MCA GRANTS GENERAL EXEMPTION FROM PROVISION OF SECTION 212 OF COMPANIES ACT 1956

MCA GRANTS GENERAL EXEMPTION FROM PROVISION OF SECTION 212 OF COMPANIES ACT 1956

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Feb 09

2019

Posted by: CS Shilpi Thapar

The Ministry of Corporate Affairs issued a general circular no. 2/2011 dated 8.02.2011 issuing directions u/s.212(8) of The Companies Act,1956. It says:

“The Central Government directs that provisions of section 212 of The Companies Act,1956 shall not apply in relation to subsidiaries of those companies which fulfill the following  conditions:-

1. The Board of Directors of the Company has by resolution given consent for not attaching the balance sheet of the subsidiary concerned;

2. The company shall present in the annual report, the consolidated financial statements of holding company and all subsidiaries duly audited by its statutory auditors;

3. The consolidated financial statement shall be prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement as prescribed by the Security and Exchange Board of India;

4. The company shall disclose in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend;

5. The holding company shall undertake in its annual report that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned and a note to the above effect will be included in the annual report of the holding company. The holding company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand;

6. The holding as well as subsidiary companies in question shall regularly file such data to the various regulatory and Government authorities as may be required by them;

7.The company shall give Indian rupee equivalent of the figures given in foreign currency appearing in the accounts of the subsidiaries companies along with exchange rate as on closing day of the financial year.”

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