risk-Based Internal Audit (RBIA) System for certain class of Non-Banking Financial Companies (NBFCs) and Primary (Urban) Co-operative Banks (UCBs).
 
Now, the RBI has decided to extend the applicability of the provisions of the aforesaid circular to the following class of Housing Finance Companies (HFCs) also:

• All deposit taking HFCs, irrespective of their size.
• Non-deposit taking HFCs with asset size of ₹5,000 crore and above.

The aforesaid entities have been asked to implement the RBIA framework by 30 June 2022 in accordance with the above-mentioned circular.
 
For more information, click here.
 
Guidance Note on communications by Listed Entities – 11 June 2021
                
The Bombay Stock Exchange (BSE) has issued the ‘Guidance Note on communications by Listed Entities’, wherein the BSE has provided an indicative list of things that shall be kept in mind by the listed entities while publicizing the company, which includes the following:

• The statement made shall be truthful, fair, evidence-based and shall not be manipulative or deceptive or distorted and the listed entity shall not make any statement, promise, or forecast which is untrue or misleading.
• Listed entities shall use simple and easy-to-understand language without using extensive technical, legal terminology, or complex language. The details provided should be adequate and appropriate so that the investors are not distracted with excessive details.
• Non-factual and unsubstantiated statements shall not be made.
• The company should provide information only with respect to publicly reported financial information and not provide any forward-looking statement.
• In case of receipt of awards/recognition, disclosure shall include whether the listed entity has any relations with the awarding agency along with the number of participants that were evaluated, recognition of the awarding agency in the field in which award is given, and publicly available information relating to the awarding agency.

For more information, click here.