The Securities and Exchange Board of India has left corporates with very little margin between their audited and unaudited results.

In its proposed amendments to Clause 41 of the Listing Agreement, the regulator has said if the total of the quarterly unaudited results varies by 10 per cent when compared with the audited results for the full year, the company has to explain the reasons to the stock exchanges. Earlier, this variation was 20 per cent.

Further, such variations pertain to items such as net profit and extraordinary items. In fact, the 10 per cent variation or Rs 10 lakh, whichever is higher, is applicable for net profit. For extraordinary items, the percentage of variation is 10 per cent.

Listed companies have to prepare unaudited quarterly and half-yearly results within one month of the close of that period, which has to be subjected to a limited audit review, while a copy of this review report has to be submitted to the stock exchanges within two months of the close of the applicable period. Previously, this used to be applicable only for the half-yearly results.

In effect, Sebi's amendments will take away the option of publishing the audited quarterly and half-yearly results within two months of the close of the periods and replace it with unaudited quarterly and half-yearly results within one month, followed by a limited review.

Companies have the options of publishing either stand-alone or consolidated financial statements at the time of publishing quarterly and half yearly financial results by the company and at the time of publishing annual financial results by all the companies which are required to prepare and submit to the stock exchange both stand-alone and consolidated results.