With a view to improve transparency and corporate governance, market regulator SEBI made it mandatory for all listed companies to disclose their financial results within 45 days of the end of every quarter. Companies would also be required to disclose their audited financial statements within 60 days of every financial year end, the Securities and Exchange Board of India (Sebi) said while amending the equity listing agreement.
“It has been decided that listed entities shall disclose, on standalone or consolidated basis, their quarterly (audited or unaudited with limited review) financial results within 45 days of the end of every quarter,” Sebi said in a circular. Earlier, companies had to disclose their results 30 or 60 days after the end of each quarter.
The market watchdog said the decision is aimed at streamlining submission of financial results by making it uniform and to reduce the timeline for submission of the same to the stock exchanges.
It has also said turnover, profit-after-tax and profit-before-tax should be mentioned on a standalone basis at the time of presenting the consolidated results.
Sebi has also mandated companies to disclose their asset-liability position within 45 days of every six months.
“With a view to have more frequent disclosure of the asset-liability position of entities, it has been decided that listed entities shall disclose within 45 days from the end of the half year, as a note to their half-yearly financial results, a statement of assets and liabilities in the specified format,” Sebi said.
At present, shareholders have access to the statement of assets and liabilities of the listed entity and its solvency position only on an annual basis.
“This is a step in the right direction by Sebi for corporate governance and transparency. Considering the global financial crisis it is important to know the position of the company on half-yearly basis,” SMC Capitals’ equity head Jagannadham Thunuguntla said.
Sebi further said to ensure that the chief financial officer of a company has adequate expertise to review and certify financial statements, appointment of the CFO should be approved first by the audit committee before the management gives its nod.
Listed companies would also require to submit to the stock exchanges an auditors’ certificate that the accounting treatment in merger and amalgamation schemes is in compliance with accounting standards.
The Sebi also said audit reports of only those auditors would be accepted who have undergone accounting regulator ICAI’s peer review process.
To familiarise companies with the international financial reporting standard (IFRS), which entities would have to mandatorily converge with in April 2011, Sebi has given entities the option to either prepare their financial results as per Indian accounting standards or the international accounting practice.