Issue no. 7 | February 2017

Issue no. 7 | February 2017

The Insolvency and Bankruptcy Code (Code) is an important legislation and overhauls the current highly fragmented insolvency regime and provides a unified framework and is expected to have a number of implications on the companies in India.

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The Insolvency and Bankruptcy Code (Code) is an important legislation and overhauls the current highly fragmented insolvency regime and provides a unified framework and is expected to have a number of implications on the companies in India. Our article on this topic provides an overview of the requirements and implications of the Code e.g. explains triggers of insolvency resolutions, resolution plan and timelines, transitional provisions, etc. The article also highlights that all categories of companies are in its ambit and allows both financial as well as operational creditors to initiate the process.

An entity may extinguish its financial liability either by issuing an equity instrument or renegotiating terms of the instrument resulting in its reclassification as an equity instrument. We have explained the accounting of debt for equity swap with help of illustrative examples and flowcharts.

The Companies Act, 2013 (2013 Act) mandates the Board of Directors of every company to lay stand-alone and Consolidated Financial Statements (CFS) at every annual general meeting of the company. Over last two years, the Ministry of Corporate Affairs issued a number of amendments and clarifications to various sections of the 2013 Act. Our article on CFS summarises all the revised requirements relating to CFS under the 2013 Act and Securities and Exchange Board of India regulations.

The preparation of CFS under Ind AS also impacts the accounting of deferred taxes of a group in relation to intra-group transactions and undistributed profits of a subsidiary, associate and joint venture. Our article explains the accounting under Ind AS with the help of worked examples.

Internationally, there is no specific guidance under International Financial Reporting Standards (IFRS) on accounting of oil and gas producing activities post exploration. Therefore, recently ICAI issued a guidance note on accounting of oil and gas producing activities under the accounting framework of Ind AS. Our article highlights key differences in accounting of oil and gas producing activities under guidance note (Indian GAAP) vis-à-vis guidance note (Ind AS).

As is the case each month, we also cover a regular round-up of some recent regulatory updates in India.

 

© 2017 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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