The weekly messenger | Edition 25.18

Accounting News

Amendments to Ind AS 40, Investment Property - 12 June 2018

The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has issued an exposure draft (ED) with respect to the various changes which it has proposed to be made in Indian Accounting Standard (Ind AS) 40,’Investment property’. The gist of the topics which have been proposed to undergo changes is as follows:   

• Measurement after recognition;
• Fair value model;
• Inability to measure fair value reliably;
• Transfers;
• Disposals;
• Disclosures;
• Transitional provisions;
• Amendment to other Ind AS etc.

Comments are to be received by 11 July 2018.

For more information, click here.

Long-term Interests in Associates and Joint Ventures (Amendments to Ind AS 28) - 12 June 2018

The ASB of ICAI has also issued an ED wherein it has proposed to insert an illustrative example illustrating that how an entity (investor) shall account for long term interest in associates and joint ventures and has also proposed the changes in the below mentioned topics in Ind AS 28 ‘Investments in Associates and Joint Ventures’:

• Equity Method;
• Application of the equity method;
• Effective date and transition; and
• Appendix 1

Comments are to be received by 11 July 2018.

For more information, click here.

Prepayment Features with Negative Compensation (Amendments to Ind AS 109, Financial Instruments) - 12 June 2018

The ASB of ICAI has also issued an ED w.r.t. certain proposed changes to be made in Ind AS 109, ‘Financial instruments’ with respect to the following topics:

• Effective date
• Transition for classification and measurement
• Transition for Prepayment Features with Negative Compensation
• Classification of financial assets; and
• Appendix 1.

 Comments are to be received by 11 July 2018.

For more information, click here.

Plan Amendment, Curtailment or Settlement (Amendments to Ind AS 19, Employee Benefits) - 12 June 2018

The ASB of ICAI has also issued an ED w.r.t. certain proposed changes to be made in Ind AS 19, ‘Employee Benefits’ which covers the following topics:

• Post-employment benefits: defined benefit plans
• Other long-term employee benefits;
• Transition and effective date etc.

Comments are to be received by 11 July, 2018.

For more information, click here.

Annual Improvements to Ind AS (2018) – 12 June 2018

The ASB of ICAI has issued an ED on Annual Improvements to Ind AS (2018) corresponding to the annual improvements to International Financial Reporting Standards (IFRS) 2015-17 Cycle issued by the International Accounting Standard Board (IASB). The amendments includes the following standards and their corresponding subject matters:

Comments are to be received by 11 July 2018.

For more information, click here.

IFRS Convergence Status – 13 June 2018

The ICAI has published the convergence status of IFRS as on 13 June 2018 which is as follows:

For more information, click here.

Regulatory News

Companies (Appointment and Qualification of directors) Third Amendment Rules, 2018 – 12 June 2018

The Central Government (CG) has amended the Companies (Appointment and Qualification of Directors) Rules 2014 with the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2018 wherein it has substituted the following forms with the new ones:

• Form DIR-3, ‘Application for allotment of Director Identification Number before appointment in an existing company or LLP’; and
• Form DIR-6, ‘Intimation of change in particulars of Director/ Designated partner to be given to the CG’.
• These rules shall come into force on the date of their publication in the Official Gazette i.e. 12 June 2018.

For more information, click here.

Companies (Registered Valuers and Valuation) Second Amendment Rules, 2018 – 13 June 2018

The CG has amended the Companies (Registered Valuers and Valuation) Rules, 2017 with the Companies (Registered Valuers and Valuation) Second Amendment Rules, 2018 wherein it has amended Rule 19(2) of the aforesaid rules which deals with the composition of the committee responsible to advice on valuation matters. In the said rule, a new clause has been inserted as per which the aforesaid committee shall also comprise of the ‘Presidents of, the ICAI, the ICSI and the Institute of Cost Accountants of India as ex-officio members’.
These rules shall come into force on the date of their publication in the Official Gazette i.e. 13 June 2018.

For more information, click here.

Companies (Significant Beneficial Owners) Rules, 2018 – 13 June 2018

The CG has notified the Companies (Significant Beneficial Owners) Rules, 2018 which inter-alia includes the following, namely;

• Rule 2 ‘Definitions’;
• Rule 3 ‘Declaration of significant beneficial ownership in shares under section 90’;
• Rule 4 ‘Return of significant beneficial ownership in shares’;
• Rule 5 ‘Register of significant beneficial ownership’, etc.

These rules shall come into force on the date of their publication in the Official Gazette i.e. 13 June 2018.

For more information, click here.

Companies (Management and Administration) Second Amendment Rules, 2018 – 13 June 2018

The CG has amended the Companies (Management and Administration) Rules 2014 with the Companies (Management and Administration) Second Amendment Rules, 2018 wherein the following changes have been made:

• Rule 13 ‘Return of changes in shareholding position of promoters and top ten shareholders’ has been omitted;
• Sub-rule 6 of Rule 15 ‘Preservation of register of members etc. and annual return’ as per which the special resolution passed in case of registers required to be maintained u/s 88 of the Act or copies of annual return are kept at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside, is to be filed with Registrar in Form no. MGT 14 has been omitted;
• Clause (ix) of sub-rule 3 of Rule 18 ‘Notice of the meeting’ which states that notice of the general meeting of the company shall be simultaneously placed on the website of the company if any and on the website as may be notified by the CG has been omitted
• In sub-rule 16 of Rule 22 ‘Procedure to be followed for conducting business through postal ballot’ which states the list of items of business which shall be transacted only by means of voting through a postal ballot, a proviso has been added as per “which any of the aforesaid items of business may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section”.
• Form no. MGT-10 ‘Changes in shareholding position of promoters and top ten shareholders’ has been omitted.

These rules shall come into force on the date of their publication in the Official Gazette i.e. 13 June 2018.

For more information, click here.

Notification regarding commencement of certain sections of Companies Amendment Act 2017 – 13 June 2018

The CG has appointed 13 June 2018 as the date on which the various other sections of the Companies (Amendment) Act, 2017 shall come into force. These mainly relates to:

• Section 22 i.e. substitution of new section for section 90 ‘Register of significant beneficial owners in a company’;
• Section 24 i.e. omission of section 93 ‘Return to be filed with Registrar in case promoters‘ stake changes’;
• Section 25 i.e. amendment of Section 94 ‘Place of keeping and inspection of registers, returns, etc.’;
• Section 26 i.e. amendment of Section 96 ‘Annual general meeting’; and
• Sections 71 i.e. amendment of Section 216 ‘Investigation of ownership of company’.

For more information, click here.

Limited Liability Partnership (Amendment) Rules, 2018 – 12 June 2018

The CG has amended the Limited Liability Partnership (LLP) Rules, 2009 with the LLP (Amendment) Rules, 2018 wherein it has made in rule 10 of the aforesaid rules by providing clarification that an individual who is appointed as a partner in an existing LLP can make application in Forms ‘DIR-3’ under the Companies (Appointment and Qualifications of Directors) Rules, 2014 for obtaining Designated Partner Identification Number (DPIN) under the LLP Act, 2008 and Forms ‘DIR-6’ under the Companies (Appointment and Qualifications of Directors) Rules, 2014 for intimating the change in director’s information if any respectively.

These rules shall come into force on the date of their publication in the Official Gazette i.e. 12 June 2018.

For more information, click here.

Expert Committee for listing of equity share capital of companies incorporated in India on foreign exchanges and vice versa – 12 June 2018

Currently, the companies incorporated in India can get their equity share capital listed abroad only through the ADR / GDR route. Also, the companies incorporated outside India can access the Indian capital markets only through the IDR route. This means that direct listing of equity share capital of companies incorporated in India is not permitted on foreign exchanges and vice versa. Therefore, the Securities and Exchange Board of India (SEBI) after considering the evolution and internationalization of the Capital Markets thought that it would be worthwhile to consider facilitating companies incorporated in India to directly list their equity share capital abroad and vice versa. So, it has constituted an Expert Committee to look into this aspect.

For more information, click here.

Basel III Framework on Liquidity Standards - LCR, Liquidity Risk Monitoring Tools and LCR Disclosure Standards – 15 June 2018

The Reserve Bank of India (RBI) has permitted banks to reckon certain prescribed class of government securities for the purpose of computing their Liquidity Coverage Ratio (LCR).

For more information, click here.

Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks – Spreading of MTM losses and creation of IFR – 15 June 2018

The RBI vide its Circular DBR.No.BP.BC.102/21.04.048/2017-18 dated 2 April 2018 had granted banks the option to spread provisioning for mark to market (MTM) losses on investments held in Available for sale (AFS) and Held for trading (HFT) for the quarters ended 31 December 2017 and 31 March 2018, in order to address the systemic impact of sharp increase in the yields on Government Securities. Now, considering the continuing rise in the yields on Government Securities, as also the inadequacy of time to build investment fluctuation reserve (IFR) for many banks, the RBI has again decided to grant the aforesaid option of spreading the provisioning for MTM losses on investments held in AFS and HFT for the quarter ending 30 June 2018 as well. The provisioning required may be spread equally over up to four quarters, commencing with the quarter ending 30 June 2018.

For more information, click here.

Further GST Updates

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 information w.r.t. extension of Special Refund Fortnight till 16.6.2018, click here;
• For information w.r.t. CGST (Fifth Amendment) Rules, 2018, click here;
• For clarification w.r.t. goods that may be disposed off by the proper office after its seizure, click here; and
• For clarification w.r.t. miscellaneous issues related to Special economic Zones (SEZ) and refund of unutilized ITC for job workers, click here.