Mumbai, Aug 3: The Sebi sub group looking into the accounting and disclosure issues for dotcom companies met on Thursday but did not arrive at any major conclusions, according to top Sebi sources. A senior member of the group said on Thursday that the issues being debated include accounting standards for dotcom companies, the disclosure requirements in IPOs made by them and also continuing disclosures that would be required post-listing of the dotcoms. This sub group will soon invite views from experts and market participants also to incorporate their valid suggestions in the final draft. The objective of defining disclosure requirements by dotcoms is to provide sufficient information to investors to enable them to understand the business model of the company and assess its fair value. Significantly, the International Organisation of Securities Commission (IOSCO), and the International Accounting Standards Committee (IASC), the Securities and Exchange Commission (SEC) and the Federal Accounting Standards Board (FASB) of the US have been deliberating on the issue of dotcom valuations for some time now. The Sebi source pointed out that recognition of revenues from Internet activities figured prominently in the discussions. These include charging listing fees and transaction-based fees charged by auction sites.
Besides, Internet businesses which provide customers with services like access to a website and maintenance of website or publication of certain information on a website for a limited period. The treatment of revenue by these businesses is not standardised and some companies have booked revenues upfront on the presumption that incremental cost of maintaining the website and/or providing access to it are minimal. In addition the study group appointed by the technical committee of IOSCO to look into issues relating to the 'New Economy' is expected to meet shortly with JR Verma, to represent Sebi in the discussions.
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