Tax experts' views on the latest SEBI listing rule
April, 08th 2010
SEBI amended the listing agreement of stock exchanges, earlier this week, seeking more balance-sheet disclosures from companies periodically. How will it help retail investors? Tax experts share their views on latest SEBI rule with News.
Vinod Ambavat, Partner, Jain Ambavat & Associates
Moves, like peer-review certificate for statutory auditors will ensure basic audit processes, are not omitted and interim disclosures of balance-sheet items may help in curbing insider trading to some extent. The IFRS stresses upon fair value accounting, and thus, enables reporting of income and asset-liabilities at their fair value. Its (IFRS) voluntary adoption will also help by way of comparison of the financials of the entity on a global basis. The retail investor may not directly benefit from this, but it will definitely help have uniformity of accounting treatment.
The entire focus of the effort towards putting together financial statements by listed companies will be brought forward. This will make it easier for analysts and investors to study companies and do a comparative analysis as all listed companies will be subject to this discipline. The disclosures on key economic changes, which are likely to effect performance or any restructuring which may include divestment or demerger, will improve transparency and boost investor confidence.
Hinesh Doshi, CA & VP, Investor Grievances forum
The disclosures relating to asset liability and balance-sheet figures should have been on a quarterly basis and not every six months. However, this is also a welcome move. The time limit of 45 days will help reduce manipulation of balance sheets and reduce scope for insider trading. The new changes will also put onus on the auditor to certify that a company has followed all accounting standards in case of a merger, amalgamation or any other reconstruction.
Dolphy DSouza, Partner, Ernst & Young
Small investors are concerned about receiving information late which puts them at a disadvantage. Prior to the SEBI circular, if a listed company chose to submit annual audited accounts closer to the 3-month deadline after the end of the accounting year, there was no information in public domain on the companys financial position for five months or more. There are numerous options in terms of timeline for submitting review reports. The new announcement advances the deadlines as well as eliminates the numerous filing options which confused the investors.