The weekly messenger | Edition 40.20

ACCOUNTING NEWS

Guidance Note on Accounting for Share-based Payments (Revised 2020) – 4 November 2020
 
The ICAI has issued the ‘Guidance Note (GN) on Accounting for Share-based Payments (Revised 2020)’, thereby replacing the erstwhile GN issued in 2005. The Revised GN would be applicable to non Ind AS compliant companies only. The main objective of revision of this GN is to align it with Ind AS 102 to the extent possible. The revised edition also deals extensively with group-wide share-based payment transactions.
 
This GN would be applicable to share-based payment plans, the grant date in respect of which falls on or after 1 April 2021. However, an enterprise is not required to apply this GN to share-based payment to equity instruments that are not fully vested as at 1 April 2021.
 
For more information, click here.
 
Guidance Note on Applicability of AS 25 and Measurement of Income Tax Expense for Interim Financial Reporting (Revised 2020) - 4 November 2020
 
The ICAI has also issued the ‘GN on Applicability of AS 25 and Measurement of Income Tax Expense for Interim Financial Reporting (Revised 2020)’, thereby replacing the erstwhile GNs issued w.r.t. same in the year 2008 and 2006 respectively. The revised GN includes updated references used in the earlier GNs and relevant examples. It also enlightens about the impact of the EAC Opinions issued by ICAI on the preparation of interim financial reports.
 
For more information, click here.
 
FASB issues Standard that delays Long-Duration Insurance Guidance And eases early adoption provisions – 5 November 2020
 
The Financial Accounting Standards Board (FASB) has issued an Accounting Standard Update (ASU), which will help insurance companies adversely affected by the COVID-19 pandemic by giving them an additional year to implement the ASU No. 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long – Duration Contracts.
 
For more information, click here. 

REGULATORY NEWS

Extension of LLP Settlement Scheme, 2020 – 9 November 2020
 
Considering the disruptions being caused by COVID-19 pandemic, the Ministry of Corporate Affairs has decided to extend the timeline for filing belated documents under the LLP Settlement Scheme, 2020, from 31 August 2020 till 30 November 2020.
 
Further, it has also been clarified that if a statement of account and solvency for the financial year 2019-20 has been signed beyond the period of six months from the end of financial year but not later than 30 November 2020, then the same shall not be deemed as non-compliance.
 
For more information, click here.
 
Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 – 3 November 2020
 
The Securities and Exchange Board of India (SEBI) vide its Circular dated 10 March 2017 had laid down the framework for Schemes of Arrangement by listed entities and relaxation under Rule 19(7) of the Securities Contracts (Regulation) Rules, 1957. Now, in order to further streamline the processing of draft schemes filed with the stock exchanges, certain amendments have been made to the aforesaid Circular, which inter-alia includes:

• Now, the audit committee is required to comment on the valuation report regarding the need for merger/ demerger/ amalgamation/ arrangement, the rationale for the scheme, the synergies of business of the entities involved, the impact on shareholders and a cost benefit analysis of the scheme.
• The listed company would also be required to submit a report from the committee of independent directors recommending the draft scheme, considering, inter alia, whether the scheme is detrimental to the shareholders to the Stock Exchange.
• Listing and trading of specified securities to be commenced within 60 days of receipt of the order of High Court or National Company Law Tribunal simultaneously on all the stock exchanges where the equity shares of the listed entity (or transfer entity) are/ were listed as against the earlier requirement of 45 days.

For more information, click here.
 
Guidelines for rights issue of units by an unlisted Infrastructure Investment Trust – 4 November 2020
 
Chapter VIA of the of SEBI (Infrastructure Investment Trusts (InvITs)) Regulations, 2014 provides the framework for private placement of units by InvITs which are not eligible to be listed. Now, in  order  to  enable  unlisted  InvITs  to  raise further funds, the SEBI has issued a mechanism for raising of funds by unlisted InvITs through rights issue of units in the form of guidelines, which inter-alia include the following broad heads:

• Conditions for issuance;
• Underwriting;
• Letter of Offer;
• Application;
• Pricing of Units;
• Timelines;
• Manner of issuance of units;
• Allotment;
• Restriction on further capital issues.

For more information, click here.

Non-compliance with provisions related to continuous disclosures – 13 November 2020
 
In order to ensure effective enforcement of continuous disclosure obligations by issuers of listed Non-Convertible Debt Securities or Non-Convertible Redeemable Preference Shares (NCRPS) or Commercial Papers, the SEBI has decided to lay down a uniform structure for imposing fines for non-compliance with continuous disclosure requirements, through various measures, which inter-alia incudes:

• The Stock Exchanges shall levy fine and take action in case of non-compliances with continuous disclosure requirements by issuers of listed Non-Convertible Debt Securities and/ or NCRPS and/or Commercial Papers.
• In case a non-compliant entity is listed on more than one recognized stock exchange, the concerned recognized stock exchanges shall take uniform action under this circular in consultation with each other.
• The recognized stock exchanges shall take necessary steps to implement this circular and shall disclose on their website the action(s) taken against the entities for non-compliance(s); including the details of the respective requirement, amount of fine levied/ action taken etc.

The provisions of this Circular shall come into force for compliance period ending on or after 31 December 2020.
 
For more information, click here.
 
Discontinuation of Returns/Reports under FEMA, 1999 – 13 November 2020
 
In order to improve the ease of doing business and to reduce the cost of compliance, the existing forms and reports prescribed under the Foreign Exchange Management Act (FEMA), 1999, were reviewed by the Reserve Bank of India (RBI). Accordingly, the RBI has decided to discontinue 17 returns/reports with immediate effect such as Report w.r.t. Extension of Liaison Offices; Extension of Project Offices; ADR/GDR Movement Report – two way fungibility; Monitoring of disinvestments by Overseas Corporate Bodies etc.
 
For more information, click here. 
 
Frequently Asked Questions (FAQs) - Department wise – 6 November 2020
 
The Insurance Regulatory and Development Authority of India (IRDAI) has issued certain FAQs for different departments such as actuarial, life, non-life, finance & accounts (life and non-life), information technology etc.
 
For more information, click here.

Dispensing with physical signatures on proposal forms – 12 November 2020
 
The IRDAI vide its Circular dated August 2020, had allowed life insurer companies to obtain customers’ consent through electronic means on the proposal form till 31 December 2020.
 
Now, the IRDAI has extended the aforesaid exemption of obtaining customer’s consent through electronic means i.e. without requiring wet signatures on the proposal forms, for the business solicited by individual Insurance Agents and Insurance Intermediaries under all products, till 31 March 2021, subject to certain conditions.
 
For more information, click here.
 
Action(s) to be initiated against listed companies for non-payment of outstanding Annual Listing Fees – 6 November 2020
 
The Bombay Stock Exchange (BSE) vide its Circular dated 6 November 2020, has issued a list of actions which would be taken against listed companies, if they fail to pay their outstanding Annual Listing fee (including the listing fee for Financial Year 2020-21) on or before 20 November 2020. The Actions inter-alia include:

• Display of names of defaulting companies on the website of BSE Limited;
• Display of a message as a running ticker on the electronic portal of the Exchange, whenever the defaulting companies will log in for submitting disclosures;
• Equity shares of the defaulting companies will be moved from Normal Trading to Trade to Trade segment (i.e. gross settlement) for which a 7 days notice will also be issued to all the market participants.

For more information, click here.