The weekly messenger | Edition 31.20

Accounting News

IASB issues IFRS Taxonomy Update for COVID-19 Related Rent Concessions – 18 August 2020

The International Accounting Standards Board (IASB) has issued an update to the IFRS Taxonomy 2020 for COVID-19 Related Rent Concessions, which amended IFRS 16 Leases. The Update includes IFRS Taxonomy elements to reflect the new disclosure requirements introduced by the amendments issued by the IASB to the aforesaid standard in May 2020.

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Regulatory News

GN on Report Under Section 92E of the Income Tax Act, 1961 (Transfer Pricing) (Revised 2020) – 20 August

The ICAI has issued the revised version of its Guidance Note (GN) on Report Under Section 92(E) of the Income Tax Act, 1961 (Transfer Pricing), based on the changes brought by the Finance Act, 2020.
 
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Clarification on Extension of AGM for FY ended 31 March 2020 – 17 August 2020

The Ministry of Corporate Affairs (MCA), vide its Circular dated 5 May 2020 had allowed the Companies to hold their Annual General Meeting (AGM) within the prescribed timelines i.e. up to 30 September 2020, through video conferencing or other audio visual means during the calendar year 2020, subject to the fulfilment of certain conditions. Further, it was also clarified that if the aforesaid companies would not able to conduct their AGM as per the framework given in the attached Circular, then in that case, they were advised to go for extension of the AGM at a suitable point of time.  
 
The MCA has now issued a further clarification, wherein it has prescribed that the companies which are unable to hold their AGM for the Financial Year (FY) ended 31 March 2020, despite of availing the relaxations provided in the aforesaid Circular, can file their applications in form GNL-1 for seeking extension of time for holding AGM for the aforesaid FY with the concerned ROC before 29 September 2020.
 
Extension can be applied for a period of upto three months i.e. till 31 December 2020.
 
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Companies (CSR Policy) Amendment Rules, 2020 – 24 August 2020

The CG has issued the Companies (Corporate Social Responsibility (CSR) Policy) Amendment Rules, 2020, wherein the following changes have been made:

• In Rule 2(1)(e), which provides the definition of CSR Policy, following proviso has been inserted: “Provided that any company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22 and2022-23 subject to the conditions that-

1. such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item(ix) of Schedule VII to the Act.
2. details of such activity shall be disclosed separately in the Annual Report on CSR included in the Board’s Report”.

• Consequential changes have been made in Rule 4(1) CSR Activities and Rule 6(1) CSR Policy.

These Rules shall come into force w.e.f. 24 August 2020.
 
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Amendments in Schedule VII of the Companies Act, 2013 – 24 August 2020

The MCA has amended the Schedule VII ‘Activities which may be included by Companies in their CSR Policies’ of the Companies Act, 2013, wherein it has included certain more entities which are engaged in research and development under the ambit of the aforesaid Schedule, which means that contribution to such entities would now be treated as Contribution for CSR Activities.

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Updated FAQs on SEBI (Buy-back of Securities) Regulations, 2018 – 14 August 2020

The Securities and Exchange Board of India (SEBI) has issued updated Frequently Asked Questions (FAQs) on SEBI (Buy-back of Securities) Regulations, 2018, which inter-alia includes:

• What is the manner in which the company can buy back its own shares?
• Can a company buyback its shares without passing shareholders’ resolution?
• Where can one get details of companies proposing to buyback their shares?
• What is the manner in which the company decides the acceptances from each shareholders? 
• Can cash component of the escrow account in the buyback offer process be maintained in an interest bearing account?
• Can the letter of offer be dispatched through electronic means?

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Consultation Paper on the format for Business Responsibility and Sustainability Reporting – 18 August 2020

The SEBI has issued a Consultation Paper on the new format for Business Responsibility and Sustainability Reporting, wherein the SEBI has invited public comments on the aforesaid Reporting Format as prescribed by the Committee setup by the MCA and has also proposed that the new format will be applicable to top 1000 listed entities by market capitalisation on a voluntary basis for FY 2020-21 (for those who choose not to adopt the new format, the existing format will apply) and will be mandatory from FY 2021-22.

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New Definition of Micro, Small and Medium Enterprises – clarifications – 21 August 2020

The Reserve Bank of India has issued a clarification with respect to the new definition of micro, small and medium enterprises, based on the representations received from various IBA and banks regarding the applicability of certain aspects on new criteria for classifying the enterprises as micro, small and medium enterprises.
 
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Dividend Criteria for Equity Investment under “Approved Investment”- 21 August 2020

The Insurance Regulatory and Development Authority of India (IRDAI), after considering the representations made by Life and General Insurance Councils, has permitted insurers to classify investments in Preference Shares and Equity Shares as a part of ‘Approved Investment’ for the period 1 April 2020 to 31 March 2021, if such shares have paid dividend “for at least 2 years out of 3 consecutive years immediately preceding” instead of “for at least 2 consecutive years immediately preceding” (as required under Regulation 3(a)(4) and 3(a)(5) of IRDAI (Investment) Regulations, 2016).
 
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