PPAs executed before January 1, 2019: Companies granted exemption from IFRS requirements

The Securities and Exchange Commission of Pakistan (SECP) has granted exemption from requirements of International Financial Reporting Standards (IFRS) to all companies that have executed their power purchase agreements before January 1, 2019.
According to SRO 986 (I)/2019 issued by the SECP here on Saturday, in exercise of the powers conferred by section 510 read with subsection (3) of section 225 of the Companies Act, 2017 and in partial modification of SRO 24(I)/2012, dated 16th January, 2012, the SECP hereby grants exemption from requirements of International Financial Reporting Standards (IFRS) to all companies that have executed their power purchase agreements before January 1, 2019, as follows: (a) IFRS 16 (Leases) to the extent of the power purchase agreements executed before the effective date of IFRS 16 ie January 1, 2019; (b) International Accounting Standard 21 (The Effects of Changes in Foreign Exchange Rates) to the extent of capitalization of exchange differences; (c) In case of capitalization of exchange differences under (b) above, recognition of embedded derivative under IFRS 9 (Financial Instruments) shall not be permitted.
Through SRO 985 (I)/2019, the Commission has notified that, in respect of companies holding financial assets due from the government of Pakistan, the requirements contained in "IFRS 9 (Financial Instruments) with respect to application of Expected Credit Losses method" shall not be applicable till 30th June, 2021, provided that such companies shall follow relevant requirements of IAS 39 - Financial Instruments: Recognition and Measurement, in respect of above referred financial assets during the exemption period.