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SEBI to rework disclosure norms for exceptional items

The regulator on Tuesday issued a Discussion Paper on "Revision of Clause-41 of Equity Listing Agreement" for public comments

August 21, 2013 3:22 IST | India Infoline News Service
Securities and Exchange Board of India (SEBI) is considering a proposal on the treatment of exceptional items in the way companies present their accounts.

The regulator on Tuesday issued a Discussion Paper on "Revision of Clause-41 of Equity Listing Agreement" for public comments.

Clause-41 of Equity Listing Agreement provides the framework for preparation, authentication and submission of Financial Results by listed companies, SEBI said in a press release.

Based on the requests/ suggestions received from various market participants, some of the provisions of Clause-41 have been revised. It is proposed to replace the existing Clause-41 of Equity Listing Agreement, it added.

Exceptional items are usually one-off gains or losses outside the usual scope of business. The regulator is looking to bring in greater visibility and more consistency to disclosures, SEBI said in the discussion paper.

Exceptional items are highly judgmental and it was observed that many companies follow divergent and inconsistent practices. The exceptional items shall be disclosed as a line item in the main table instead of in the 'Notes' to enhance visibility. More, the definition of exceptional items has also been modified to bring more clarity in disclosures, the paper added.

Other suggestions that it is looking to bring into practice include putting all results in 'Rs crore' till two decimal points, disclosure of book value and cash flow on a six-month basis and greater transparency in reporting of foreign subsidiaries and discontinued operations.

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