The weekly messenger | Edition 28.21

Auditing news

ICMAI aligns the time limit of generating UDIN from 15 days to 60 days ‒ 28 September 2021
 
As per CAS-102 on Cost Audit Documentation and the Guidance Manual for Audit Quality, the Council of the Institute of Cost Accountants of India (ICMAI) has decided to amend the time limit for generating Unique Document Identification Number (UDIN) from 15 days to 60 days.
 
However, for the documents where the respective Regulator/(s) or other stakeholders require UDIN immediately on signing or within a specified period, the same shall be provided by the Practicing Cost Accountant.
 
For more information, click here.

Regulatory news

Extension of the last date of filing of Cost Audit Report to the Board of Directors under Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014 ‒ 27 September 2021

As per Rule 6(5) of the Companies (Cost Records and Audit Rules) 2014, every cost auditor is required to forward his duly signed report to the Board of Directors of the company within a period of 180 days from the closure of the financial year (FY) to which the report relates.

Considering the disruptions caused by the pandemic, the Ministry of Corporate Affairs (MCA) has decided to extend the last date of submission of the Cost Audit Report for the FY 2020-21 by the cost auditor to the Board of Directors till 31 October 2021.

For more information, click here.

Relaxations relating to procedural matters - Issues and Listing ‒ 1 October 2021

The Securities of Exchange Board of India (SEBI) vide its Circular dated 6 May 2020 had granted one-time relaxations from strict enforcement of certain regulations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to Rights Issue opening upto 31 July 2020 which was further extended till 31 December 2020.

In addition to the aforesaid relaxation, the relaxation mentioned in point (iv) of the above-mentioned Circular, which was w.r.t. application for a right issue through other optional mechanism as decided by the issuer instead of ASBA facility was further extended till 30 September 2021. Now, the SEBI has once again extended the said timelines till 31 March 2022 subject to certain conditions.

For more information, click here.

Use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions ‒ 28 September 2021

The Reserve Bank of India (RBI) has permitted the Authorised Dealer Category– I banks (AD) banks to use any other widely accepted/alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions.

For more information, click here.

Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances ‒ 1 October 2021

The RBI has issued the Master Circular on ‘Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances’, thereby consolidating instructions on matters relating to prudential norms on income recognition, asset classification and provisioning pertaining to advances issued as on date.

For more information, click here.

Dividend Criteria for Equity Investment under “Approved Investment” ‒ 28 September 2021

The Insurance Regulatory and Development Authority of India (IRDAI) vide its Circular dated 21 August 2020 and 31 March 2021 respectively, had permitted the Insurers to classify investments in Preference Shares and Equity Shares as part of “Approved Investment” if dividend is paid on such Shares “for at least 2 years out of 3 consecutive years immediately preceding ” instead of “for at least 2 consecutive years immediately preceding” for the period from 1 April 2020 to 30 September 2021.

The aforesaid period has been further extended till 31 March 2022.         

For more information, click here.

IBBI (Liquidation Process) (Second Amendment) Regulations, 2021 ‒ 30 September 2021

The Insolvency and Bankruptcy Board of India (IBBI) has issued the IBBI (Liquidation Process) (Second Amendment) Regulations, 2021 wherein certain modifications have been made in the principal Regulations. Some of the important amendments are as follows:

• In Regulation 31A ‘Stakeholder’s Consultation Committee’:

1. The scope of the advice to be provided by the Consultation Committee constituted by the liquidator has been expanded, which will cover all aspects related to sale of assets and appointment of professionals.
2. Manner for selection of representatives of stakeholders in Stakeholder’s Consultation Committee has been provided.

• In paragraph 1 ‘Auction’ of Schedule I ‘Mode of Sale’:

1. A proviso has been added in clause (3), which states that the liquidator shall not be required to make the payment of any non-refundable deposit or fee for participation in an auction under the liquidation process and the earnest money deposit shall not exceed 10% of the reserve price.
2. To enhance the transparency and accountability, a new clause (11A) has been inserted, which states that the Liquidator is required to intimate the reasons for rejection of the highest bid to the highest bidder and mention the same in the next progress report.

These regulations shall come into force w.e.f 30 September 2021.

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IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2021 ‒ 30 September 2021

The IBBI has issued the IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2021 wherein following Regulations have been amended:

• Regulation 17 ‘Constitution of Committee’;

• Regulation 36A ‘Invitation for expression of interest’;

• Regulation 36B ‘Request for resolution plans’;

• Regulation 39 ‘Approval of resolution plan’.

These regulations shall come into force w.e.f 30 September 2021.

For more information, click here.

Guidance Note on SEBI (LODR) Regulation 23(9) regarding disclosure of related party transactions ‒ 30 September 2021

The Bombay Stock Exchange (BSE) vide its Circular dated 1 April 2021 had issued a Guidance Note (GN) on SEBI (Listing Obligations and Disclosure Requirements (LODR)) Regulations 23(9) on disclosure of related party transactions, which comprised of guidance on the various aspects of related party disclosures.

Now, the BSE has issued a clarification on ‘Q 3. Whether to publish all Related Party Transaction on standalone or consolidated basis’ of the above-mentioned GN, wherein it has been clarified that:

• Listed entities submitting only standalone financial result under Regulation 33 of SEBI (LODR), Regulations, 2015, are required to submit related party transactions on standalone basis under Regulation 23(9) of said regulation.

• Further, listed entities submitting both standalone & consolidated financial results under Regulation 33 of SEBI (LODR), Regulations, 2015, are required to submit related party transactions only on consolidated basis under Regulation 23(9) of aforementioned regulations.

For more information, click here.

Formats specifying disclosure of Corporate Governance by High value debt listed entities ‒ 1 October 2021

The SEBI has issued the SEBI (LODR) (Fifth Amendment), Regulations 2021 vide its notification dated 7 September 2021, wherein the corporate governance requirements were extended to high value debt listed entities on comply or explain basis until 31 March 2023.

In this regard, the BSE has clarified that the following formats and requirements for disclosures of such corporate governance requirements shall be applicable for the purpose of compliance:

• SEBI Circular dated 8 February 2019 on the Annual Secretarial Audit Report and Secretarial Compliance report.

• Annexure 1 of SEBI Circular dated 31 May 2021 on the quarterly format for reporting on Corporate Governance compliances.

• Part C (disclosures in corporate governance report as part of annual report), D (Declaration by CEO on compliance of the management and directors with the code of conduct) and E (Compliance certificate by auditors or practising Company Secretary of corporate governance compliance) of schedule V of the SEBI (LODR) Regulations, 2015.

The Listed Companies are required to submit those corporate governance requirements in pdf form through BSE listing centre for the quarter ended 30 September 2021.

For more information, click here.