The weekly messenger | Edition 11.22

Accounting News

Companies (Ind AS) Amendment Rules, 2022 – 4 April 2022

The Ministry of Corporate Affairs (MCA) has issued the Companies (Ind AS) Amendment Rules, 2022, wherein certain changes have been made in the following Ind AS:

• Ind AS 101 ‘First-time Adoption of Indian Accounting Standards’

• Ind AS 103 ‘Business Combinations’

• Ind AS 109 ‘Financial Instruments’

• Ind AS 16 ‘Property, Plant and Equipment’

• Ind AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’

• Ind AS 41 ‘Agriculture’

These Rules shall come into force w.e.f. 4 April 2022.

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Auditing News

Announcement - Peer Review Mandate - Roll Out - (Revised) – 11 April 2022

The Institute of Chartered Accountants of India (ICAI) vide its Announcement dated 12 February 2022, had issued a revised Peer Review Mandate, wherein the coverage of the peer review was enhanced by covering more firms under the ambit of the same.  

Now, the ICAI has issued a revised Announcement, wherein in order to bring in more clarity, certain aspects of the Peer Review Process mandate have been revised such as holding a valid Peer Review certificate by Practice Units should be a prerequisite for undertaking audit of all entities falling under phase I; II; III and IV of the mandate from respective dates of mandate becoming operative.

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Regulatory News

Companies (Management and Administration) Amendment Rules, 2022 – 6 April 2022

The MCA has issued the Companies (Management and Administration) Amendment Rules, 2022, wherein in Rule 14 ‘Inspection of Registers, Returns etc.’, a new sub-rule (3) has been inserted, which states that:

“Notwithstanding anything contained in sub-rules (1) and (2), the following particulars of the register or index or return in respect of the members of a company shall not be made available for any inspection under sub-section (2) or for taking extracts or copies under sub-section (3) of section 94, namely:-address or registered address (in case of a body corporate); e-mail ID; Unique Identification Number; PAN Number”.

These Rules shall come into force w.e.f. 6 April 2022.

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Companies (Incorporation) Amendment Rules, 2022 – 8 April 2022

The MCA has issued the Companies (Incorporation) Amendment Rules, 2022, wherein the following changes have been made:

• In Rule 12 ‘Application for Incorporation of Companies’, the following proviso has been inserted:

“Provided further that in case of a Company being incorporated as a Nidhi, the declaration by the Central Government under section 406 of the Act shall be obtained by the Nidhi before commencing the business and a declaration in this behalf shall be submitted at the stage of incorporation by the company.”

• In Annexure, Form No. INC.20A ‘Declaration for commencement of business’ has been substituted with a new form.

These Rules shall come into force w.e.f. 8 April 2022.

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Clarification on applicability of Regulation 23(4) read with Regulation 23(3)(e) of the SEBI (LODR) Regulations, 2015 in relation to Related Party Transactions – 8 April 2022

Regulation 23(3)(e) of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements (LODR)) Regulations, 2015 (SEBI (LODR) Regulations, 2015) specifies that omnibus approval granted by the audit committee shall be valid for a period of one year and shall require fresh approvals after expiry of one year.  Further, Regulation 23(4) of the SEBI (LODR) Regulations, 2015 requires shareholder approval for material related party transactions (RPTs). 

Section 96(1) of the Companies Act, 2013 specifies that the time gap between two Annual General Meetings (AGMs) cannot be more than fifteen months.

In order to facilitate listed entities to align their processes to conduct AGMs and obtain omnibus shareholders’ approval for material RPTs, the SEBI has issued a Circular, wherein it has been specified that the shareholders’ approval of omnibus RPTs approved in an AGM shall be valid upto the date of the next AGM for a period not exceeding fifteen months. However, in case, where the omnibus approvals for material RPTs are obtained from shareholders in general meetings other than AGMs, then in that case the validity of such omnibus approvals shall not exceed one year.

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SEBI (LODR) (Third Amendment) Regulations, 2022 – 11 April 2022

The SEBI has issued the SEBI (LODR) (Third Amendment) Regulations, 2022, wherein the following changes have been made:

• In Regulation 54 and Regulation 56, the words “Asset Cover” have been replaced with the words “Security Cover”;

• In Regulation 54(1):

-      Before the words and symbols “listed non-convertible debt securities”, the word “secured” has been inserted.

-      After the words “principal amount”, the words “and the interest thereon” have also been inserted;

These Regulations shall come into force w.e.f. 11 April 2022.

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Updated FAQ's on Regulation 17(1C) of SEBI (LODR) Regulations, 2015 – 8 April 2022

The Bombay Stock Exchange has issued a Frequently Asked Question (FAQ) w.r.t. newly inserted Regulation 17 (1C) of the SEBI (LODR), Regulations 2015, which provides clarification on the following matter:

FAQ: Whether the provision of Regulation 17(1C) shall also be applicable to re-appointment of directors?

Response: The provisions of regulation 17(1C) shall also be applicable in case of re-appointment of directors.

For more information, click here.