SEBI facilitates transition for listed entities covered under IND-AS

Background

MCA vide notification no. G.S.R. 111(E) dated 16th February, 2015 had issued the Companies (Indian Accounting Standards) Rules, 2015 ('IND-AS Rules'). According to IND-AS Rules, the Companies and their auditors shall comply with the IND-AS Rules in preparation of their financial statements and auditor's reports respectively. IND-AS Rules are aligned with the International Financial Reporting Standards (IFRS) and are mandatorily applicable on certain class of companies from April 1, 2016.

List A

(a)		companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of rupees five hundred crore or more;
(b)		companies other than those above and having net worth of rupees five hundred crore or more;
(c)		holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) and (b) above;

List B

(a)		companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees five hundred crore;
(b)		companies other than those covered under List A and (a) above, that is, unlisted companies having net worth of rupees two hundred and fifty crore or more but less than rupees five hundred crore.
(c)		holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) and (b) above under List B:

Companies that meet threshold for the first time as on 31st March 2017 shall apply IND-AS from FY 2017-18 onwards. Similarly, companies that meet threshold for the first time as on 31st March, 2018 shall apply IND-AS from FY 2018-19.

Entities exempted from applicability of IND-AS

IND-AS Rules exempts companies whose securities are listed or are in the process of being listed on SME exchange as referred to in Chapter XB or on the Institutional Trading Platform without initial public offering in accordance with the provisions of Chapter XC of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 need not comply with above.

Further, the insurance companies, banking companies and non-banking finance companies shall not be required to apply IND-AS Rules for preparation of their financial statements either voluntarily or mandatorily.

SEBI Circular

Para 5 of SEBI Circular dated November 30, 2015 provided that companies required to comply with IND-AS Rules while publishing quarterly/ annual financial results under Regulation 33 shall ensure that the comparatives filed along with such quarterly/ annual financial results shall also be IND-AS compliance.

In order to facilitate smooth transition during the first year of IND-AS implementation, Securities Exchange Board of India ('SEBI') issued Circular No. CIR/CFD/FAC/62/2016 dated July 05, 2016 ('the Circular').

Listed entities can continue to report in the format prescribed under SEBI Circular dated November 30, 2015 till the period ending December 31, 2016.

For period ending March 31, 2017 the Circular prescribes following the format under Schedule III to Companies Act, 2013 (Act, 2013) for submission of Unaudited/Audited quarterly financial results i.e. Statement of Profit and Loss and the Unaudited/Audited Half-Yearly Balance Sheet.