1. What is financial statement?
As per section 2(40) of Companies Act 2013, Financial statement in relation to company includes-
• a balance sheet as at the end of the financial year;
• a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;
• cash flow statement for the financial year; a statement of changes in equity, if applicable; and
• any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv)

2. Form and content of Financial Statement?
Rule 4A of Companies (Accounts) Rules, 2014 i.e. Forms and items contained in financial statements provides that the financial statements shall be in the form specified in Schedule III to the Act and comply with Accounting Standards or Indian Accounting Standards as applicable. Section 129 (1) requires that the financial statements shall give a true and fair view of the state of affairs of the company or companies and it shall:
• comply with the accounting standards notified under section 133; and
• shall be in the form or forms as may be provided for different class or classes of companies in Schedule III.
(Section 129(1) is not applicable to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company.)

3. Consolidated Financial Statement?
Section 129 (3) provides that where a company has one or more subsidiaries, it shall, in addition to financial statements, prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the annual general meeting of the company along with the laying of its financial statement.

4. Mode of approval of financial statement and consolidated financial statement?
Section 129(2) provides that at every annual general meeting of a company, the Board of Directors of the company shall lay before such meeting financial statements for the financial year.

Section 129(4) the provisions of this Act applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis , apply to the consolidated financial statements referred to in sub-section (3).

Fourth proviso to section 137(1) of the Act requires that a company should along with its financial statements to be filed with ROC, attach the financial statements of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.
With respect to this requirement MCA has come out with a clarification vide General Circular 11/2015 dated 21st July, 2015 that:
• in case of foreign subsidiary which is not required to get its financial statements audited as per legal requirements prevalent in the country of its incorporation and
• which does not get such financial statements audited the Indian holding/parent company may place/file such unaudited financial statements to comply with the requirements of section 136(1) and section 137(1) of the Act, as applicable. These, however, would need to be translated in English, if these financial statements are not in English.
Further, the format of financial statements of foreign subsidiaries should be, as far as possible, in accordance with the requirements under the Companies Act, 2013. In case this is not possible, a statement indicating the reasons for deviation may be placed/ filed along with such financial statements.

5. Deviation to be disclosed?
In case the financial statements of a company do not comply with the accounting standards, the company shall disclose in its financial statements, the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any, arising out of such deviation.

6. Exemption to Class of Companies
MCA exercising the power conferred by section 129(6) of the Companies Act, 2013, in public interest exempted the government companies producing Defense Equipment including Space Research from providing additional information required through para 5(ii)(a)(1), 5(ii)(a)(2), 5(ii)(e), 5(iii), 5(viii)(a), 5(viii)(b), 5(viii)(c) and 5(viii)(e) of the General instructions for preparation of Statement of Profit and Loss in Schedule III of the Companies Act, 2013

7. Revision of Financial Statements or Board’s Report
Section 130 deals with Re-opening of accounts on court’s or Tribunal’s orders. Section 131 deals with voluntary revision of financial statements or Board’s report.
Section 131 (1) states that, if it appears to the directors of a company that—
• the financial statement of the company; or
• the report of the Board,
do not comply with the provisions of section 129 or section 134, they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in form NCLT-1 and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar in Form INC-28 and SRN of INC-28 will be mention in the form AOC-4.

8. Salient Features of The Financial Statement of Subsidiaries Or Associate Companies Or Joint Ventures in the Board Report:
The statement containing the salient feature of the financial statement of a company’s subsidiary or subsidiaries, associate company or companies and joint venture or ventures under the first proviso to sub-section (3) of section 129 shall be in Form AOC-1.

9. Signing of Financial Statements By Board
• The financial statements, including consolidated financial statements, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by the chairperson of the company where he is authorized by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon. [Section 134] The auditors’ report shall be attached to every financial statement.
• The Board’s report and any annexures thereto under sub- section (3) of section 134 shall be signed by its chairperson of the company if he is authorized by the Board and where he is not so authorized, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.
• The Board’s report and any annexures thereto under sub- section (3) of section 134 shall be signed by its chairperson of the company if he is authorized by the Board and where he is not so authorized, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.

10. Approval of Financial Statements In Annual General Meeting
Section 137(1) requires that copy of financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed within thirty days of such AGM.

11. Where the financial statement are not adopted?
• As per the first proviso to section 137(1), where the financial statements are not adopted at annual general meeting or adjourned annual general meeting , such unadopted financial statements along with the required documents shall be filed with the Registrar within thirty days of the date of annual general meeting and Registrar shall take them in his records as Provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose.
• As per the second proviso to section 137(1), financial statements adopted in the adjourned annual general meeting shall be filed with Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed within the time specified.

12. Where the AGM has not been held?
Section 137(2) states that where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub-section (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 days of the last date before which the annual general meeting should have been held and in such manner, with such fees or additional fees as may be prescribed within the time specified

If a company fails to file the copy of the financial statements, the company shall be punishable with fine of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

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