To enhance the quality of financial reporting, SEBI has now decided to review the present system of annual audit reports.

A Qualified Audit Review Committee (QARC) would be set up consisting of ICAI and exchanges to guide SEBI on qualified audit reports.

Listed companies are expected to submit their annual audited reports to stock exchanges which will then refer them to SEBI/QARC.

In cases where the qualifications are significant and the explanation unsatisfactory, the company would be referred to ICAI’s Financial Reporting Review Board (FRRB). If the FRRB upholds the explanations given, SEBI will direct the company to restate its accounts and inform shareholders through an exchange announcement.

SEBI has also harmonised the ICDR (issue of capital and disclosure requirements) regulations pertaining to the infrastructure sector with others.

Henceforth, the minimum subscription limit of 90 per cent in an IPO shall also apply to infrastructure sector IPOs. Earlier, this sector was exempt from these limits. This would be subject to a minimum public shareholding limit of 25 per cent in private sector and 10 per cent in public sector companies.

(This article was published on June 26, 2012)
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