Page 158 - CA Inter Audit PARAM

CA Ravi Taori
• where the equity shares of the company are listed on a recognized stock exchange, the
sweat equity shares are issued in accordance with the regulations made by the Securities
and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are
issued in accordance with such rules as may be prescribed.
• The rights, limitations, restrictions and provisions as are for the time being applicable to
equity shares shall be applicable to the sweat equity shares issued under this section and
the holders of such shares shall rank pari passu with other equity shareholders.

QNO Disclosure of Promoter holding Old Course–(N22E)
AIFS.17.20 Bhaskar CNO - AIFS-P1.070
S& Co, Chartered Accountants, are appointed as the auditors of ABC Ltd. CA S, the engagement partner,
has come across the following while verifying equity share capital of the company:
(i) He noticed that some of the equity shares are held by promoters.

What are the disclosure requirements of such promoter's shareholding?
Disclosure requirements of such promoter’s shareholding: A company shall disclose Shareholding of
Promoters* as below:
Shares held by promoters at the end of the year % Change during
the year***
S. No Promoter Name No. of shares % of total
shares**

* Promoter here means promoter as defined in the Companies Act, 2013.
** Details shall be given separately for each class of shares.
*** percentage change shall be computed with respect to the number at the beginning of
the year or if issued during the year for the first time then with respect to the date of issue.
NOTE: Refer AIFS.17 for Sweat Equity Answer

QNO Classification of Liability in Current Vs Not Current AND Old Course – (M22M)
AIFS. Classification of Reserves & Surplus
17.50 Bhaskar CNO - AIFS-P1.080
While auditing the accounts of ABC Ltd, a member of audit team is not clear about :
(i) the criteria regarding classification of liability into current liability and non-current liability.
(ii) Classification of Reserves and Surplus
You being the senior member of audit team guide the member of the audit team about such criteria and
classification as per general instructions for preparation of balance sheet as per Schedule III.
(i) A liability shall be classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date; or
(d) the company does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
All other liabilities shall be classified as non-current.

(ii) Reserves and Surplus shall be classified as:
(a) Capital Reserves;
(b) Capital Redemption Reserve;
(c) Securities Premium;
(d) Debenture Redemption Reserve;
(e) Revaluation Reserve
(f) Share Options Outstanding Account;
(g) Other Reserves – (specify the nature and purpose of each reserve and the amount in respect
thereof);

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