Following the report of an Institute of ICAI panel on the Satyam scam, the institute has sought details of local audit firms' tie-ups with multinational companies to check surrogate practices.

Indian Chartered Accountants eyeing work opportunities abroad will soon be spoilt for choice,
with their nodal agency the Institute of Chartered Accountants of India (ICAI), negotiating with its
counterparts in Canada, Singapore and Ireland to allow the professionals to take on assignments
in these countries. Institute of Chartered Accountants of India (ICAI) is in talks with the Canadian
Institute of Chartered Accountants, Institute Certified Public Accountants of Singapore and the
Institute of Certified Public Accountants in Ireland, besides the American Institute of Certified Public
Accountants. Two years ago, Institute of Chartered Accountants of India (ICAI) even signed memorandum of understanding with the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants in Australia (ICAA). Besides UK, the ICAEW membership will entitle an Indian CA to work in other EU countries and give them access to professional development programmes.

Bombay Stock Exchange (BSE) has reduced membership deposit and fee requirements for new
members in the cash and equity derivatives segments with immediate effect. In the new offer, the membership can be obtained by paying a deposit of Rs. 10 lakh instead of the existing Rs. 1 crore.

Securities and Exchange Board of India (SEBI) has made it mandatory for companies to list
shares within 12 days after the closure of a public issue. The regulator said that this would be applicable to public issues opening on or after May1, 2010.

The Government has extended tax concession on interest paid for educational loans to all streams of
studies including vocational courses, benefiting students from all economic strata opting for higher
studies, from this academic session on wards. The concession was till now restricted for graduate and
post-graduate courses in engineering, medicine, management and post-graduate courses in applied
sciences or pure sciences, including mathematics and statistics. This latest amendment in section 80E of the I-T Act has brought all the streams of education (apart from regular ones) and vocational courses under its ambit. This will benefit the students who apply for graduate and postgraduate courses in various streams during the upcoming academic session.The I-T concession on such a loan will also be extended to parents who have legally adopted a child.

The authority for Advance Ruling's (AAR) order in the case of a consortium bidding for Delhi Metro
Rail Corporation (DMRC) project.has said that the firms in the consortium would be taxed as separate taxable entities. The tax rate could vary for each partner depending on the character of its income. Certain kinds of income could even be exempt. So effectively, getting taxed as an independent taxable entity would mean a lower tax liability in many cases, besides clarity on taxation for firms coming together to take up a project in India.

RBI has raised the two key policy rates - reverse repo and repo - by 25 basis points each and left banks with Rs.12,500 crore less to lend with a 25 bps increase in the cash reserve ratio (CRR).

It has been decided that infrastructure loan accounts which are classified as sub-standard will attract a
provisioning of 15 per cent instead of the current prescription of 20 per cent. To avail of this benefit of lower provisioning, the banks should have in place an appropriate mechanism to escrow the cash flows and also have a clear and legal first claim on these cash flows.

The Reserve Bank of India (RBI) has revised guidelines on securitisation, wherein it has proposed
that the seller of the loan should at least hold the loan in its books for one year and retain a minimum 10 percent of the securitised amount if the loan is with original maturity of two years or more. The revised draft guidelines also says that if the loan is for up to two years, the originator should hold the loan in its books for at least nine months and it should subscribe to at least 5 percent of the securitised amount.

Some commercial banks have sought clarification in respect of classification of working capital limits
granted to units engaged in agricultural and allied activities and to food and agro-based processing units by way of export credit under priority sector. The issue has been examined and it is clarified that loans granted by commercial banks for agricultural and allied activities are eligible for classification under priority sector, irrespective of whether the borrowing entity is engaged in export or otherwise.

The Securities and Exchange Board of India (SEBI) is planning to introduce more currency derivatives products, beginning with options, to give a wider choice to investors.

In order to ensure increased flow of credit to the micro and small enterprises (MSEs), the Reserve Bank of India said that it will ask banks not to insist on collateral security in case of loans up to Rs 10 lakh. Currently, banks extend loans up to Rs 5 lakh without collateral security to all units in the MSE space.

The Reserve Bank of India (RBI) has decided to set up a committee comprising all the stakeholders for studying the advisability of granting new urban co-operative banking licences. Also, the RBI has decided to allow well-managed UCBs to set up off-site ATMs without seeking approval through the annual business plans.

Reserve Bank of India (RBI) in its annual credit & monetary policy has said that all applications received for getting new bank licences would be referred to an external expert group for examination and recommendations to the RBI for granting licences. RBI will also prepare a discussion paper marshalling the international practices, the Indian experience and also the extant ownership and governance (O&G) guidelines on the issue of granting licences to the new players and place it on its website by end of July 2010 for wider comments and feedback.

The Securities and Exchange Board of India (SEBI) has asked foreign institutional investors (FIIs) to stop using complex structures of protected cell companies and segregated portfolio companies. In addition, it has mandated that the investor base be broad based in case of multi-class share vehicles. The twin moves are part of the market regulator's plan to curb potential round-tripping through FIIs and also increase transparency. From now on all FIIs, whether already registered or not, will have to undertake that they do not follow a protected cell company or segregated portfolio company structure.

PROTECTED CELL COMPANIES

Protected Cell Companies are entities with several cells within the same vehicle. A cell has  its own assets, liabilities, a cellular capital, dividends and accounts. Each cell functions as an independent unit within the overall set-up and the debtors and creditors of each cell have no claims against the assets or liabilities of another cell.

MULTI CLASS SHARE VEHICLE

For those that use the MCV model, there are two routes. The first option is to have a common
portfolio, where there need to be at least 20 investors at the FII level. The second route that
could be used is to have a segregated portfolio for each class of investors, provided each class
has at least 20 investors. Any change in the structure or an addition of classes will require a
prior regulatory approval. Any addition of share classes would have to adopt the broad-based

criteria by having at least 20 investors.

NEW PE VALUATION NORMS FOR UNLISTED COs

Foreign private equity firms will face stiff valuations when they decide to buy stakes in unlisted companies following a change in valuation norms by the Reserve Bank of India (RBI). The shares in unlisted companies will now have to be valued using a discounted cash flow model. This will remove any discretion in price- fixing and also reduce the chances of lower valuation under the earlier guidelines that fixed the price at average of two different valuations.

A core group set up by Government of India in consultation with ICAI has decided a road map
for implementation of IFRS in India. In terms of the road map, the phase-1 of the IFRS will be implemented on all large companies with net worth of Rs. 1000 crore or more and above besides companies in BSE, Sensex, Nifty - Fifty. In terms of phase-2, the companies with net worth of Rs. 500 crore to 1000 crore class will be brought in including banks, insurance companies and financial sectors.

IFRS - International Financial Reporting Standards including international accounting standards, as a part thereof have large number of conceptual changes in respect of accounting for various assets, liabilities, revenue and expenditure. The most important being fair value accounting, in comparison to historical cost accounting. ICAI has already done a lot of ground work in Indianizing IFRS and International Accounting Standards and IFRS compliance Accounting Standards will be known in India as IND Accounting Standards (IAS). In terms of ICAI plan being worked out in consultation with Government of India, almost all standards set out by IFRS will be Indianized by the ICAI in next 3 to 6 months. This will bring India to the international map of about 150 countries where IFRS is used as a benchmark standard.

How to Study 

It is important to study the text of IFRS standards, as is being published in India by a private publisher i.e. Taxman. ICAI will also soon come out with Indian convergence of IFRS standards, as finalized by them in a matter of next 3 to 6 months. It is also important to participate in workshops and conferences and study circle meetings where IFRS is proposed to be discussed and adopted in depth.

Opportunities

The opportunities in IFRS area are very huge not only within India but also internationally for Chartered Accountants who are in employment as well as chartered accountants who are in practice. Those who are IFRS literate have a good potential -

• To be employed by leading corporates
• To be employed by leading Chartered Accountant Firms
• To act as independent CA professionals in helping the corporates to converge to IFRS standards. These corporates will be within India as well as outside India.
• To undertake fair value valuation for re-valuation of property, plant & equipment's as well as for  fair valuation for various assets and liabilities.
• Advisory in respect of accounting treatment of various important aspects.