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Tuesday, April 6, 2010

Understand listing agreement amendments with new sub-clauses in 41 & 49 (position before & after 5th April 2010)

As part of a review of the extant policies of disclosure requirements for listed entities and  also  to  bring  more  transparency  and  efficiency  in  the  governance  of  listed entities  it  has  been  decided  to  specify  certain  listing  conditions  so  to  amend  the Equity Listing Agreement.  This post has list of new clauses inserted and ends with a summary table to understand position before and after amendment along with the effective date.

Voluntary  adoption  of  International  Financial Reporting Standards  (IFRS)  by listed entities having subsidiaries - Insertion of Clause 41(I) (g)
Various  regulatory  authorities  are  working  on  arriving  at  a  roadmap  for implementation of IFRS in India and on the steps to be taken for convergence of the Indian Accounting Standards with IFRS by April 01, 2011.

Requirement of a valid peer review certificate for statutory auditors- Insertion of Clause 41(1) (h)

It  has  been  decided  that  in  respect  of  all  listed  entities,  limited review/statutory audit reports submitted to the concerned stock exchanges shall be given only by those auditors who have subjected themselves to the peer review process of ICAI and  who  hold  a  valid  certificate  issued  by  the  ‘Peer  Review  Board’  of  Institute of Chartered Accountants of India.

Interim disclosure of Balance Sheet items by listed entities- Insertion of clause 41(V) (h) and Annexure IX

With  a  view  to  have more  frequent  disclosure  of  the  asset-liability position  of entities, it has been decided that listed entities shall disclose within forty-five days from  the  end  of  the  half-year,  as  a  note  to  their  half-yearly  financial  results,  a statement of assets and liabilities in the specified format.

Approval of appointment of ‘CFO’ by the Audit Committee- Insertion of Clause 49(II)(D)(12A)

 

GIST OF SEBI CIRCULAR 5TH APRIL 2010 – AMENDMENT OF LISTING AGREEMENT

Credits to Mr. CS Sriram Sharma for the wonderful presentation in table format:

SL. NO

CLAUSES

AMENDMENT OF CIRCULAR

1

Clause 24 (i)

Company while filing for approval with the Stock Exchange any draft scheme of amalgamation / merger / reconstruction, etc under Clause 24(f) is required to file with the Stock Exchange an Auditors’ Certificate that the accounting treatment contained in the scheme of amalgamation is in compliance with the Accounting Standards specified by ICAI.

Effective Date: 5th April 2010.

2

Clause 41 (I)(c)

Companies have an option to submit audited or un-audited quarterly and year to date financial results within 45 days of the end of each quarter instead of 1 month of the end of each quarter. [The above clause is for results to be submitted for other than last quarter]

3

Clause 41 (I) (c)

For Companies which opt to submit un-audited financial results, the copy of the Limited Review report should be furnished to Stock Exchange within 45 days from the end of the quarter instead of 2 months earlier. [The above clause is for results to be submitted for other than last quarter]

4

Clause 41 I (d)

In respect of the last quarter, Companies have an option to submit un-audited financial results for the quarter within 45 days of the end of the Financial Year OR if the Company decides to submit audited financial results for the entire Financial Year it should do so within 60 days of the end of the Financial Year

5

Clause 41 I (d)

The Limited Review Report in respect of the last quarter should be furnished to the Stock Exchange within 45 days of the end of the Financial Year

6

Clause 41 I (e) (i)

In case of a Company having subsidiaries, it may in addition to submitting quarterly and y-t-d stand alone financial results to the Stock Exchange within 45 days from the end of the quarter, also submit quarterly and year to date consolidated financial results within 45 days from the end of the quarter

7

Clause 41 I (e) (ii)

For a Company having subsidiaries, it should submit the annual audited consolidated financial results along with the annual audited stand alone financial results within 60 days from the end of the Financial Year to the Stock Exchange

8

Clause 41 I (ea) & (eaa)

A Statement of Assets & Liabilities as at the end of the half-year should be disclosed within 45 days from the end of the half-year to the Stock Exchange. The said information should be disclosed as a part of the audited or un-audited financial results for the half-year to the Stock Exchange so as to keep the shareholders informed about the solvency position of the Company

9

Clause 41 I (g)

If the Company has subsidiaries, it may opt to submit consolidated financial results as per IFRS

10

Clause 41 I (h)

Company to ensure that the Limited Review / Audit Reports is given by an Auditor who has subjected himself to the peer review process of the ICAI and holds a valid certificate issued by the Peer Review Board of the ICAI.

Effective Date: For appointment of Auditors after 1st April 2010.

11

Clause 41 V (g)

Disclosure of Balance Sheet items as per Cl 41 I (eaa) to be in the format specified in Annexure IX drawn from the Schedule VI of the Companies Act, 1956

12

Clause 41 VI (b)

Disclosure of Consolidated financial results along with the following items on a stand alone basis as a foot note (a) Turnover (b) Profit before Tax (c) Profit after tax instead of only consolidated financial results

13

Clause 41 VI (b) (iv)

Companies that are required to prepare consolidated financial results for the first time at the end of the Financial Year should exercise the option mentioned in Cl. 41 VI (b) in respect of the quarter during the Financial Year in which they first acquire the subsidiary

14

Annexure V to Clause 41 – Limited Review Report for Companies other than Banks

Disclosures regarding “Public Shareholding” and “Promoter & Promoter Group Shareholding” which have been traced from the disclosures made by the management and have not been audited by us inserted

15

Annexure VI to Clause 41 – Limited Review Report for Banks

Same as point 14 above.

16

Annexure VII & VIII  (both parts)

Except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter & Promoter Group Shareholding’ which have been traced from the disclosures made by the management and have not been audited by us inserted after the words pursuant to the requirement of Clause 41 of the Listing Agreement

17

Annexure IX

Statement of Assets & Liabilities introduced

18

Clause 49 II D (12A)

Audit Committee to approve the appointment of CFO - Approval of the appointment of CFO after assessing the qualifications, experience and background of the candidate.

 

Unless effective date is mentioned above, all other provisions shall be effective from the date of circular as mentioned below..

Source: SEBI CIR/CFD/DIL/1/2010 dated 5th April 2010

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