On July 10, 2007, India's stock market regulator, the Securities and Exchange Board of India (SEBI), amended Clause 41 of the Listing Agreement and directed all stock exchanges to replace the existing clause with a revised one.

All companies in India in order to be listed on a particular stock exchange have to enter into an agreement with it. The listing agreements are executed on a stamp paper and the common seal of the company is engraved on it.  Their relevance lies in the disclosure norms and acts to be complied on the part of the company which are mandatory in nature to ensure transparency as well timely and accurate information to the investors. Clause 41 is among them and aims to rationalise formats for submission of financial results. 

All listed companies are now required to file a copy of their quarterly and annual financial results (audited/unaudited) within one month of the end of the quarter or year as the case may be. Currently, they can file it within two months.

SEBI wants to achieve a two-fold objective through the modification of the clause. One is to enable the investors to get to know the financial results earlier and second to prevent companies from distorting their results by window dressing.

It has commented on the effective date of implementation of the revised Clause. "The revised Clause 41 of the Equity Listing Agreement shall come into force for all filings made to stock exchanges in respect of accounting periods commencing on or after July 1, 2007." Therefore, the date for first of such filings will the period  that commences on the expiry of quarter ended September 30, 2007 until October 31, 2007.

Further, the companies with subsidiaries have an option to publish standalone or consolidated results. This option cannot be changed during the year.

The amended clause retains a provision of the original Clause 41 that allows firms furnishing unaudited financial results to change these numbers by filing a limited review report within two months from the end of the quarter or year. Previously, they were asked to provide an explanation to the exchanges only if the variation between the unaudited and audited results was 20 percent or higher. So companies could fine-tune these numbers. The regulator, however, has reduced the percentage of variation for revision from 20 percent or more to 10 percent or Rs 10 lakhs (US$25,000), whichever is higher' on net profit or loss, and on exceptional and extraordinary items. 

More on this can be read in the attached file containing:

a) The Letter from SEBI on the above mentioned amendment and

b) Revised Clause 41along with all formats.