The weekly messenger | Edition 29.20

Accounting News

FASB improves Convertible Instruments and Contracts in an Entity’s Own Equity – 5 August 2020

The Financial Accounting Standards Board (FASB) has issued a new Accounting Standards Update (ASU), which is expected to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The ASU will make the accounting for convertible instruments easier by removing major separation models under current Generally Accepted Accounting Principles (GAAP).

For more information, click here. 

Auditing News

Review Engagements on Interim Financial Information in the Current Evolving Environment Due to COVID-19 – 7 August 2020

The ICAI has issued a publication namely ‘Review Engagements on Interim Financial Information in the Current Evolving Environment Due to COVID-19’, which highlights the key focus areas to be considered by the auditor in the current environment, while undertaking review of interim financial information in accordance with SRE 2410 ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’  .

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Regulatory News

IBBI (Liquidation Process) (Third Amendment) Regulations, 2020 – 6 August 2020

The Insolvency and Bankruptcy Board of India (IBBI) has notified the IBBI (Liquidation Process) (Third Amendment) Regulations, 2020, wherein certain changes have been made in Regulation 4, which deals with the Liquidator’s fee. Earlier, the aforesaid Regulation require the committee of creditors to fix the fee payable to the liquidator.  However, where the fee has not been fixed by the committee of creditors, the Regulation provide for a fee as a percentage of the amount realised and of the amount distributed by the liquidator.  It has been observed that there have been instances wherein one liquidator realises the amount while another liquidator distributes the same to stakeholders. Therefore, now, it has been clarified that in such scenarios, a  liquidator who realises any amount, but does not distribute the same shall be entitled to a fee corresponding to the amount realised by him. Likewise, where a liquidator distributes any amount, which is not realised by him shall be entitled to a fee corresponding to the amount distributed by him.

These Regulations shall come into force w.e.f. 6 August 2020.

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IBBI (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020 – 7 August 2020

The IBBI has also issued the IBBI (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020, wherein it has substituted the erstwhile Regulation 5 with a new Regulation 5 ‘Appointment of Liquidator’, wherein it has been clarified that if a situation arise which may require appointment of another resolution professional as the liquidator, then in those scenarios, the corporate person may replace the liquidator by appointing another insolvency professional as liquidator by a resolution of members or partners, or contributories, as the case may be.

These Regulations shall come into force w.e.f. 5 August 2020.

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SEBI (LODR) (Second Amendment) Regulations 2020 – 5 August 2020

The Securities and Exchange Board of India (SEBI) has issued the SEBI (Listing Obligations and Disclosure Requirements (LODR)) (Second Amendment) Regulations 2020, wherein certain changes have been made in sub-regulation (1) of Regulation 42 ‘Record Date or Date of closure of  transfer books’ of the SEBI (LODR) Regulations 2015 . Under the said sub-regulation, earlier the listed entities were required to intimate the record date to all the stock exchange(s) where it is listed for certain purposes such as declaration of dividend, issue of right or bonus shares etc. Now, after the amendments been made in the aforesaid sub-regulation, a listed entity is required to make such intimation not only where it is listed on the stock exchange but also where stock derivatives are available on the stock of the listed entity or where listed entity’s stock form part of an index on which derivatives are available.

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Resolution Framework for COVID-19 related Stress – 6 August 2020

The Reserve Bank of India (RBI) has issued a notification on 'Resolution Framework for COVID-19 related Stress', wherein the RBI has provided a resolution window under the existing RBI (Prudential Framework for Resolution of Stressed Assets) Directions 2019, dated June 7, 2019, in order to mitigate the financial stress faced by borrowers due to economic fallout on account of COVID-19 pandemic.

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Relaxation from submission of Hard Copy of Regulatory Returns – 4 August 2020

Pursuant to COVID-19 situation, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed Life Insurers to upload the Regulatory Returns through BAP module through e-mail instead of filing the same physically up to 31 March 2021. However, the IRDAI has asked the Life Insurers to keep their physical copies of returns ready for filing on a later date, which may be indicated later.

For more information, click here.