Submission of Cash Flow Statement
Summary
This document mandates the inclusion of Cash Flow Statements in annual reports for listed companies to enhance investor information. It outlines specific objectives, applicability, and preparation guidelines for these statements under SEBI regulations. The text defines key terms such as cash equivalents and operating activities while establishing effective dates for compliance. This section defines and provides examples for cash flows arising from operating, investing, and financing activities. It establishes reporting requirements for these categories, including the use of gross versus net basis presentation. Additionally, it outlines specific rules for handling foreign currency transactions, extraordinary items, and the classification of interest and dividends. Paragraphs 36 to 52 provide detailed guidance on classifying interest, dividends, taxes, and subsidiary transactions within cash flow statements. The text mandates specific disclosure requirements for acquisitions, disposals, non-cash transactions, and components of cash equivalents. It concludes with a standardized template illustrating the structure of a company's Cash Flow Statement.
Text
SEBI formed a group consisting of representatives of SEBI, the Stock Exchanges of Bombay, Calcutta, Delhi and Ahmedabad, National Stock Exchange and the Institute of Chartered Accountants of India (ICAI) to frame the norms for incorporating a new provision in the Listing Agreement requiring the companies to give a Cash Flow Statement in their Annual Reports.
The company will also give a Cash Flow Statement along with the Balance Sheet and Profit and Loss Account. The Cash Flow Statement will be prepared in accordance with the Annexure attached hereto.
Cash Flow Statement, as a requirement in the Listing Agreement, should be made effective for the accounts prepared by the companies and listed entities from the financial year 1994-95.
This requirements shall be mandatory for all the listed companies and other listed entities on the recognised stock exchanges.
A company should prepare a cash flow statement in accordance with this requirements and should present it as an integral part of its financial statements for each period for which financial statements are presented.
The cash flow statement for a period should be derived from the audited annual financial statements of the company. This statement should be mandatorily circulated by all listed companies alongwith the annual report to the share holders and will also be made available to the stock exchanges and SEBI.
This will form part of the listing agreement between the listed and other entities and the exchange and would come into effect for all annual accounts approved by the shareholders after March 31, 1995.
The statement shall be issued under the authority of the Board and shall be signed on behalf of the Board of Directors in the manner provided for authentication of Balance Sheet and Profit and Loss account in Section 215 of the Companies Act, 1956.
The statement shall be verified and accompanied by a certificate of the statutory auditors.
CASH Cash in hand and deposits repayable on demand with any bank or other financial institutions and body corporates. Cash includes cash in hand and deposits denominated in foreign currencies.
CASH EQUIVALENTS Are short term (three months or less) or highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
OPERATING ACTIVITIES Are the principal revenue-producing activities of the company and other activities that are not investing or financing activities.
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Source: SecMarx — Submission of Cash Flow Statement. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.