The weekly messenger | Edition 23.20

Accounting News

IASB issues amendments to IFRS 17 Insurance Contracts to help companies with implementation – 25 June 2020

The International Accounting Standards Board (IASB) has issued amendments to IFRS 17 Insurance Contracts, in order to help the companies in implementing the same and make it easier for them to explain their financial performance. The purpose of designing these amendments are to:

• reduce costs by simplifying some requirements in the Standard;
• make financial performance easier to explain; and
• ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.

For more information, click here.

FASB issues Taxonomy Staff Q&A Document on How to Apply the Taxonomy to COVID-19 Pandemic and Relief Disclosures – 22 June 2020

The Financial Accounting Standards Board (FASB) has issued a question and answer document (Q&A) that responds to frequently asked questions (FAQs) about the application of the US GAAP Financial Reporting Taxonomy to disclosures related to the effects of the COVID-19 pandemic and relief efforts.
 
For more information, click here.

Regulatory News

Companies (Meetings of board and its powers) Second Amendment Rules, 2020 – 23 June 2020

In the month of March 2020, the Ministry of Corporate Affairs (MCA) had issued a notification, wherein it had allowed the companies to hold board meeting even through video conferencing or other audio visual means from the period 19 March 2020 till 30 June 2020, for the following matters, which are otherwise required to be dealt with in a board meeting, requiring the physical presence of the directors:

• Approval of the annual financial statements;
• Approval of the Board’s report;
• Approval of the prospectus;
• Audit Committee Meetings for consideration of financial statements including consolidated financial statement if any, to be approved by the board under Section 134(1) of the Companies Act, 2013.

Now, as per the amended Rules, the MCA has extended the aforesaid relaxation till 30 September
2020.
 
These Rules shall come into force w.e.f. 23 June 2020.
 
For more information, click here.

Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2020 – 23 June 2020

The MCA has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 with the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2020, wherein it has made certain changes in clause (a) of sub-rule (1) of Rule 6 ‘Compliances required by a person eligible and willing to be appointed as an independent director’ of the aforesaid Rules.
 
As per the Amendment Rules, the time lines within which the independent director in a company has to apply online to the institute for inclusion of his name in the data bank, has been revised from ‘seven months’ to ‘ten months’ from the commencement of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 i.e. 1 December 2019.
 
These Rules shall come into force w.e.f. 23 June 2020.
 
For more information, click here.

Ministry of MSME notifies criteria for classification and other forms and procedures w.r.t. MSMEs – 26 June 2020

The Ministry of Micro, Small and Medium Enterprises (MSME) has issued a notification, which notifies the criteria for classifying the enterprises as MSMEs and also specifies the form and procedure for filing the memorandum (‘Udyam Registration’) w.e.f. 1 July 2020. The salient features of this notification are as follows:

• Classification Criteria

• MSME will be known as Udyam. Accordingly, the registration process will be known Udyam Registration.
• Udyam Registration can be filed online based on self-declaration with no requirement to upload documents, papers, certificates or proof. 
• The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961.
• The notification clarifies that Exports of goods or services or both shall be excluded while calculating the turnover of any enterprise whether Micro, Small or Medium.
• All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as MSME.
• This notification supersedes all earlier notifications issued with regard to classification or registration of MSMEs.

For more information, click here.

FAQs pertaining to form NFRA 2 - 29 June 2020

The National Financial Reporting Authority (NFRA) has issued certain FAQs, thereby providing clarifications on various aspects of Form NFRA 2, which inter-alia includes:

• Is there facility to upload client wise information using excel or word file to help in bulk filing of client data.
• Please clarify whether the information in clause 3 and 4 of NFRA 2 form will be applicable only if the audit firm is the statutory auditor of an entity as per covered in Clause 3(1) (a) to 3(1)(e) of NFRA Rules 2018 or this clause will be applicable even in those cases where the audit firm audits the special purpose (non-statutory) financial statements.
• Clause 4 requires specified information for audit clients and audit reports of the auditor. The definition of the term 'auditor' indicates that it will cover only statutory audits conducted under Section 143 of the Act. Therefore, our understanding is that it will not cover clients where engagements other than statutory audit under Section 143 are performed i.e. limited review, quarterly audits, special purpose audit, tax audit, group reporting and other non statutory audit engagements (whether an entity is covered under Rule 3(1)(a) to (d) or 3(1)(e). You are requested to confirm our understanding.
• As per point 4.a.I.12/4.b.I.9 Any findings in the Auditor’s report which are unfavourable or qualified. Whether this includes Disclaimer of opinion or qualified opinion or both?
• Fee information to be provided in clause 4(a)(l)(10), our understanding is that the fee information is required without GST. You are requested to confirm our understanding.

For more information, click here.

SEBI (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2020 – 22 June 2020

The Securities and Exchange Board of India (SEBI) has amended the SEBI ((Issue of Capital and Disclosure Requirements) Regulations, 2018 with the SEBI ((Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2020, wherein a new Regulation i.e. Regulation 164A ‘Pricing in preferential issue of shares of companies having stressed assets’ has been inserted.

These Regulations shall come into force w.e.f. 22 June 2020.
 
For more information, click here.

Relaxations for Listed Companies having stressed assets – 23 June 2020

The SEBI has decided to relax the pricing methodology for preferential issues by listed companies having stressed assets and exempt allottees of preferential issues from open offer obligations in such cases, with immediate effect, subject to certain conditions.
 
For more information, click here.

Operational framework for transactions in defaulted debt securities post maturity date/ redemption date under provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 – 23 June 2020

The SEBI has introduced an operational framework for transactions in defaulted debt securities, which outlines the operational framework for transactions in defaulted debt securities and prescribes the obligations of Issuers, Debenture Trustee(s), Depositories and Stock Exchange(s) while permitting such transactions.
 
The provisions for the same shall come into force w.e.f. 1 July 2020.
 
For more information, click here.

Further extension of time for submission of financial results for the quarter/half year/financial year ending 31 March 2020 due to the continuing impact of the COVID-19 pandemic – 24 June 2020

The SEBI, vide its Circulars dated 19 March 2020 and 23 March 2020, had extended the timelines for submission of quarterly / half yearly / annual financial results for the quarter / half year / financial year ending on 31 March 2020 under regulations 33 and 52 of the SEBI (Listing Obligations and Disclosure) Regulations, 2015 (Listing Regulations) up to 30 June 2020.

Now, the SEBI has again decided to further extend the aforesaid timelines by a month i.e. the results can now be submitted till 31 July 2020.
 
For more information, click here.

Further extension of time for submission of Annual Secretarial Compliance Report by listed entities due to the continuing impact of the COVID-19 pandemic – 25 June 2020

The SEBI, vide its Circular dated 19 March 2020, had also extended the timeline for submission of the Annual Secretarial Compliance Report for the financial year 2019-2020, for listed entities by one month (i.e. from 31 May 2020 to 30 June 2020).

Now, the SEBI has further extended the timelines for the submission of the aforesaid Report till 31 July 2020.
 
For more information, click here.

Relaxation of time gap between two board / Audit Committee meetings of listed entities owing to the COVID-19 pandemic – 26 June 2020

The SEBI, had issued a Circular in the month of March 2020, wherein it had relaxed the requirement of the maximum stipulated time gap of 120 days between two meetings of the board and Audit Committees of listed entities, as required under the Listing Regulations. This relaxation was provided for the meetings held/proposed to be held between the period 1 December 2019 and 30 June 2020.
Now, since, the timelines for submission of financial results has been extended till 31 July 2020. Therefore, the SEBI has further extended the relaxation of maximum gap between two board/Audit Committee meetings as provided under erstwhile Circular till 31 July 2020.
 
However, the board of directors and the audit committee of the listed entities shall ensure that they meet at least four times a year.
 
For more information, click here.

Change in Minimum Daily Maintenance of the Cash Reserve Requirement – 26 June 2020

The Reserve Bank of India (RBI), vide its Statement of Developmental and Regulatory Policies of 27 March 2020, had announced that the minimum daily maintenance of the Cash Reserve Ratio (CRR) was reduced from 90% of the prescribed CRR to 80%, which was effective from the fortnight beginning from 28 March 2020 till 26 June 2020.
 
Considering the current situations, the RBI has decided to further extend the relaxation of maintenance of minimum CRR of 80% for a further period of three months. i.e. upto 25 September 2020.
 
For more information, click here.

Maintenance of Statutory Liquidity Ratio (SLR) – Marginal Standing Facility (MSF) – 26 June 2020

The RBI, vide its Statement of Developmental and Regulatory Policies of 27 March 2020, had also announced that borrowing limit of scheduled banks under the MSF scheme, by dipping into the prescribed SLR, was increased from 2 per cent to 3 per cent of their Net Demand and Time Liabilities (NDTL) outstanding at the end of the second preceding fortnight with immediate effect. This relaxation was available up to 30 June 2020.
 
After reviewing the same, the RBI has decided to extend this enhanced limit till 30 September 2020.
 
For more information, click here.

The Banking Regulation (Amendment) Ordinance, 2020 – 26 June 2020

The Ministry of Law and Justice has issued the Banking Regulation (Amendment) Ordinance, 2020, in order to further amend the Banking Regulation Act, 1949. Some of the key highlights of the Ordinance are as follows:

• The ordinance will extend powers which are already available with the RBI w.r.t. other banks to Co-operative Banks and for sound banking regulation, and by ensuring professionalism and enabling their access to capital. 
• The amendments do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is long-term finance for agricultural development.
• The Ordinance also amends Section 45 of the Banking Regulation Act, to enable the making of a scheme of reconstruction or amalgamation of a banking company for protecting the interest of the public, depositors, and the banking system.
• These amendments will not effect the existing powers of the State Registrars of Co-operative Societies under state co-operative laws.

For more information, click here.

Extension of various time limits under Direct Tax & Benami laws – 24 June 2020

The Ministry of Finance had earlier issued the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, wherein it had extended the various time limits under the Direct Tax and Benami Laws.

Now, in order to provide further relief to the taxpayers in order to be compliant, the Ministry of Finance has again issued a notification on 24 June 2020, thereby providing some further relaxations. The salient features of such notification are as follows:

• The time for filing of original as well as revised ITRs for the FY 2018-19 (AY 2019-20) has been extended to 31 July 2020.
• Due date for ITR for the FY 2019-20 (AY 2020-21) has been extended to 30 November 2020. Hence, the ITRs which are required to be filed by 31 July 2020 and 31 October 2020 can be filed upto 30 November 2020. Consequently, the date for furnishing tax audit report has also been extended to 31 October 2020.
• In order to provide relief to small and middle class taxpayers, the date for payment of self-assessment tax in the case of a taxpayer whose self assessment tax liability is upto Rs. 1 lakh has also been extended to 30 November 2020.
• The date for making various investment/ payment for claiming deduction under Chapter-VIA-B of the IT Act has also been further extended to 31 July 2020.
• The furnishing of the TDS/ TCS statements and issuance of TDS/ TCS certificates being the prerequisite for enabling the taxpayers to prepare their return of income for FY 2019-20, the date for furnishing of TDS/ TCS statements and issuance of TDS/ TCS certificates pertaining to the FY 2019-20 has been extended to 31 July 2020 and 15 August 2020 respectively.
• The reduced rate of interest of 9% for delayed payments of taxes, levies etc. specified in the Ordinance shall not be applicable for the payments made after 30 June 2020.

For more information, click here.