Companies (Accounts) Amendment Rules, 2016
The Ministry of Corporate Affairs (“MCA”) has issued the Companies (Accounts) Amendment Rules, 2016 (“Amendment Rule”) to further amend the existing Companies (Accounts) Rules, 2014 (“Principal Rules”). A brief summary of the key amendments are provided below:
► Manner of consolidation of accounts: As per Section 129(3) of the Companies Act, 2013, Company is required to prepare a consolidated financial statements (“CFS”) of the Company and all its subsidiaries and lay the same before the Shareholders in Annual General Meeting. Rule 6 of the Companies (Accounts) Rules, 2014 provides that if the Company referred to in Section 129(3) is not required to prepare a CFS as per Accounting Standards, it would be sufficient compliance of law if it complies with the provisions of CFS in Schedule III of the Act.
However, the aforesaid proviso shall not apply in respect of preparation of CFS by an intermediate wholly-owned subsidiary, other than a wholly-owned subsidiary whose immediate parent company is incorporated outside India. The second proviso to Rule 6 has been amended to provide that a Company is not required to prepare CFS, if it satisfies the following conditions:
• Company is a wholly-owned subsidiary or is partially owned subsidiary of another company and all its other members have intimated in writing that they do not object to the company for not presenting CFS. Further, the company is required to maintain the proof of delivery of such intimation;
• Company whose securities are not listed or are not in the process of listing on any stock exchanges, whether in India or outside India; and
• Company’s ultimate or any intermediate holding company files CFS with the Registrar
► Matter to be included in Board’s report: The amendment rule provides for reporting on the highlights of performance of subsidiaries, associates and joint ventures and their contribution to the overall performance of the company during the period under report as against reporting on the performance and financial position of each of the subsidiaries, associates and joint venture companies in the CFS.
► Companies required to appoint internal auditor:
• The amendment rule has widened the meaning of “firm of internal auditors” to include an individual or a partnership firm or a body corporate and the said can be appointed to perform internal audit.
• The amendment rule has modified the explanation to define the term Cost Accountant which is referred in Section 138 as “Cost Accountant engaged in practice or not”.
The Amendment Rule would be effective from the date of its publication in the Official Gazette.
To read the full text of the Amendment Rule, please click the below link:
Companies (Accounts) Amendment Rules, 2016 Reviewed by Adarsh Madrecha on 12:37:00 Rating: