Sl no.

Existing provisions of Clause 41

Gist of Representations

Proposed amendments

1.

Time limit for submission of Consolidated Financial Results :

Under Clause 41 (I) (c) the  company has an option either to submit audited or unaudited quarterly and year to date standalone financial results to the stock exchange within one month of the end of each quarter (other than the last quarter).

Under Clause 41 (I) (e) company having subsidiaries has an option to submit consolidated financial results in addition to standalone financial results to the stock exchange(s) within 1 month of the end of each quarter (other than last quarter).

Companies having global operations prefer to submit consolidated financial results. Such companies face practical difficulties in preparation of consolidated financial results, within 1 month of the end of the quarter as a company may have large number of subsidiaries.

It is proposed that the existing timeline under clause 41 (I) (c) may be extended to 2 months for those companies, which opt to submit to Stock Exchanges the consolidated financial results in addition to standalone financial results as per option under clause 41 (I) (e).

2.

Publication of financial results of a listed company which opts to submit consolidated results along with standalone results : 

Under Clause 41 (VI) (b) a company which opts to submit consolidated results along with the standalone results has following two options for publication of results in newspaper:-

1. Clause 41 (VI) (b) (iii) If a company opts to publish only consolidated result then the company shall give reference in the newspaper publication, to the places, such as the company’s website and stock exchange’s website, where standalone results shall be available.

2. Clause 41 (VI) (b) (iv) If a company opts to publish only standalone results then the company shall also publish consolidated figures for turnover, Net Profit After Tax  (NPAT) and Earning Per Share (EPS).

Uniformity and consistency needs to be maintained in the publication requirement. 

It is proposed that a company exercising option no.1  should also publish standalone figures for turnover, Net Profit after Tax (NPAT) and Earning Per Share (EPS) along with the existing requirement mentioned therein.

Similarly, a company exercising option no. 2 should also give reference in newspaper publication to the places such as company’s website, SE’s website etc where the consolidated financial results will be available for perusal, along with the existing requirement mentioned therein.

3.

Limited Review Report need not be placed before Board again if the variation does not exceed 10% or more:

Under Clause 41 (II) (d) a company has to place the limited review report on un-audited quarterly financial results before its Board of directors or the committee thereof (other than the audit committee), prior to  submitting the same to the stock exchange.

1.     The requirement of placing limited review report in case of nil qualifications or remark, before the Board or the prescribed committee may be dispensed with.

2.     Placing the limited review report to Board of directors or committee before submission to Stock exchange may create some practical difficulties considering the fact that the Board or the committee thereof would have met just 30 days before to approve the financial results and convening a board or committee meeting again to approve the limited review report may be strenuous.

It is proposed to mandate this requirement only for those companies, where the variation {as defined in Clause 41 (IV) (a)} between un-audited financials and financials amended pursuant to limited review for the same period, exceeds 10% or more.

4.

Applicability of Accounting Standard (AS) 23 Investment in Associates & Accounting Standard (AS) 27  on Joint Venture

Clause 41 (I) (e) states that the option of submitting Consolidated Financial results is available where the company is having subsidiaries.

AS 23 on ‘Accounting of Investment in Associates in Consolidated Financial Statement’ and AS 27 ‘Financial Reporting of Interests in Joint Ventures are also to be considered while preparing consolidated financial results. Whether the results of associates and joint ventures are to be included in consolidated financial results, if the company does not have subsidiary needs clarification.

It is proposed to specifically mention in the clause that the provisions pertaining to the consolidated financial results as per AS 23 and AS 27 are applicable to the extent relevant.

5.

Submission of limited review report in case of last quarter

Under Clause 41 (I) (c) if a company opts to submit quarterly un-audited financial results the limited review report should be furnished to the stock exchange(s).

It is not clear whether a company opting to submit un-audited financial results, is required to submit limited review report for the last quarter also.

It is proposed to clarify that  limited review report is required to be submitted for all quarters including the last quarter.

6.

Interpretation of term ‘turnover’ for publication of financial results in case of banks:

Under Clause 41 (VI) (b) (iv) if a company opts to publish only standalone financial results, it shall also publish consolidated figures for ‘turnover’, ‘net profit after tax’ and ‘earning per share’.

What does the term ‘turnover’ constitute in case of a bank.

It is proposed to include a clarificatory statement that for banks, the term ‘turnover’ shall have the same meaning of ‘total income’ as calculated in the formats for banks in the annexure to Clause 41.

7.

Change to column no.1 ‘Particulars’ in Annexure I & II of formats for disclosure of financial results:

In column no. I ‘Particulars’ of Annexure I & II, the term total income includes ‘other income’.

 Some companies do not prefer to include ‘Other Income’, while arriving at the profits, as it does not give correct picture of its operational results.

It is proposed that the column may be modified suitably to disclose income from operations. The modified column is given at  Annexure A.

8.

Clarification with regard to alternative formats

Clause 41 (V) (b) states that manufacturing, trading and service companies, which have followed functional (secondary) classification of expenditure in the annual profit and loss account published in the most recent annual report or which proposed to follow such classification for the current financial year, may furnish quarterly financial results in the alternative format given in Annexure III. The alternative format can be used for a subsequent quarter only if such format is used consistently from the first quarter of the financial year.

 The last sentence of clause 41 (V) (b) is not clear.

It is proposed that the last sentence of clause 41 (V) (b) be replaced as “The alternative formats can be used only if such format is used consistently from first quarter of the financial year”.

9.

Interim Dividends

The first sentence of Clause 41 (IV) (l) states that “The company shall disclose the following in respect of dividends paid or recommended for the year, including interim dividends (only in respect of annual results)…”

The requirement of disclosing information of dividend paid or recommended should be disclosed in quarterly periods also.

It is proposed that the first sentence of Clause 41 (IV) (l) to be replaced as “The company shall disclose the following in respect of dividends paid or recommended for the year, including interim dividends…”

10.

Reference to applicable accounting standards

Under Clause 41 (VI), (V) and certain footnotes of the formats there are references to accounting Standards issued by ICAI, only.

Clause 41 gives reference to accounting standards issued by ICAI and does not refer to Company (Accounting Standards) Rules 2006. It is suggested to give reference to both i.e. accounting standards issued by ICAI and Company (Accounting Standards) Rules 2006.

It is proposed that  in the relevant places of clause 41 reference to ‘accounting standards issued by ICAI’ be changed to ‘accounting standards issued by ICAI/ Company (Accounting Standards) Rules 2006, whichever is applicable’.

11.

Publication of reference of standalone financial statement of an unlisted subsidiary if it is not available on website

Under Clause 41 (VI) (b) (iii) where a company opts publish only consolidated financial results, it shall give a reference in the newspaper publication, to the places, such as the company’s website and stock exchanges’ websites, where the standalone results will be available for perusal.

How can the company give reference to  standalone statements of an unlisted subsidiary; results of such subsidiary are not available on website.

The existing requirement of giving reference to website is applicable only for the standalone financials of the listed holding company. To avoid confusion, it is proposed that the sub-clause may be modified as follows:- If the company opts to publish only consolidated financial results, it shall give a reference in the newspaper publication, to the places, such as the company’s website and stock exchanges’ websites, where the standalone results of the company  will be available for perusal.