SEBI (Securities and Exchange Board of India) might relax the disclose rules for the firms that are planning to go for the initial public offering. This move is to allow a smooth transition to the Ind-AS, the new accounting standards that will start in the upcoming fiscal year.
Recently, the market regulator has written to ICAI (Institute of Chartered Accountants of India) as it is seeking its views and opinions on the matter. The audit companies and ICAI are discussing with the market regulator on the implications related to these new standards, claimed a person with knowledge about this matter. These new standards are in accordance with IFRS (International Financial Reporting Standards).
SEBI’s current rules authorize the companies to disclose the financial statements of the past five years in the IPO document. As of now, there is no precision under these new standards if a company has to repeat its accounts for the past five years if it enters IPO’s right after the new rules are made effective. Due to the lack of this clarity, many companies are claimed to have seized their IPO plans.
One of the sources with knowledge about the matter has stated that this will be the topic of discussion by the SEBI committee on new norms for IPOs and the lack of clarity will be clarified at the discussions.
Regarding this, Manoj Fadnis, the ICAI President stated that the regulator has approached ICAI for suggestions. The issue that has to be decided is if the companies should present the present and previous years’ figures as per the Ind-AS as well as the figures of the three previous financial years as per the Ind-AD or existing AS. Also, if there is any alternative in the same, that will also be discussed.
In the U.S., when the foreign private issuers are given the chance to present their financial statement adhering to the IFRS. They are to present the latest two years’ IFRS complaint information in the document.
