The Securities and Exchange Board of India has vide its circular bearing no. SEBI/HO/MRD1/DSAP/CIR/P/2020/154 dated August 21, 2020 (“Circular 1”) and circular bearing no. SEBI/HO/MRD1/DSAP/CIR/P/2020/155 dated August 21, 2020 (“Circular 2”), amended SEBI (International Financial Services Centres) Guidelines, 2015 (“IFSC Guidelines”).
Clause 19 of the IFSC Guidelines provided that the entities issuing and/or listing their debt securities in International Financial Services Centres (“IFSC”) shall prepare their statement of accounts in accordance with IFRS/ US GAAP/ IND AS or accounting standards as applicable to them in their place of incorporation. In case an entity does not prepare its statement of accounts in accordance with IFRS/ US GAAP/ IND AS, a quantitative summary of significant differences between national accounting standards and IFRS shall be prepared by such entity and incorporated in the relevant disclosure documents to be filed with the exchange.
However, by way of the Circular 1, SEBI has amended the aforesaid Clause 19 to provide that the quantitative summary of significant differences as provided under Clause 19 is not required and a statement of differences between local accounting standards and IFRS/ US GAAP/ IND AS would suffice, if the issue is targeted to institutional investors, along with a disclaimer that the issuer has not quantified the effect of applying IFRS/ US GAAP / IND AS to its financial information and the investors may make their own judgment in accessing the financial information.
Further, by way of the Circular 2, SEBI has inserted a new Clause 8(3) under the IFSC Guidelines to provide that an entity, based in India or in a foreign jurisdiction, may provide financial services in IFSC, subject to compliance with the applicable regulatory framework/ guidelines for such financial services, as specified by SEBI, from time to time.
Please find a copy of the Circular 1 here, Circular 2 here and a copy of IFSC Guidelines, 2015 here.
This update has been contributed by Aastha (Partner) and Swaraj Singh Narula (Associate).
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