Books of Accounts / Annual Financial Statements / Statutory Records & Statements along with Reports requisite for Annual Returns under Companies Act 2013

Significance

As per Section 92 of the Companies Act 2013, every Company should prepare an annual return in the form of MGT 7containg the financial particulars as they stood on the closure of the financial year ending.

Its registered Office, principal business activitiies , particulars of its holdings,

subsidary and associate companies;

Its shares, debentures and other securities and share holding pattern;

Its indebtedness;

Its members and debentures along with changes therein since the close of the previous financial year;

Its promoters,directors,key managerial personal along with changes therein since the close of the previous financial year,

Meeting of members or a class thereof, Board and it various commiitees along with attendence details;

Renumeration of directors and key managerial personnel

Penalty or punishment imposed on the country, its diretors or officers and

details of compounding of offences and appeals made against such penalty or

punishment;

Matters  relating  to  certificate  of  compliances,  disclosure  as  may  be prescribed;

Details , as may be prescribed , in respect of shares held by or on behalf of the

foreign institutional investors indicating there names, addresses , countries of

incorporation , registration and percentage of shareholding held by them and

Such matters as may be pescribed.

BOOKS OF ACCOUNT TO BE MAINTAINED:

Place of keeping of Books of Accounts: Every Company shall prepare and Keep At Its Registered Office

1. Books of Account

2. Other relevant Books and Papers and

Financial Statement for every financial year which give a true and fair view of the state of the affairs of the Company including that of its branch office or offices, if any Company can keep all or any of the books of account aforesaid at Place Other Then

Registered Office (but in INDIA) of the Company by following procedure:

1. Board of Director of the Company will pass a Board Resolution.

2. Within 7 days of passing of resolution company will file form AOC-5 with ROC.

Meaning of Books of Accounts:

Every company must keep proper books of account with respect to:

1. all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place;

2. all sales and purchases of goods by the company;

3. the assets and liabilities of the company; and

4. in the case of a company engaged in production, processing, manufacturing or mining activities, such particulars relating to utilization of material or labor or other items of cost as may be prescribed by the Central Government, provided the Central Government so directs to any such class of companies or any particular company.

We have elaborated below some of the common compliances which a private limited company has to mandatorily ensure:

Compliance Requirement Description and Timeline
Appointment of Auditor Auditor will be appointed for the 5 (Five) years and form ADT-1 will be filed for 5-year appointment.The first Auditor will be appointed within one month from the date of incorporation of the Company.
Statutory Audit of Accounts Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar.
Filing of Annual Return (Form MGT-7) Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
Filing of Financial Statements (Form AOC-4) Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.
Holding Annual General Meeting It is mandatory for every Private Limited Company Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.
Preparation of Directors’ Report Directors’ Report will be prepared with a mention of all the information required under Section 134.

Meaning of Book or Paper:

Accounts, Deeds, vouchers, writings, documents, MINUTES and REGISTERES maintained on paper or in electronic form.

TIME PERIOD OF PRESERVATION OF BOOKS OF ACCOUNT TO BE KEPT:

Books of accounts of every company relating to a period of Not Less Than 8 (Eighty) Years immediately proceeding the financial year, along with relevant books and papers.

It is highly advisable to pass a Board Resolution to Destroy records every year, after prescribed period is over, giving list of records to be destroyed.

FINANCIAL YEAR:

In case of newly incorporate company:

1. If Company incorporated ON OR AFTER 1st January of a year, the period ending on the 31st day of March of FOLLOWING Year.

2.If Company incorporated ON OR BEFORE 1st January of a year, the period ending on the 31st day of March of that Year.

In case of old incorporate company:

i. Financial year means the period ending on the 31st Day of March every year.

Transitory provisions in case of existing Companies:

A company existing on the commencement of the 2013Act, shall, with in a period of 2 (TWO) years from such commencement, align its financial year as 1st April, to 31st March. This period has already been expired.

 Different financial year if holding or Subsidiary is outside India:

If because of holding or subsidiary is outside India Company required to follow a different financial year for consolidation of its accounts outside India. The company can make an application with CLB, if CLB satisfied, allow any period as its financial year, whether or not that period is a year.

[This can happen in case of foreign Companies having subsidiaries in India. Even in that case, the Indian company has to prepare accounts for year ending on 31st March, for income tax purpose]

FINANCIAL STATEMENT:

i. A Balance Sheet

ii. A profit and Loss account (or Income and expenditure account)

iii. Cash Flow Statement

iv. A statement of changes in equity (If applicable)

v. Any explanatory note attached to,

[The State changes in equity is applicable for Companies to which the AS applies]

Cash Flow Statement not required to be prepared by the companies:

i. One Person Company; of

ii. Small Company; or

iii. Dormant Company.

Financial Statement of Companies governed by Special Acts:

Insurance Company Banking Company

Electricity Company any other company governs by Special law.

Need not the disclose matters which are not required to be disclosed under their specific Act.

In other words, financial statements of the Companies governed by Special Acts will be prepared as per provisions of those special Acts and not as per provision of Companies Act.

Preparation of Financial Statements:

i. Every Company must prepare ‘Financial Statement’ for every financial year.

ii. The Financial statement should be prepared at the Annual General Meeting of members.

AUTHENTICATION OF FINANCIAL STATEMENT:

The Financial Statement (Including consolidated financial statement where applicable) shall be approved by the Board of Directors. After Board approval, the statement should be signed on behalf of the Board as follows-

a) By any two Directors (on shall be MD, if any) and

CEO, if any

CFO, if appointed.

Company Secretary of the Company, if appointed

In case of Small Company where no MD, CEO CFO than Financial statement should be signed by the Two Directors of the Company.

After the signatures, it should be submitted to the auditor for his report thereon.

When financial statement signed by two directors, such directors should be present at the meeting and should sign the accounts at the meeting. (i.e. should be signed at the meeting itself and not later).

Approval of Financial Statement and Board Report by Board in Meeting:

Theoretically, financial statements are presented to auditors only after they approved by Boards and signed by authorized persons. The auditors are only expected to submit his report on the financial statements presented to him for audit.

Practically, The checking of financial statements is already completed before these are approved by the Board. Auditor informally approves the draft financial statements with notes etc., before the accounts are approved by the Board. Usually, he also gives unsigned draft of the Auditor’s Report.

However, auditor signs the financial statements only after these are approved by Board and signed by person authorized by Board of the Company.

APPROVAL OF FINANCIAL STATEMENT:

Approval of Financial Statement shall be done at the meeting of the Board.

The approval can’t be done by circulation or by committee. (same provision in Secretarial Standard (SS-1) of ICSI

MGT-14: The Board resolution approving financial statement to be filed with ROC in form MGT-14. (But Private Company not required to file MGT-14 after exemption on Private Limited Companies)

CIRCULATION OF FINANCIAL STATEMENT:

To whom:

Every Member of the Company

To every trustee for the debenture-holder of any debentures issued by the Company and

To all persons other than such member of trustee, being the person so entitled.

Time period of circulation:

The financial statement (including consolidated financial statement, if any) auditor’s report and every other documents required by law to be annexed or attached to financial statements, which are to be laid before a company in its general meeting shall be sent “Not Less Than 21 (Twenty One) days before the date of the Meeting.

Publication on Website:

A listed Company (Whether Debt Listed or Equity Listed) shall place its financial statements (including consolidated financial statements, if any), and all other documents required to be attached thereto, on Company’s website, which is maintained by or on behalf of the Company.

Inspection of Documents:

A company shall allow every member or trustee of the holder of any debentures issued by the company to inspect the documents stated under section 136(1) at its registered office during business hours- Section 136(1)

Mode of sending Financial Statement:

Financial statement can be sent to members and others through post or courier or had delivery as per Section 20(2).

However, a listed company or a public company whose net worth is more than one crore and turnover of more than ten Crores, financial statement can be sent by-

E-mail if shares in Demat form and email ID is registered with depository.

E-mail if shares are in physical form and member has positively consented in writing for receiving by email

By post, courier or had delivery as per section

CONSOLIDATION OF FINANCIAL STATEMENT:

Every company having a subsidiary or subsidiaries has to submit consolidated financial statement in addition to its own ‘financial statement’.

The financial statement should be in same form.

It shall be laid before annual general meeting of the company, along with company’s own financial statement.

In addition to consolidated financial statement, a separate statement containing salient features of financial statement of its subsidiaries shall be attached. (Form AOC-1)

FILING COPY OF FINANCIAL STATEMENT:

Copy of Financial Statements (including consolidated financial statements in case of holding company), shall be filed with Registrar of Companies with in 30 (Thirty) days from the date when the accounts were duly adopted at the annual General Meeting of the Company.

All documents which are required to be annexed or attached to the financial statement must be filed.

The documents are required to be filed with filing fees.

Financial statement to be filed even if not adopted in AGM:

Even if the financial statements are not adopted at AGM or at the adjourned general meeting, the un-adopted financial statement duly signed is required to be submitted within 30 days from date of AGM. The registrar of Companies shall take them on record a provisional, till the financial statements duly adopted are filed after the accounts are adopted in the adjourned General Meeting.

Such adopted financial statement shall be filed within 30 days from the date of adjourned meeting where the accounts were adopted.

Documents which required to prepare the Annual Return:

  • Memorandum & Article of Association
  • Statutory Registers
    • Register of Members
    • Register of Directors
    • Register of Director Shareholding
    • Register of Key Managerial Personnel
    • Register of Related Party Contracts
    • Register of Loan and Investment
    • Register of Charge
    • Register of Securities
  • Minutes of the Meetings
    • Board Meeting
    • General Meeting
    • Committee Meeting
  • Attendance Sheet of the all Meetings
  • Forms & receipts filed with the Registrar of Companies
  • Indebtedness Certificate signed by Company Secretary/ CFO of the Company.
  • Latest Audited Financial Statement
  • Copy of Notice of Annual General Meeting
  • List of Shareholders as on 1st April and 31st March
  • List of Share Transfers during the Financial Year.
  • Any orders received by the company from the High court or from any other regulatory body
  • List of Promoters
  • Financial statement to be filed even if not adopted in AGM:

Where the annual General Meeting of a company for any year has not been held, the financial statement along with the documents required to be attached under section 137(1), duly signed along with the statement of facts and reasons for not holding the Annual General Meeting shall be filed with the Registrar within 30 (thirty) days of the last date before which the annual General Meeting should have been held.

Filing financial statement in case of OPC:

In case of One Person Company, financial statement along with annexes and attachments should be filed with ROC within 180 days from close of financial year.

Filing financial statement in case of Company having subsidiaries outside India:

In case of companies having subsidiary or subsidiaries outside India and which has no place of business in India, the accounts of subsidiary/ subsidiaries should be filed along with financial statement of the holding Company.

INSPECTION OF FINANCIAL STATEMENT:

The financial statement and related documents filed with ROC are ‘public documents’ and any person can inspect those documents on payment of prescribed inspection fees.

Duty to lay Annual Accounts at Annual General Meeting:

Notice of AGM

Directors Report and Compliance Certificate from Practicing Company Secretary, (If Required).

Auditors Report

Balance Sheet

Profit & loss Account

In case of Holding company:

Balance Sheet

Directors Report

Auditors Report

Statement of holding company’s interest in subsidiary, if any

AUDIT REPORT REQUIREMENT

Section 143 (3) read with rule 11 of the Companies (Audit and Auditors) Rules, 2014 of the Companies Act, 2013 talks about the provisions of Audit Report:

The Requirement of audit report comes from Section 142(2) of Companies Act, 2013.

The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statement which are required by or under this act to be laid before the company in general meeting.

Importance of Audit Report:

The audit report of the company is referred to and relied upon by many who are dealing with the Company. Information available in the audited accounts is very valuable for all.

Contravention of Provision of Section 139-146: (Attendance in General Meeting): If any provisions of this Section contravene then:

Penalty on Company:

The company shall be punishable with fine which shall not be less than Rs. 25,000 (Rupees twenty-five thousand) but which may extend to Rs. 5 Lac (Rupees five lac)

AND (+)

Penalty on Officer of Company:

Every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year OR with fine which shall not be less than Rs. 10,000/- (Rupees ten thousand) but which may extend to Rs. 1 Lac (Rupees one lakh), OR with BOTH.

Contravention of Provision of Section 145: (Signing of Auditor Report): If any provisions of this Section contravene then:

Penalty on Auditor (without intention or will):

The auditor shall be punishable with fine which shall not be less than Rs. 25,000/- (Rupees twenty-five thousand) but which may extend to Rs. 5 Lac (Rupees five lakh)

Penalty on Auditor (Contravene the provisions knowingly or willfully):

If an auditor has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year AND with fine which shall not be less than Rs. Lac (Rupees one lac) but which may extend to Rs. 25 Lac (Rupees twenty-five lac).

CONCLUSION:

Therefore all Companies registered under the provisions of the companies Act 1956/2013 are required to file with the registrar of companies the audited copy of financial statement with in a period of 30 days of holding the annual general meeting in terms of section 137(1), and the Annual return within a period of 60 days of the Annual General meeting in terms of section 92(4) of the Companies Act, 2013.

Time Period for filing of Forms:

AOC-4 Within 30 days of Holding of Annual General Meeting
MGT-7 Within 60 days of holding of Annual General Meeting. If there is no AGM then within 60 days from the date on which AGM should held.
MGT-14 Within 30 days of Holding of Board Meeting. For Companies Other than Private Limited Companies.

Date of Filing:

MCA came with a circular according that Companies which have done there Annual General Meeting before 30th September, 2015 can file AOC-4 & MGT-7 upto 30th October, 2015 without any late fee.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

Advise for contacting VidyaSunil & Associates;

E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819

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