Entities that are formed under the provisions of the Companies Act 2013 or previous company law have to disclose their financial results annually. Under the companies act, companies are required to disclose and furnish their annual returns, file respective taxes, director’s report and compliance with specific provisions. Financial Results under SEBI regulations is compulsory for listed entities.
Provisions related to listing of securities in Stock Exchange- Financial Results under SEBI
Companies that have their securities listed in a stock exchange have to comply with the rules laid down by the Securities Regulator. The primary regulatory authority for listing of securities in the stock exchange is the Securities Exchange Board of India (SEBI). The regulations that apply to governance of securities in a stock exchange is the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).
Regulation 33 speaks about Financial Results under SEBI regulations. All listed companies have to follow definite protocols for disclosing financial results under these regulations. For disclosing financial statements, specific timelines have been allocated by the regulator.
Which financial results would this be applicable to?
Financial results under SEBI regulations would be applicable to the following:
- Quarterly Financial Statements which are required to be submitted by listed entity;
- Annual Financial Statements which are required to be submitted by listed entity; and
- Audited Financial Results which are required to be submitted by the listed entity annually.
These financial results under SEBI regulations are supposed to be submitted between 45 to 60 days from the end of the quarter of the financial year. Annual Financial results have to be submitted 60 days from the end of the financial year. Listed companies have to comply with the timelines allocated by the regulator.
Financial results submitted above may be audited or unaudited. The auditing of financial statements would be subject to the following:
In case the entity submits financial statements which are not audited as per the requirement of the authority, then such statements would be subject to limited review by the statutory auditor. The statutory auditor would have to submit a limited review final report. In case, the financial statements are submitted by a public company, then the review or audit will be conducted by a practising chartered accountant. Where the listed company submits audited financial results, then the statutory auditor will provide an audit report.
For the annual audit report a statement regarding the audit is required. The statement would be the opinion on the audit. The listed entity will submit the audit report to the stock exchange. If the audit report has an opinion which is not modified, then the company must submit a declaration to the stock exchange. This declaration must be submitted when the listed entity is publishing the annual audit report. Financial Results under SEBI regulations would be applicable to the above.
Would this be applicable to subsidiaries of listed entities?
Financial results under SEBI regulations would be applicable to all entities. When a listed entity has a subsidiary, then financial results of the subsidiaries also have to be submitted along with the financial statements. The financial results of subsidiaries are known as consolidated financial results. Previously, there were ambiguities regarding the submission of financial statements of subsidiaries of listed entities. These ambiguities were applicable where the company has associates and joint ventures.
To overcome, these ambiguities the SEBI came out with a circular no LIST/COMP/30/2019-20 that listed entities with subsidiaries/ associate or joint venture companies have to submit consolidated financial results. However, these consolidated financial results must be submitted with the stand alone financial results of the company.
Considerations before publishing Financial Results under SEBI
Any listed entity must follow the guidelines before publishing financial results under SEBI. The following are certain considerations which are required to be followed by a listed entity:
- Financial statements and results have to be prepared by a certified auditor or chartered accountant. The accrual accounting policy must be used for preparing financial results by the listed company. Uniform and standard accounting practices must be followed by the company. These practices must be recognised internationally.
- Financial results which are prepared quarterly and yearly, must follow the rules laid down under the Companies (Indian Accountings Standards) Rules,2015 (Ind AS). These rules are prescribed under section 133 of the Companies Act, 2013. Accounting standards are laid down and prescribed by the Institute of Chartered Accountant of India (ICAI).
- Financial statements and results submitted by listed companies must ensure that they are either subjected to limited review. Limited review is only applicable to unaudited financial statements. Audited financial statements are not subject to any limited review. The listed company should ensure that statements submitted either quarterly or annually must be only provided by an auditor (Chartered Accountant (CA). It is mandatory for the CA to have undergone a peer review process conducted by the ICAI. Apart from this, the CA must also hold a valid certificate which is certified by the peer review board of the ICAI.
- Audit committee of the listed company must review the quarterly financial results before submitting the same to the stock exchange. Apart from this, the quarterly financial results must be authorised by the Board of Directors (BOD) of the Company. Disclosure of Financial Results under the SEBI regulations, require the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) to specifically review the financial statements. They should also verify that the financial results and statements are true and don’t have any misleading or false statements.
- Financial results required to be submitted must be signed by the Managing Director or the Chairperson of the listed company. The Whole Time Director (WTD) also has the authority to sign financial results. In absence of these directors, the financial statements can be signed by a director who has the official authority to sign financial statements.
- A listed company (entity) that submits unaudited financial statements would be subject to limited review by the statutory auditor. Limited review should be put forth to the BOD. Approval or rejection will be provided by the BOD before it is submitted to the stock exchange.
- Along with the standalone or consolidated financial results, the listed entity must also submit a report on the statement of assets and liabilities of the company. With this, the cash flow statement of the company must also be submitted.
- When consolidated financial statements are submitted by the listed entity, it must make sure that at least 80% of the revenue is subjected to audit. Where the listed entity has unaudited results, then the same must be subject to limited review.
- The auditor must conduct a limited review of all the companies/ entities which are associated to the listed entity. This would be according to IND AS 110/ IND AS28 in accordance with guidelines issued by the Board on this matter.
Before publishing or disclosing Financial Results under SEBI, every listed company must keep in mind the above points to follow effective compliance.
Newspaper Advertisements – Financial Results under SEBI Regulations
Regulation 47 deals with the aspect of a listed entity publishing its financial results in Newspaper advertisements.
The following is stated in the regulation:
- The listed company can publish and disclose the following in the newspaper:
- Notice of the meetings which are held by the listed company. This notice will specify that the board meeting is convened for publishing financial results of the company.
- Apart from this the listed company can publish financial results of the listed entity.
- Every listed entity would be required to publish financial results on the standalone basis. Suppose a listed company published financial results on a standalone basis and consolidated basis, then a note has to be put on financial results of the consolidated basis stating the following:
- Profit before Tax; and
- Profit after Tax.
- The company which publishes its financial results in the newspaper has to provide the reference link of the website. The website has to be an operating website of the listed company.
- A company listed in the stock exchange must simultaneously submit the information in the newspaper and the stock exchange at the same time.
- The listed company must publish financial results under SEBI regulations in English. The newspaper must be circulated throughout India. The information related to financial results under SEBI must also be published in the region where the listed company has its head office or registered office located.
- Information related to financial results must be published after 48 hours of approval in the board meeting.
Pre Board Meeting Intimation – Financial results under SEBI
- Regulation 29 of the Listing Regulations speaks about the listed entity providing notification to the stock exchange about the board publishing financial results.
- The date of intimation must be at least 5 days before having the board meeting.
- Five days means clear working days. This would not include the date of intimation and the date on which the meeting is held.
Post Board Meeting Intimation- Financial Results under SEBI
- Part A schedule III along with regulation 30 of the listing regulations speaks about post board meeting intimation.
- Resolutions or outcomes which occur in the board meeting must be communicated to the stock exchange within 30 minutes of ending the board meeting.
What disclosures have to be made with the Financial Results?
Schedule IV talks about the disclosures made for financial results under SEBI regulations. The following disclosures have to be made for financial results under SEBI regulations:
- Income and expenditure items;
- Details of any form of segment reporting as per the Indian Accounting Standard 108;
- Details of any form of changes in the accounting policies and procedures as per Accounting Standard 8;
- Details of any form of material adverse change in the company. The material adverse change can be all forms of changes in the business structure of the company. Material adverse change would not be limited to specific acquisitions made by the company, disposals of subsidiaries, any form of restructuring which has affected the business;
- Revenue disclosures which are subject to seasonal variations. If the listed company has a seasonal business, then their financial results have to be supplemented;
- Any information which is material to understanding the information on financial results. This information can be related to expansion plans of business, change in capital structure of the company, any form of material change;
- Information of the dividends paid by the company. This will also include interim dividends;
- When the listed company has changed its name, all expenditures such as profits and losses must also be mentioned;
- The listed entity should also submit any details of any form of commercial project or commercial venture. If the business of the project or venture has not started then information related to the project must be submitted;
- Any form of modified or unmodified opinion of the auditor must be submitted by the listed entity. Apart from this the company must also mention any details of the impact it has on the profit, net worth of the business, cumulative impact on the business, earnings per share, expenditure of the business and total liabilities of the business; and
- The company also has to submit financial results in the last quarter and financial information for the whole year.
Therefore a listed entity has to disclose along with financial results under SEBI Regulations.
Where are Financial Results under SEBI regulations filed?
Regulation 33 speaks about filing of financial results under SEBI regulations. These results are filed in the XBRL Mode. This must be done within 24 hours of putting up the results in PDF format. It is mandatory for a listed company to submit financial results in the below mode. Submitting financial results in any other mode would attract penalties under the Listing regulations.
Conclusion for Financial results under SEBI regulations
A company registered under the companies act has to file certain statements and disclosures as per the requirement of the Ministry of Corporate Affairs (MCA) and the Registrar of Companies (ROC). Similarly, a listed company has to submit its financial results under SEBI regulations. The company has to file these disclosures within the allocated time. Before filing financial results in print and electronic media, prior approval from the board of directors is required. The financial results have to be either unaudited or audited. Non compliance with the above would attract severe penalties.