Sebi asks stock exchanges to amend Clause 41 of listing agreement

Our Markets Bureau

Mumbai, Oct 14: The capital market regulator Securities and Exchange Board of India (Sebi) has asked the stock exchanges to amend caluse 41 of their listing agreements and that they should also ask the companies to file the unaudited quarterly financial results in the new format suggested by the Accounting Standards Committe (ASC). For this purpose, the ASC has issued clarifications for the segment reporting to be made by the companies.

In a communication to the executive directors, presidents and managing directors of all the stock exchanges, Sebi has said that the manufacturing and trading/service companies which have followed functional (secondary) classification of expenditure in the annual profit and loss account in their most recent anual report, may furnish un-audited financial results on a quarterly basis in the alternative format.

Sebi has also decided to accept the recomendation of the ASC as regards the qualifications in the audit reports. As per this recomendation, the companies shall be required to disclose the audit qualifications along with the audited financial results published under Clause 41 of the listing agreement in addition to the explanatory statements as to how audit qualifications in respect of the audited accounts of the previous accounting year have been addressed in the financial results. Sebi has advised all the exchanges to incorporate these amendments in the clause 41 of the listing agreement immediately and has also asked them to confirm the compliance.

The regulator has also issued some clarifications regarding the segment reporting by the companies as regards their quarterly and other periodical financial results. Sebi has made it mandatory the Accounting Standards-17 on Segment reporting issued by The Institute of Chartered Accountants of India (ICAI) from April 1, 2001. Though some clarifications were sought, whether companies, whose accounting year has commenced before April 1, 2001 and to whom the standard is not applicable for the current year, are required to disclose segmental information in respect of the previous quarters along with the un-audited financial results for the quarter ending on or after September 30, 2001.

Sebi has clarified that in respect of all the companies including companies whose accounting year has commenced before April 1, 2001, segment information prescribed under clause 41 of the listing agreement shall be given for the quarters ending on or after September 30, 2001.

It has further said, in respect of companies whose accounting year has commenced on or after April 1, 2001, cumulative segment information (ie, year to date figures) for the current year in addition to the segment information for the current quarter shall be given begining with the quarter ended September 30, 2001.