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Thursday, Oct 17, 2002

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ICAI, DCA consult over schemes of reconstruction

K.R. Srivats

NEW DELHI, Oct. 16

COMPANIES may soon find it difficult to adjust past losses against the securities premium account in their schemes of reconstruction filed with the Courts. The Institute of Chartered Accountants of India (ICAI) is in consultations with the Department of Company Affairs (DCA) on the issue of the increasing tendency among corporates to adopt this route for presenting a clean and stronger balance sheet after reconstruction.

"Yes, discussions are on between the Department and the Institute on this matter. No considered view has been arrived at yet. A section of professionals feel that the Companies Act may need further amendments," an ICAI official told Business Line here. An industry official, under condition of anonymity, pointed out that courts have been sanctioning restructuring schemes wherein companies have set off their past losses against the securities premium account.

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