SEBI panel for simultaneous release of company results

CHENNAI: The following are the major recommendations given by the Accounting Standards Committee set up by the Securities and Exchange Board of India under the chairmanship of Mr. Y. H. Malegam in the meeting held on December 7.

Announcement of results, dividends, bonus and rights: At present, companies are required to make announcements regarding financial results, declaration of dividends, rights, bonus, etc., only after the close of the market hours in accordance with clauses 20, 22 and 41 of the listing agreement.

The secondary market advisory committee of SEBI had recommended that companies should be required to make announcements regarding corporate actions such as declaration of dividends and bonus within 15 minutes from the close of the board meeting in which these decisions are taken. The Accounting Standard Committee of SEBI has agreed with this recommendation and further recommended that the financial results of the company should also be disclosed in the same manner. However, the ASC of SEBI felt that necessary safeguards shall be put in place to ensure that all the stock exchanges get the information simultaneously and the information is also disseminated to the common investors who do not have access to the information flashed on the trading terminals of the members of the stock exchange.

The ASC of SEBI recommended that the companies shall immediately disclose all material information simultaneously to all the stock exchanges where the securities of the company are listed; the regional stock exchanges shall disseminate the information to all the stock exchanges where the securities of the company are listed or traded; and in respect of the any material events arising out of decisions taken in the board meetings including the announcements of results, dividends, bonus and rights, the information shall be furnished to the stock exchanges within 15 minutes of the closure of the board meetings.

Audit of half yearly accounts: The committee has recommended that companies may be given an option to publish audited half yearly financial results within two months instead of publishing unaudited results within one month followed by a limited review within two months as the ASC of SEBI felt that this will improve the reliability of information provided to investors.

Format of quarterly/half yearly results: The format for declaration of quarterly/half yearly results and the format of review report for banks has been recommended by the Reserve Bank of India. The ASC of SEBI has recommended that the same formats may be prescribed under the Clause 41 of Listing Agreement for Banks whose securities are listed on stock exchanges.

The committee has also recommended that the RBI may be also requested to recommend formats for quarterly/half yearly results and review report for NBFCs to be prescribed under Clause 41 of the Listing Agreement.

New accounting standards: The ASC as well as the Corporate Governance Committee of SEBI had recommended that the following Accounting Standards are required to be issued urgently by the Institute of Chartered Accountant of India (ICAI): Segmental reporting, related party transactions, consolidation of accounts, deferred taxes and earning per share.

The ICAI has already issued the Accounting Standards on segment reporting and related party transactions. It has confirmed that it is likely to issue the final Accounting Standards on the other three subjects before March 31, 2001.

The ASC has recommended that in case the Accounting Standards on Consolidation of Accounts and Deferred Taxes are not issued by ICAI by March 31, 2001, the Listing Agreement may be amended to make the International Accounting Standards on Consolidation of Accounts and Deferred taxes mandatory for listed companies till such time the final standards are issued by ICAI.

These new Accounting Standards will significantly increase the disclosures of financial information by the companies. While the impact of these new standards will be felt in the annual accounts of the companies for the year 2001-02, the ASC felt that even the format of quarterly results could be improved by incorporating some of the items arising out of segment reporting, namely, segment-wise turnover and segment-wise profits. The format of quarterly results will be revised to prescribe additional segment-wise disclosures for each business segment of the company.

Quarterly disclosures by companies which are yet to commence commercial production: The ASC has also recommended that the current disclosure requirements, which are prescribed under Schedule VI of the Companies Act for unutilised monies of public issues and the form in which such unutilised funds have been invested, may also be prescribed under Clause 41 of the Listing Agreement for companies which are yet to commence commercial production.

Send this article to Friends by E-Mail

Section  : Business
Previous : FIIs net sellers in equities
Next     : CCS Infotech launches e-group portal