The weekly messenger | Edition 19.19

Accounting News

ITFG Clarification Bulletin 19 – 9 May 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 nineteenth set of clarifications. This bulletin contains clarifications on following significant matters:

• Accounting treatment of difference between the consideration paid for additional shares acquired in a subsidiary and the amount of reduction in non-controlling interests resulting from said acquisition in the books of the parent on the date of transition to Ind AS;
• Recognition of revenue in case of a shipping entity;
• Application of ‘full retrospective adoption method’ under Ind AS 115 ‘Revenue from Contracts with Customers’ by a first time Ind AS adopter;
• Clarification on restatement of previous year figures of the acquiree as per Ind AS 103 ‘Business Combination’; and
• Ind AS applicability w.r.t. a subsidiary of an Ind AS compliant company, which is subsequently sold to an unrelated third party and also w.r.t. the unrelated third party to whom such subsidiary has been sold etc.

For more information, click here

Regulatory News

ICSI Auditing Standards (CSAS-1 to CSAS-4) – 6 May 2019

The Institute of Company Secretaries of India (ICSI) has issued four Auditing Standards, namely;

• CSAS-1 – Auditing Standard on Audit Engagement;
•  CSAS-2 – Auditing Standard on Audit Process and Documentation;
•  CSAS-3 – Auditing Standard on Forming of Opinion; and
•  CSAS-4 – Auditing Standard on Secretarial Audit.

These standards are effective and recommendatory for the audit engagements/secretarial audit accepted by the auditor (i.e. a Company Secretary who is deemed to be in practice under sub-section (2) of Section 2 of the Company Secretaries Act, 1980 including a firm or Limited Liability Partnership (LLP) registered with ICSI undertaking the Audit) on after 1 July 2019 and mandatory for the audit engagements/secretarial audit accepted by the auditor on or after 1 April 2020.
 
For more information, click here.

Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 – 8 May 2019

The Central government (CG) has amended the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 with the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 wherein the following changes have been made:

• In sub-rule (1) to rule 4, ‘Application for removal of name of company’, the fees to be paid by the company w.r.t the application for the removal of the name of the company under section 248(2) in Form STK-2 ‘Application by company to ROC for removing its name from register of companies’, has been increased from ₹ 5,000 to ₹ 10,000. Further, certain new provisos have also been inserted which provides that:

1.  filing of Form STK-2 would be subject to filing of overdue returns in Form No. AOC – 4 (Financial Statements) or AOC – 4 XBRL, as the case may be and Form No. MGT-7 (Annual Return) within specified timelines;
2.  a company would not be allowed to file application in Form no. STK-2 after issuance of notice in Form No. STK – 7 ‘Notice of Striking Off and Dissolution’ by the Registrar pursuant to the action initiated under Section 248(1) of the Act; 

• A new form i.e. Form No. STK-8 ‘Statement of Accounts’ has been introduced which is to filed along with the Form STK-2 etc.

These rules shall come into force w.e.f. 10 May 2019.
 
For more information, click here.

NCLT (Second Amendment) Rules, 2019 – 8 May 2019

The CG has amended the National Company Law Tribunal (NCLT) Rules, 2016 with the NCLT (Second Amendment) Rules, 2019, wherein it has inserted two new sub-rules in Rule 84, ‘Right to apply under section 245’ thereby providing the threshold limits w.r.t. number of members/depositors who can file an application under sub-section (1) of section 245 ‘Class Action’.
 
These rules shall come into force on the date of their application in the official gazette i.e. 8 May 2019.
 
For more information, click here.

Format for filing of Annual return under NFRA Rules, 2018 – 8 May 2019

The Ministry of Corporate affairs has notified that it is in the process of prescribing the format of annual return to be filed by the auditors under Rule 5 ‘Annual Return’ of the National Financial Reporting Authority (NFRA) Rules, 2018. Accordingly, it has requested all the stakeholders to make such filings only after such format is made available.
 
For more information, click here.

Companies (Incorporation) Fifth Amendment Rules, 2019 – 10 May 2019  

The CG has amended the Companies (Incorporation) Rules, 2014 with the Companies (Incorporation) Fifth Amendment Rules, 2019 wherein the existing Rule 8 ‘Undesirable name’ has been substituted by the following new rules:

• Rule 8, ‘Names which resemble too nearly with the name of existing company’;
• Rule 8A, ‘Undesirable Names’; and
• Rule 8B, ‘Word or expression which can be used only after obtaining previous approval of the Central Government’.

These rules shall come into force on the date of their publication in the official gazette i.e. 10 May 2019.
 
For more information, click here.

SEBI (LODR) (Second Amendment) Regulations, 2019 – 7 May 2019

The Securities and Exchange Board of India (SEBI) has further amended the SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015 with the SEBI (LODR) (Second Amendment) Regulations, 2019, wherein the following changes have been introduced in Regulation 52, ‘Financial Results’:

• After sub-regulation (1) which provides the timelines w.r.t. the submission of the financial results by the listed entities which have listed its non-convertible debt securities or non-convertible redeemable preference shares or both, the following proviso has been inserted, namely-
  ‘Provided that in case of entities which have listed their equity shares and debt securities, a copy of the financial results submitted to stock exchanges shall be provided to Debenture Trustees on the same day the information is submitted to stock exchanges’ and-

• As per erstwhile Sub- regulation (5), the listed entities while submitting the information required under sub-regulation (4), were required to submit to stock exchange(s), a certificate signed by debenture trustee that it has taken note of the contents. Now, the aforesaid certificate can be submitted within a period of seven working days from the date of submission of the information under sub-regulation (4).

These regulations shall come into force on the date of their publication in the official gazette i.e., 7 May 2019.
 
For more information, click here.