Tag Archives: The Companies (Accounts) Rules 2014

Return of Loans, Deposits and a “not a Deposits”


After the recent amendment dated 22nd January 2019, Form DPT – 3 which has its legal name as “Return of Deposit” shall be used for filing return of deposit or particulars of a transaction not considered as deposit or both. It includes Loan but excludes capital and day to day business receipts. We will discuss seriously latest amendment in these “no longer only the Deposits Rules, 2014”.

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Amendment in Registration Offices and Fees Rules


Ministry of corporate came out with minor but significant decision in the Companies (Registration Offices and Fees) Rules, 2014 by way of the Companies (Registration Offices and Fees) 2nd Amendment Rules, 2016.

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Amendment in Companies Accounts rules, 2016


Ministry of Corporate Affairs came with amendment to the Companies (Accounts) Rules, 2014, last month. These rules has been published in official gazette on 27th July 2016 and came into force on that date. In this post, we will discuss these amendments in this blog post.

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AOC – 4


Recent amendment to the Companies (Accounts) Second Amendment Rules 2015 dated 4th September 2015 for which I have yet to locate published copy in the Official Gazette. This Amendment shall come into force from the date of publication in Official Gazette. By virtue of its Rule 12(1) is being substituted. According to substituted Rule, “Every company shall file the financial statements with Registrar together with Form AOC – 4 and the consolidated financial statement, if any with Form AOC – 4 CFS.” Original rule was discussed earlier here.

Earlier Form AOC – 4 is also proposed to be replaced with Form AOC – 4 and Form AOC – 4 CFS. In this post we will discuss Form AOC – 4.

Note: AOC – 4 Version 30th September 2015 is being used for writing this post. The post is long one but to avoid confusion, i opted not to split this post. Readers may read it segment wise.

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YEARS’ ‘second’ AMENDMENT IN ACCOUNTS RULES


Ministry of Corporate Affairs placed on its web site a DRAFT notification on 4th September 2015 which proposed to amend the Companies (Accounts) Rules, 2015 with effect from date of publication of this notification in the official Gazette.

We will discuss here, provisions proposed to be amended by this notification:

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Internal Auditor


Internal Audit is one most important tool for better Corporate Governance in any company. This is not a post – mortem like statutory audit, but may provide real time analysis and processing of transactions through watchful eyes.

According to Section 138 of the Companies Act, 2013 discussed earlier here, “Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.”

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FINANCIAL STATEMENT TO MEMBERS AND PUBLIC


As discussed earlier here according to Section 136, a copy of the financial statements, including consolidated financial statements, if any, auditor’s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to 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 or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting. [Section 136(1)]

Statement containing salient features of financial statements:

In the case of a listed company, the provisions of this section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements. [First Proviso to Section 136(1)]

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Every Holding Company to Consolidate Financial Statements


Rule 6 of the Companies (Accounts) Rules 2014 deals with consolidation of Accounts. This rule got its power from second proviso to sub – section (3) of Section 129.

According to Section 129(3), where a company has one or more subsidiaries, it shall, in addition to financial statements provided under sub-section (2), 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 under sub-section (2).

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Board’s Report – 3


In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.

Managerial Remuneration [Rule 5(1) of Managerial Remuneration Rules]:

Every listed company shall disclose in the Board’s report-

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

The expression “median” means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers may be found by arranging all the observations from lowest value to highest value and picking the middle one. If there is an even number of observations, the median shall be the average of the two middle values.

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Board’s Report – 2


In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.

Particulars of Contracts or Arrangements [Rule 8(2) of Accounts Rules read with Section 134(3)(h)]:

The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2.

As discussed earlier here and here, Section 188 lists out certain transaction restricted to be entered into with related parties.

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Board’s Report – 1


In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.

Preparation of Boards’ Report:

The Board’s Report shall be prepared based on the stand alone financial statements of the company and the report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented. [Rule 8(1) of Accounts Rules]

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FINANCIAL STATEMENTS AND BOARD’S REPORT


Section 134 of the Companies Act 2013 enumerates provisions related to with Financial Statements and Boards’ Reports. Rule 8 to Rule 12 of the Companies (Accounts) Rules 2014 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also deals with Boards’ Report.

Penalty for Contravention of Section 134:

If a company contravenes the provisions of section 134, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. [Section 134(8)]

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SUBSIDIARIES AND CONSOLIDATION OF ACCOUNTS


As we have discussed earlier here, Section 129(3) discuss about consolidation of accounts.

Where a company has any subsidiary, the company shall prepare a consolidated financial statement of the company and of all subsidiaries in the same form and manner as that of its own.  The consolidated financial statement shall also be laid before the annual general meeting along with own financial statement.

The company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiaries.

Under this section, the word subsidiary shall include associate company and joint venture.

Form of Statement containing salient features of financial statements of subsidiaries [Rule 5]

According to Second Proviso to Section 129(3) discussed earlier here, where a company has any subsidiary, the company shall prepare a consolidated financial statement of the company and of all subsidiaries in the same form and manner as that of its own.  The consolidated financial statement shall also be laid before the annual general meeting along with own financial statement.

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MAINTENANCE OF BOOKS OF ACCOUNT


The Companies (Accounts) Rules 2014 came into force from 1st April 2014. These rules first time recognised electronic mode for keeping of books of account.

Notice of address at which books of account are to be maintained [Rule 2A]:

As we discussed earlier here according to Section 128 of the Companies Act 2013, every company shall prepare and keep at its registered office books of accounts and other relevant books and papers and financial statement for every financial year. These books must give a true and fair view of the state of affairs of the company and its branch offices. These books must explain the transactions effected both at the registered office and its branches.  These books shall be kept on actual basis and double entry system of accounting.

These books or some of these books may be kept at a place other than registered office at the decision of the Board of Directors after filing with the Registrar of Companies a notice in writing giving full address of that place.

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