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Securities and Exchange Board of India (SEBI) has come up with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2016 effective with retrospective effect from 1st April, 2016.

The amendments were in respect to annual financial results, audit report and annual report tweaking their manner of submission, applicable formats, how they were reviewed, manner of rectification/submission, contains and disclosures of listed entities. New changes are for entities who have listed their specified securities (equity shares and all that converts into equity shares) as well as for entities who have listed their non convertible debt or non convertible redeemable preference share or both.

The listed entities requires to file their annual financial results along with the audited report within sixty(60) days of end of financial year, that is 31st March, 2016 (uniform as per Companies Act, 2013, unless special permission is taken from the tribunal). The 30th May, 2016 is the last day for the listed entities to submit their annual financial results along with the audited report and other forms (now a statement). The major rejig in regulations announced on 25th May, 2016 just few days before the last day, making it effective from 1st April will result in rush at the eleventh hour.

A comparative study of existing regulations with the amended regulations is table as follows:-

Comparative Analysis of SEBI(LODR)Regulations, 2015 with its Amendments dated 25.05.2016

SN

Particular & RN

SEBI(LODR) Regulations, 2015

Amended Regulation, 2016 w.e.f. 01.04.16

1

Manner for submission of Financial Results by entities having listed specified securities  R.33(3)(d)

The listed entity shall submit audited standalone financial results for the financial year, within sixty days from the end of the financial year along with the audit report and either Form A (for audit report with unmodified opinion) or Form B (for audit report with modified opinion):

Provided that if the listed entity has subsidiaries, it shall, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report and either Form A (for audit report with unmodified opinion) or Form B (for audit report with modified opinion).

The listed entity shall submit annual audited standalone financial results for the financial year, within sixty days from the end of the financial year along with the audit report and Statement on Impact of Audit Qualifications (applicable only for audit report with modified opinion):

Provided that if the listed entity has subsidiaries, it shall, while submitting annual audited standalone financial results also submit annual audited consolidated financial results along with the audit report and Statement on Impact of Audit Qualifications (applicable only for audit report with modified opinion):

Provided further that, in case of audit reports with unmodified opinion(s), the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.

2

Applicable formats of Financial Results etc by entities having listed specified securities  R.33(4)

The applicable formats of the financial results and Form A (for audit report with unmodified opinion) & Form B (for audit report with modified opinion) shall be in

the manner as specified by the Board from time to time

The applicable formats of the financial results and Statement on Impact of Audit Qualifications (for audit report with modified opinion) shall be in the manner as specified by the Board.

3

Review of Form and annual audited report by  entities having listed specified securities  R.33(6)

The Form B and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) shall be reviewed by the stock exchange(s) and Qualified Audit Report Review Committee in manner as specified in Schedule VIII.

The Statement on Impact of Audit Qualifications (for audit report with modified opinion) and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) shall be reviewed by the stock exchange(s).

4

Rectification or submission of revised Financial Results by entities having listed specified securities  R.33(7)

The listed entity shall on the direction issued by the Board, carry out the necessary steps, for rectification of modified opinion and/or submission of revised pro-forma financial results, in the manner specified in Schedule VIII.

Deleted.

5

Contains of Annual Report by entities having listed specified securities  R.34(2)(a)

audited financial statements i.e. balance sheets, profit and loss accounts etc;

audited financial statements i.e. balance sheets, profit and loss accounts etc, and Statement on Impact of Audit Qualifications as stipulated in regulation 33(3)(d), if applicable;

6

Financial Results and audited report of entities having listed non convertible debt/non convertible redeemable preference share/both R.52(3)(a)

The annual audited financial results shall be submitted along with the annual audit report and either Form A for audit report with unmodified opinion or Form B for audit report with modified opinion.

The annual audited financial results shall be submitted along with the annual audit report and Statement on Impact of Audit Qualifications (applicable only for audit report with modified opinion): Provided that, in case of audit reports with unmodified opinion, the listed entity shall furnish a declaration to that effect to the Stock Exchange(s) while publishing the annual audited financial results.

7

Review of form and annual audited report of entities having listed non convertible debt/non convertible redeemable preference share/both 52(3)(b)

The Form B and the accompanying annual audit report submitted in terms of clause (a) shall be reviewed by the stock exchange(s) and the Qualified Audit Report Review Committee in the manner specified in Schedule VIII.

The Statement on Impact of Audit Qualifications (for audit report with modified opinion) and the accompanying annual audit report submitted in terms of clause (a) shall be reviewed by the stock exchange(s).

8

Rectification or submission of revised Financial Result of entities having listed non convertible debt/non convertible redeemable preference share/both 52(3)(c)

The listed entity shall on the direction issued by the Board, carry out the necessary steps, for rectification of modified opinion and/or submission of revised pro-forma financial results, in the manner specified in Schedule VIII.

Deleted.

9

Formats of Financial Results and audit report of entities having listed non convertible debt/non convertible redeemable preference share/both 52(3)(d)

The applicable formats of Form A and Form B shall be specified by the Board from time to time.

The applicable format of Statement on Impact of Audit Qualifications (for audit report with modified opinion) shall be in the manner as specified by the Board

10

Contains of Annual Report  of entities having listed non convertible debt/non convertible redeemable preference share/both 53(a)

audited financial statements i.e. balance sheets, profit and loss accounts etc;

audited financial statements i.e. balance sheets, profit and loss accounts etc, and Statement on Impact of Audit Qualifications as stipulated in regulation 52(3)(a), if applicable

11

Review by Stock Exchange R.95

Form B accompanying Annual Audit Report.

95. The recognised stock exchange(s) shall review the Form B and the accompanying annual audit report, submitted in terms of clause (d) of sub-regulation (3) of regulation 33 and clause (a) of sub-regulation (3) of regulation 52, in the manner specified in Schedule VIII.

Statement on Impact of Audit Qualifications accompanying Annual Audit Report.

95. The recognised stock exchange(s) shall review the Statement on Impact of Audit Qualifications and the accompanying annual audit report submitted in terms of clause (d) of sub-regulation (3) of regulation33 and clause (a) of sub-regulation (3) of regulation 52

12

Disclosure in Financial Results

Schedule IV, Part A, clause B

If the auditor has expressed any modified opinion(s) or other reservation(s) in respect of audited financial results submitted or published under this para, the listed entity shall disclose such modified opinion(s) or other reservation(s) and cumulative impact of the same on profit or loss, net worth, total assets, turnover/ total income, earning per share or any other financial item(s) which may be impacted due to modified opinion(s) or other reservation(s), while publishing or submitting such results

If the auditor has expressed any modified opinion(s) in respect of audited financial results submitted or published under this para, the listed entity shall disclose such modified opinion(s) and cumulative impact of the same on profit or loss, net worth, total assets, turnover/total income, earning per share total expenditure, total liabilities or any other financial item(s) which may be impacted due to modified opinion(s) while

publishing or submitting such results.

BA. If the auditor has expressed any modified opinion(s), the management of the listed entity has the option to explain its views on the audit qualifications and the same shall be included in the Statement on Impact of Audit Qualifications (for audit report with modified opinion).

BB. With respect to audit qualifications where the impact of the qualification is not quantifiable:

i. The management shall make an estimate and the auditor shall review the same and report accordingly; or

ii. If the management is unable to make an estimate, it shall provide the reasons and the auditor shall review the same and report accordingly.

The above shall be included in the statement on impact of audit qualifications (for audit report with modified opinion)

13

Schedule VIII

Schedule VIII - manner of reviewing form b accompanying annual Audited results [see regulations 33(6) and 33(7) , 52(3)(b) and 52(3)(c) and 95]

Deleted

It is clear from this study that now Form B is replaced by Statement on Impact of Audit Qualifications and Form A is replaced by a declaration by the listed entity. If applicable, Statement on Impact of Audit Qualifications should also be included in the annual report. Only stock exchanges will review the results and reports. Regulations for rectification and submission of revised results were omitted all together.     

By this time, when around 1345 listed entities have already submitted its results, etc., many entities have already finalised contents of their annual report and Infosys,  the company known for its best corporate governance practice,  had already published its annual report, how far SEBI will be successful in its complete perspective changed way of looking into the financial results, audited report and annual report of listed entities is a big question.

Note: Readers can share their constructive comments at yoginakochar@yahoo.co.in

Disclaimer: The views expressed in this article is only  for academic purpose for the discussed topic and shall not be construed as any professional advice in any manner. This article is the property  of the writer CS Yogina Kochar and no part of it can be  copied, reproduced or distributed in any manner. 


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