Merger of companies following Special Purpose Acquisition Companies (SPAC) route may offer potential advantages to a private unlisted company but at the same time it is equally important to assess the readiness to be operating as a public company given the compressed time frame it offers for completion of the entire transaction. Those considerations could range from assessing adequacy of accounting and auditing policies, instituting necessary processes, technology and internal controls, skilled resources, adherence to corporate governance norms and timely communication to shareholders. These considerations continue to be relevant even after the completion of the transaction. Continuing our discussion, in this edition of Accounting and Auditing Update (AAU), we cast our lens on some of the key points for assessing public company readiness following SPAC route relevant for the closing of the transaction and life beyond as a public company.
In March 2020, the Government of India (GoI) has introduced the Production Linked Incentive (PLI) scheme to boost domestic manufacturing under the GoI’s ‘Aatmanirbhar Bharat’ initiative. The PLI scheme aims at incentivising companies on incremental sales from products manufactured in India. Incentives under the scheme may vary, depending upon underlying sector, type of products and qualifying criteria. Recently, the GoI approved the PLI scheme for automobile and auto component industry (auto sector). The scheme is expected to overcome the cost disabilities of the auto industry for manufacture of advanced automotive technology products in India. Companies opting for the PLI scheme may need to evaluate the financial reporting implications of the scheme, for instance, increased investment in property, plant and equipment and consequent capitalisation, accounting of the incentive as government grant and increased research and development expenditure, etc. Our article provides an overview of the PLI scheme and the expected financial reporting impacts for the company opting for the scheme.
The Ministry of Corporate Affairs (MCA) has recently extended the timeline for holding Annual General Meeting (AGM) for financial year ended 31 March 2021 by two months from the due date prescribed under the Companies Act, 2013. Accordingly, AGM for financial year ended 31 March 2021 can be held up to 30 November 2021. Additionally, the Securities and Exchange Board of India (SEBI) has approved amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) relating to regulatory provisions on related party and related party transactions. Our regulatory updates article covers these and other important regulatory developments in India and internationally.