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(i) Soft copies of full annual reports containing its Balance Sheet, Profit & Loss account and Directors
Report to all those shareholder(s) who have registered their email address(es) for the purpose;
(ii) Hard copy of statement containing the salient features of all the documents, as prescribed in subclause
(iv) of clause (b) of proviso to section 219 of the Companies Act, 1956 to those
shareholder(s) who have not so registered;
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Dear
Under Section 219 of the Companies Act, 1956(the Act) every company is required to send to its
members copies of the Balance Sheet including the Profit and Loss Account and the Auditors
Report and every other document required by law to be annexed or attached, as the case may be
to the balance sheet not less than twenty one days before the date of the meeting at which the
same would be laid for adoption. The use of the expression, โrequired by lawโ, is significant. The
same has been deliberately used to cover the requirements that could be imposed by Acts other
than the Companies Act. Under section 212 of the Act a company which has a subsidiary is
required to attach to its balance sheet, the profit and loss account, the directors report, the auditors
report and other statements referred to in the said section of the subsidiary. Under section 217 of
the Act the Report of the Board of Directors is required to be attached with every balance sheet. In
the case of listed companies under the listing agreement which derives its authority from the
Securities Contracts (Regulation) Act, 1956, companies are required to give in the Annual Report
Cash Flow Statement, and Consolidated Balance Sheet and Profit and Loss Account in case they
have subsidiaries. Such companies are also required to give a report on Corporate Governance
containing the prescribed particulars and a Management Discussion Analysis. Such companies
are further required to give the following certificates/declaration:
ย A declaration by the Chief Executive Officer, to the effect that members of the Board and
Senior Management Personnel of the Company have affirmed to the Board of compliance
with the Code of Conduct laid down by the Board.
ย A Certificate signed by Chief Executive Officer and Chief Finance Officer (or by the person
heading the finance function) certifying in the manner stipulated about the financial
statements and cash flow statement.
ย A Certificate by the Statutory Auditors or a Practising Company Secretary certifying that
the company has complied with the requirements of Corporate Governance laid down
under the Listing Agreement.
They are also required to detail the transactions with related parties in the balance sheet.
Thus it would be seen that a host of documents is required to be attached or annexed to the balance
sheet and considerable information is required to be given therein. Naturally this involves huge
costs in the form of paper, printing, postage etc. in sending a complete copy of the balance sheet
to each and every member of the company. Even though on the face of it, it would appear that the
cost is borne by the company, the burden really falls on the shareholders, whose interest the
authorities desire to protect. Further every member of a company is not interested in all the
information contained in the accounts and in fact it is beyond an average manโs capacity to
understand and assimilate them. Keeping this in mind, the Companies (Amendment) Act, 1988
amended the requirements of section 219. The said section after amendment provided that a
listed company need not send a complete copy of the balance sheet to its members provided โ
ย The complete copy of the balance sheet is kept open for inspection at the registered office
during working hours for a period of twenty one days before the date of the meeting, and
ย A statement containing the salient features of such documents in the prescribed form or
copies of the documents, as the company may deem fit are sent to the members and to every
trustee for the holders of the debentures of the company not less than twenty one days
before the date of the meeting.
Companies, particularly listed companies, which have
considerable number of members in order to reduce cost made
use of this wholesome provision in section 219. But gradually
through the medium of listing agreement this laudable objective
was given a go by and companies were required to send a
complete copy of the balance sheet to each and every member of
theirs as would be evident from the following clause 32 of the
Listing Agreement:
โThe Company will supply a copy of the complete and full
Balance Sheet, Profit and Loss Account and the Directorsโ
Report, to each Shareholder and upon application to any
member of the Exchange.
However, the company may supply single copy of complete and
full Balance Sheet and Profit & Loss Account and Directors report
to shareholders residing in one household (i.e., having same
address in the Books of Company/Registrars/Share transfer
agents). Provided that, the company on receipt of request shall
supply the complete and full Balance Sheet and Profit & Loss
Account and Directors report also to any shareholder residing in
such household. Further, the company will supply abridged
Balance sheet to all the shareholders in the same household.
In case the company has changed its name suggesting any new
line of business (including software business), after 1st January,
1998 or it changes the name hereafter, then the company will
disclose the turnover and income, etc., from such new activities
separately in the annual results for a period of 3 years from the
date of change in the name of the company.
In addition to the above provisions, listed companies which
decide to change their names would be required to comply with
the following conditions :
1. a time period of at least 1 year should have elapsed from
the last name change
2. at least 50% of the total revenue in the preceding 1 year
period should have been accounted for by the new activity
suggested by the new name.
The new name along with the old name shall be disclosed through
the web sites of the respective stock exchange/s where the company
is listed and also through the EDIFAR web site for a continuous
period of one year, from the date of the last name change.
The Company will also give a Cash Flow Statement along with
Balance Sheet and Profit and Loss Account. The Cash Flow Statement
will be prepared in accordance with the Accounting Standard on
Cash Flow Statement (AS-3) issued by the Institute of Chartered
Accountants of India, and the Cash Flow Statement shall be
presented only under the Indirect Method as given in AS-3.
The company will mandatorily publish Consolidated Financial
Statements in its Annual Report in addition to the individual
financial statements. The company will have to get its Consolidated
Financial Statements audited by the statutory auditors of the
company and file the same with the Stock Exchange.
The company will make disclosures in compliance with the
Accounting Standard on โRelated Party Disclosuresโ in its Annual
Report.
Disclosure of loans/advances and investments in its own shares
by the listed companies, their subsidiaries, associates etc.
The following disclosure requirements shall be complied by the
companies in the Annual Accounts
Sr. In the accounts of Disclosures of amounts at the
No. year end and the maximum
amount of loans/advances/
Investments outstanding during
the year.
1 Parent โข Loans and advances in the
nature of loans to subsidiaries
by name and amount.
โข Loans and advances in the
nature of loans to associates
by name and amount.
โข Loans and advances in the
nature of loans where there is
(I) no repayment schedule or
repayment beyond seven
years or
(II) no interest or interest
below section 372A of
Companies Act by name
and amount
Loans and advances in
the nature of loans to
firms/companies in which
directors are interested
by name and amount.
2 Subsidiary Same disclosures as applicable
to the parent company in the
accounts of subsidiary company.
3 Parent Investments by the loanee in the
shares of parent company and
subsidiary company, when the
company has made a loan or
advance in the nature of loan.
Note : (1) For the purpose of the above disclosures the terms โparentโ
and โsubsidiaryโ shall have the same meaning as defined in the
Accounting Standard on Consolidated Financial Statement (AS-21)โ
issued by ICAI.
(2) For the purpose of the above disclosures the terms โAssociateโ
and โRelated Partyโ shall have the same meaning as defined in
the Accounting Standard on โRelated Party Disclosures (AS-18)โ
issued by ICAI.
(3) For the purpose of above disclosures directors interest shall
have the same meaning as given in Section 299 of Companies Act.
The above disclosures shall be applicable to all listed companies
except for listed banks.โ
The Company shall supply:
(i) Soft copies of full annual reports containing its Balance Sheet, Profit & Loss account and Directors
Report to all those shareholder(s) who have registered their email address(es) for the purpose;
(ii) Hard copy of statement containing the salient features of all the documents, as prescribed in subclause
(iv) of clause (b) of proviso to section 219 of the Companies Act, 1956 to those
shareholder(s) who have not so registered;
(iii) Hard copies of full annual reports to those shareholders, who request for the same.
The Company will also give a Cash Flow Statement along with Balance Sheet and Profit and Loss Account.
The Cash Flow Statement will be prepared in accordance with the Accounting Standard on Cash Flow
Statement (AS-3) issued by the Institute of Chartered Accountants of India, and the Cash Flow Statement
shall be presented only under the Indirect Method as given in AS-3.
The company will mandatorily publish Consolidated Financial Statements in its Annual Report in addition to
the individual financial statements. The company will have to get its Consolidated Financial Statements
audited by the statutory auditors of the company and file the same with the Stock Exchange. Companies
shall be required to make disclosures in compliance with the Accounting Standard or โRelated Party
Disclosuresโ in the Annual Report
Thanks