Exposure Draft

Guidance Note on Reports in
Company Prospectuses
(Revised 2018)

Readers may note that this Guidance Note supercedes the Guidance Note on Reports in Company Prospectuses (Revised 2016) issued by the ICAI in November 2016.

(Last date for comments: December 21, 2018)

Issued by
Auditing and Assurance Standards Board
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi

Your comments on this Exposure Draft should reach us by December 21, 2018. Comments are most helpful if they indicate the specific paragraph(s) to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording. The comments should be sent to:

Secretary, Auditing and Assurance Standards Board

The Institute of Chartered Accountants of India

ICAI Bhawan, A-29, Sector-62,

NOIDA, Uttar Pradesh – 201 309

Comments can also be e-mailed at: aasb@icai.in

CONTENTS

Paragraph
No.
Page
No.
Applicability of the Guidance Note 1.1 1
Overview of amendments in the ICDR Regulations 1.2 1
Legal Aspects 1.3-1.7 7
Roles and Responsibilities 1.8-1.12 8
Who are Eligible to Make the Reports 1.13-1.15 10
Fees for Issuing the Reports 1.16 11
Signing the Report 1.17 12
Consent Letter 1.18 12
Comfort Letter 1.19 12
Liability for Misstatement in Prospectus 1.20-1.22 13
Reports and Certificates 1.23-1.27 14
Rights and Powers 1.28-1.29 27
Person to whom the Report should be addressed 1.30 28
Financial Information of the Issuer Company 1.31-1.37 28
Accounting and Auditing Aspects 2.1-2.8 33
Appendices 44-194
1. Illustrative Format of the Consent
Letter
44
2. Comfort Letter 47
3. Illustrative Capitalisation Statement 107
0. Illustrative Auditor’s Examination Report on Financial Information in Relation to Prospectus 109
4. Restated Financial Information 122
6. Illustrative Format of Independent Auditor’s Report on the promoters’ contribution received before opening of the issue 155
7. Illustrative Format of Independent
Auditor’s Report on the cash flow statement and liquidity position of the issuer company
159
8. Illustrative Format of Independent
Auditor’s Report on the Compliance with conditions of proposed preferential issue
163
9. Illustrative Format of Independent Auditor’s Report on the receipt of consideration of specified securities in connection with proposed preferential issue 168
10. Illustrative Format of Independent
Auditor’s Report on the cash flow statement disclosing the use of funds received from promoters contribution for the stated objects
172
11. Illustrative Format of Independent Auditor’s Report on the receipt of consideration  [paid]/[received] and mode of financing in case of non- material [acquisition]/[divestments] 176
12. Illustrative Format of the Engagement Letter for the Entire Engagement to Issue Report on the Prospectus 180
13. Illustrative Format of Representation Letter from Management for Issuance of Examination Report 189

1.2 The SEBI has issued the ICDR Regulations which amended the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR 2009”) with the aim of simplifying the law, eliminating redundancies and inconsistencies and updating references to the Companies Act, 2013. The Chapters have been reorganised for various issues of securities issues like IPO, further public offers, rights issues etc.

Applicability of the Guidance Note

1.1 This Guidance Note is issued for providing guidance to the practitioners in reporting requirements that are required in relation to financial information to be included in the prospectus in case of initial public offering (IPO) in accordance with Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (hereinafter referred to as the “ICDR Regulations”). This Guidance Note, apart from the IPO, is also applicable to other type of filings for the issue of securities (equity shares, debentures and notes etc.) such as letter of offer (in case of right issue), placement document (in case of Qualified Institutional Buyers ‘QIBs’) etc. and filings for the issue of units under Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, as amended and Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, as amended to the extent applicable. The Guidance Note is drafted considering the offer or sale of the securities in India. Accordingly, the guidance or formats included may need to be modified based on other international guidance or practices, in case an offer or sale of the securities is made outside India. This Guidance Note will be applicable in relation to initial offer document such as DRHP/ DLoF/ PPD and others which are filed on or after [Date]. Earlier application is voluntary.

Overview of amendments in the ICDR Regulations

Some of the key amendments are given below:

1) Definitions:

  • Definition of promoter and relative made consistent with the Companies Act, 2013.

Download Full text

Author Bio

More Under SEBI

Posted Under

Category : SEBI (2982)
Type : News (13979)
Tags : ICAI (2751) SEBI (586)

Leave a Reply

Your email address will not be published. Required fields are marked *

Featured Posts