chp 13 - statutory register
TRANSCRIPT
13. Statutory Books, Accounts & Audit
1. Statutory Registers / Books to be maintained by a company.
2. Divisible Profits and Dividend 3. Accounts and audit
What you should know :
Statutory Registers / Books to be maintained by a
company49(7) Register of investments - where investments of the company in shares or securities are not held in its own name.
58A Register of Deposits (Read with rule 6 of the Companies (Acceptance of Deposits) Rules, 1975.
136 Copy of every instrument creating any charge requiring Registration.
#143(1) Register of charges.#150(1) Register of members.#151(1) Index of Members, where their number is more than fifty.#152(1) Register of Debenture holders. #152(2) Index of Debenture holders where their number is more
than fifty.157-158 Foreign Register of members and debenture holders.
# To be open for public inspection.
#159-160 Copies of Annual Return.193-196 Minutes Books of Proceedings of General Meetings and
of meetings of the Board of Directors of Committees of the Board.
209(1) Books of account and Cost Records301 Register of contracts, Companies and Firms in which the
Directors of the Company are interested.302 (6) All contracts entered into by the Company for the
appointment of a Manager or Managing Director.#303(1) Register of directors, manager and secretary.307 Register of shareholding or debenture holdings of
Directors and Manager.370(IC) Register of loans made and guarantees given or
securities provided to Companies under the same management.
372(6) Register of all investments made by the Company in the shares of any other body corporate or bodies corporate
Non Statutory Registers
Besides the above-detailed statutory
registers, which every company is required
to keep, there are quite a few non-statutory
registers which are required to be
maintained for the smooth, systematic and
efficient functioning of the company. Some of
these registers are
1) Share holders / proxies attendance register.
2) Register of documents executed under
common seal.
3) Register of share transfers / transmissions.
4) Register of fixed assets.
5) Register of employee stock option.
6) Directors attendance book .
[A] Register of members [sec.150]
• The name and address, and the occupation,
if any, of each member,• Number of shares and their distinctive
numbers except where such shares are held
with a depository and the amount paid• The date at which the name of each person
was entered in the Register as a member, &• The date at which any person ceased to be
a member.
Closing of Register [sec.154]
Closure of register of members means that the
company can lawfully refuse to accept the instrument
of transfer of shares for such period during which the
register of members has been closed. Generally, the
company closes its register of members before the
annual general meeting.
This is done so that the dividend, bonus issue or right
issue is given to the person who is the member as on
the date of closure of register of members.
Closing of Register [sec.154] Cont..
The Register of members of a company can be closed
after giving not less than 7 clear day’s previous
notice, by advertisement in some newspaper
circulating in the district in which the registered office
of the company is situated.
But in no case the register be closed for more than 30
days at a stretch and for an aggregate period of 45
days in a year.
Record date for bonus/ rights.
Place of keeping the register
Under section 163, the Register of members is required to be kept at the registered office of the company or any other place in the same city.
The Register of members must be kept open during business hours for inspection of any member or debenture holder without fee, and for any other person, on payment of the prescribed tee.
The Register must be kept open for at least two hours on every working during business hours
Index of members – If there are more than 50 members
Inspection of register of members
Register of debenture- holders [sec.152] Same contents as register of members.
Company having more than 50 debenture-holders.
Index of debenture-holders [sec.152]
The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be an index of member s and register and index of debenture- holders as the case may be, for the purpose of this Act.
Register & Index of beneficial owners [sec. 152A]
Foreign register of member (Sec. 157 & 158)
It is not mandatory for a company to maintain a foreign register, even if it has issued shares or debentures to persons resident outside India.
The foreign register shall be kept in a country outside India. It shall be kept in addition to the register of members kept under section 150 (hereinafter referred to as ‘principal register’)
The foreign register shall be in the form of a branch register, i.e., it shall contain the particulars relating to members or debentures resident in the country in which it is kept. A separate register may be kept in respect of every country.
Within 30 days of opening of the foreign register, the company shall file with the Registrar notice of the situation of the office where foreign register is kept.
Registers etc. to be evidence (Section 164)
Following registers etc. shall be prima facie evidence of any
matters contained therein:
(a) The register of members maintained under section 150.
(b) The register of debenture holders maintained under Sec
152.
(c) The annual returns, certificates and statements referred to
in sections 159, 160 and 161.
LIST OF STATUTORY REGISTERS, BOOKS AND RECORDS REQUIRED TO BE MAINTAINED BY A COMPANY UNDER
COMPANIES ACT, 1956
Sr.No.
Relevant Sections
Register/Books/Returns Inspection Fees/Charges for Inspection, if any
1. 49(7) Register of investments in any shares or securities not held in names its own name
Members and Debenture holder
Without any fees
2 58A read with rule 7 of the Companies (Acceptance of Deposits Rules,1975) & RBI Directions
Registers of deposits The Register is not open for Inspection
3 77A(9) Register of securities Bought Back
Not open for inspection
4 143(1) Register of charges Member or Debenture holder or a creditor
Without any fees
any other person
On payment of requisite fees.
5 150(1) Register of members Member or Debenture holder
Without any fees
Any other person
On payment of requisite fees.
6 151(1) Index to members Member or debenture holder
Without any fees
or any other person
On Payment of requisite fees
7 152(2) Register of debenture-holders
Member or Debenture holder or the trustee or
Without any fees
Any person On payment of requisite fees.
8 152(2) Index of debentures-holders
Member or Debenture holder or the trustee or
Without any fees
any other person
On payment of requisite fees
9 152A Register & Index of Beneficial Owners
Any Member Without any fees
10 157 and 158
Foreign register of members or debenture
Member or Debentures holders
Without any fees
Any other person
On payment of requisite fees
11 159-160 Copies of Annual Return
Member or Debenture holders
Without any fees or
any other person
on payment of requisite fees.
12 193 Minutes books of Board Meetings & any other meetings
13 193/196 Minutes books of General Meetings
Any Member Without any charge
14 209(1)(a)(b)(c)209 (d)
Proper books of account and cost records
The Directors of the Company
Without any charge
15 301 Register of contracts, companies and firms in which directors are interested
Member Without any fees
16 302(6) Register of contracts entered into by the company for the appointment of Manager or Managing Director
Member Without any fees
17 303(1) Register of Director/Managing Director/Manager/Whole Time Director/Secretary
Member Without any fees
18 307 Register of Directors’ shareholdings, etc.
Member or Debenture Holders
Without any fees
19 370(1C) Register of loans, etc., to companies under the same management
Member on payment of requisite fees.
20 372(6) Register of investments in shares of any body corporate
Member Without any fees
21 372A Register of loans made, guarantees given, securities provided or investment made by the company
Member or Debenture holder
Without any fees
22 Rule 7(2) of the Companies (Issue of Share Certificates)
Rules, 1960
Register of renewed and duplicate Share certificates
Not open for inspection
23 581-ZE(1) Books of account of the Producer Company
24 581-ZL(7) Register of particulars of Investments of producer companies
Member Without any fees
25 69-75 Register of Allotments Member or Debenture holder
Without any fees
26 205 Dividend Register Member Without any fees
27 192A Register of Postal Ballot
28 285 Register of Directors’ Attendance
29 79A Register of Sweat Equity Shares
Member Without any fees
30 SEBI Register of SEBI (Substantial Acquisition Regulations of Shares and Takeovers) Regulations
31 176 Record of Proxies and representatives
32 Register of Document executed under Common Seal
33 Register of Inspection
34 Register of destruction of records/documents
Filing of Returns with the Registrar of Companies
Periodical Returns: There are three important periodical returns. These are:A) Annual Return under section 159 or 160B) Balance Sheet and Profit and Loss Account, under Sec. 220;
andC) Compliance Certificate under section 383A.
Returns on occurrence of certain events: These include:Return as to allotment in e-form no. 2 (sec. 75)Return of directors in e-form no. 32 (sec. 303)Return as to Alteration of Memorandum, which requires
confirmation of CLB in e-form no. 21.Return as to Alteration of Share Capital in e-form no. 5 (sec.
94)Return of Charges in e-form no. 8 and 17 (sec. 125 and 127)Return of Resolutions and Agreements in e-form no. 23 (sec.
192)Return of Foreign Companies in e-form no. 44 / 49 (sec. 592 /
593)
Annual Return [sec.159 to 162]
Every company having a share capital shall file with the
Registrar of companies an annual return within 60 days
from the date of holding of the Annual General Meeting.
Contents:• Name and registered office address
• Capital structure of the company
• Directors/ Secretary Information (Past and Present)
• Details of shares/debentures held at date of AGM
• Details of shares transfers since last date of AGM
• Indebtedness of the company
• Equity share capital breakup
A. ANNUAL RETURN UNDER SECTIONS 159, 160
1. The annual return has to be filed with the ROC in an electronic mode within 60 days of the holding of the annual general meeting;
2. Where annual general meeting has not been held, the return is required to be filed within 60 days from the date on which the annual general meeting should have been held;
3. The return is to be duly signed digitally and the requisite certificates to be attached as per section 161; (by any two directors, including MD, if any)
4. In case of a company whose shares are listed on a recognized stock exchange; the return is to be also signed digitally by a secretary in whole-time practice.
Note: In case of an adjourned annual general meeting, the annual return incorporates the date of the original meeting.
Description e-Form
Particulars of annual return for the company not having share capital
Form 21A
Form for filing annual return by a company having a share capital with the Registrar
Form 20B
Form of annual return of a foreign company having a share capital
PrescribedForm 20B
[B] BALANCE SHEET, ETC., UNDER SECTION 220
1. the balance sheet, etc., to be adopted at the annual general meeting;
2. copy of Annual report including Balance Sheet etc. to be e-filed with the ROC within 30 days of the date of the annual general meeting;
3. where an annual general meeting (AGM) is not held, copy of balance sheet etc. to be e-filed within 30 days from the latest day on or before which the meeting should have been held and a statement of the fact and of the reasons thereof to be filed along with the balance sheet.
4. where balance sheet etc., is laid before but not adopted at the AGM or the AGM was adjourned without adopting the balance sheet, a statement of the fact and reasons thereof was filed along with balance sheet, etc. to be e-filed within 30 days of the AGM.
Description e-Form
Form for filing balance sheet and other documents with the Registrar
Form 23AC
Form for filing Profit and Loss account and other documents with the Registrar
Form 23ACA
C. COMPLIANCE CERTIFICATE UNDER SECTION 383A
1. The company to which proviso to sub-section (1) of section 383A is applicable, (Paid up capital of Rs. 10 lakhs and less than Rs. 5 Crores) has to digitally file with the ROC a Certificate from a Company Secretary in whole time Practice in Form appended to the Companies (Compliance Certificate) Rules, 2001 within 30 days from the date of annual general meeting, along with the Annual Report.
2. In case the annual general meeting of the company is not held for the year, the aforesaid Compliance Certificate to be digitally filed with the ROC within 30 days from the latest day on or before which that meeting should have been held.
Description e-Form
Form for submission of compliance certificate with the Registrar
Form 66
Section 209 of the Companies Act requires every company to maintain proper books of account with respect to
Books of Account
a) receipts and payments, b) sales and purchases, c) assets and liabilities,d) Cost accounting records if applicable.
Books of account to be kept at the Registered office.
Books which give true and fair view of the state of affairs of the company
The books of account explain the transactions; &
The books of account are kept on accrual basis and according to the double-entry system of accounting.
The accounts are prepared as per accounting standards.
What do you mean by Proper Books of Accounts?
1) any director during business hours, 2) the Registrar of Companies, 3) such officer of Government, as may be
authorised by the Central Government in this behalf,
4) the Reserve Bank of India.5) SEBI in respect of listed companies
Inspection of books of account (section 209A)
Although a director has a right of inspection of books of account during business hours, this right does not extend to a shareholder except where such a right is specifically given in the Articles.
Persons responsible for keeping proper books of account - Section 209(6)
Section 209(6) primarily makes the managing director or manager, if there is one, liable for keeping proper books of account.
In case the company does not have a managing director or a manager, every director of the company shall be liable.
Besides the liability extends to every officer, employee, agent and any other person who has been made responsible to ensure that the requirements of section 209 are complied with
Preparation and presentation of Financial Statements
Format of balance sheet - Part I of Schedule VI Format of profit & loss a/c - Part II of Schedule VI
Accounting standards and accounts: According to section 211 every profit and loss account and balance sheet of the company shall comply with the accounting standards. If the accounts do not comply with the accounting standards, such company should disclose in its profit & loss account and balance sheet, the following namely: a) the deviation from the accounting standard;b) the reasons for such deviations; andc) the financial effect, if any, arising due to such deviation.
Authentication of Accounts
Every B/S and P&L a/c is required to be signed, on behalf of the Board of directors, by its manager or secretary, if any, and by not less than two directors of a company one of whom must be the managing director where there is one.
Board’s Report
At the Annual General Meeting one of the matters to be considered is the report of the Board of Directors. Section 217(1) requires that a report of Board of Directors should be attached to the balance sheet laid before the AGM. While drafting the Directors’ report the provisions of Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and Companies (Particulars of Employees) Rules, 1975 should be complied with.
Contents of Report of Board of Directors –
(i) State of the company's affairs
(ii) Amount proposed to be carried to any reserves in the
balance sheet.
(iii) Amount recommended to be paid to share holders as
dividend.
(iv) Material changes and comments, if any, affecting the
financial position of the company occurred after the close of
financial year and the date of report of Board of Directors
(called 'events after balance sheet')
(v) Conservation of energy, technology absorption, foreign
exchange earnings and outgo. These details should be
submitted in prescribed form.
(A) According to section 217(1) the report of Board of Directors shall report the following:–
…….Contents of Report of Board of Directors –
B. Statement giving details of employees whose salaries are beyond prescribed limit. [Section 217(2A)] (presently Rs. 24 lakhs p.a.)
C. If company had entered into 'buy back' of shares as per approval of members, and if buy-back was not completed within specified time, Board should specify reasons for the failure. (section 77A).
D. Fullest information and explanations about every reservation, qualification or adverse remarks in the auditors' report.
E. Director's Responsibility Statement [section 217(2AA)] F. Secretarial Compliance Certificate if required should be
attached to the report of Board. [proviso to section 383A(1)]
Circulation of Annual Accounts
Section 219(1) requires that a
• copy of every balance sheet (including the profit and loss
account,
• auditors’ report and
• every other document required to be annexed or attached
thereto) which is to be laid before the annual general
meeting of the company shall be sent,
• not less than 21 clear days before the meeting, to every
member of the company and to all other persons so
entitled.
Adoption of Accounts
One of the business to be transacted at an annual general
meeting is adoption of the accounts including the balance
sheet, profit and loss account and the directors’ report
thereon.
The annual accounts must be presented within six months
from close of financial year. This period can be extended by
further three months by RoC.
In case of the first AGM, the annual general meeting should
be held within nine months from close of financial year.
(section 210)
Filing of Accounts
Every company is required to e-file with the Registrar scan
copies of its balance sheet and profit and loss account duly
authenticated together with forms 23AC (Balance Sheet),
23ACA (Profit and Loss Account).
Section 220 requires these documents to be e-filed with the
Registrar within thirty days from the date on which the
balance sheet and profit and loss account were laid before
the AGM of the company.
Disclosure of accounts of subsidiary companies
Balance sheet of a holding company should include following
details of each subsidiary company [section 212]-
(a) Balance sheet, P&L account
(b) Report of Board of Directors
(c) Report of Auditors of the subsidiary company.
(d) Statement of holding company’s interest in the subsidiary
at the end of financial year.
Divisible Profits & Dividend (Sections 205 - 208)
• Final dividend – It is declared by the shareholders at the
annual general meeting.
• Interim dividend – Interim dividend is declared by the
board of directors if authorised by the articles. It is
declared between two annual general meetings.
• According to section 205, dividends may be declared only
out of current profits;
past reserves created out of profit or
out of moneys provided by the Central or State Govt. for this
purpose in pursuance of a guarantee given by such Government.
Dividend should be declared only
- after providing for depreciation for the current year and arrears of depreciation if any.
- after transferring a prescribed percentage of its profits to its reserves.
It may be noted that no transfer to reserves is required if the rate of dividend proposed is 10% or less.
Normally amount transferred to reserves should not exceed 10% of current profits.
Companies (Transfer of Profits to Reserves) Rules, 1975.
Section Checklist (Payment of Dividend)
To pass a resolution in the Board meeting and also in the AGM by an ordinary resolution by simple majority.
205 (1A)
The amount of dividend to be deposited in a separate bank account within five days of AGM in which it is approved.
205 (1A)
The interim dividend should be deposited in a separate bank account within five days of the Board Meeting. the interim dividend declared by a company should be confirmed in the next AGM.
205 (5)(b)
The dividend should be paid to the shareholders by cheque of warrant within 30 days of declaration. The amount of dividend should be rounded off to the nearest rupee.
206A Pending registration of transfer of shares, dividend amount should be held in abeyance. The company must transfer such dividend amounts to the special account referred to in section 205A unless the registered shareholder has advised otherwise.
I. Tax Act
The dividend tax under the Income-tax Act should be deposited on time as introduced by Finance Act, 2003.
205A(1) Dividend remaining unpaid or unclaimed should be transferred to a special account called "Unpaid dividend account of ……….. Ltd." within 7 days from the date of expiry of thirty days from the date of declaration. The above account may be with any scheduled bank and can be either a current account or fixed deposit account.
205A(5) Unclaimed or unpaid dividend for a period of 7 years should be transferred to Investor Education and Protection Fund.
205(1)(C)
If the company wants to declare dividend before providing depreciation, the approval of central Government should be obtained.
Likewise, central Government's permission will be required if the company wants to declare dividend out of reserves of the company.
Section Checklist
Audit i) Audit is the systematic check of books of
accounts. The main purpose of audit is detection and prevention of errors and detection and prevention of fraud. It is to ensure that the statement of accounts of the relevant financial year truly and fairly reflect the state of affairs of the company.
ii) Qualifications of an auditor iii) Appointment of first auditors – by BODiv) Appointment of subsequent auditors – in AGM v) Appointment by special resolution – 25%
subscribed capital held by Govt. / PFI / Gov. Co.
…Audit vi. Appointment by Central Government – in case
Auditor is not appointed in AGM.vii. Casual vacancy viii. Ceiling on audits – 20 Companies ix. Appointment of Auditors of Govt. Companies x. Removal of an Auditor xi. Remuneration of Auditors
Special audit Under section 233A, the Central Government is empowered
to direct that a special audit of the company’s accounts for a specified period shall be conducted. Such a direction shall be issued where it is of the opinion that –
a) the affairs of any company are not being managed in accordance with sound business principles or prudent commercial practices; or
b) that the company is being managed in a manner likely to cause serious injury or damage to the interest of trade, industry or business to which it pertains ;
c) that the financial position of any company is such as to endanger its solvency.
For the purpose of special audit, the Central Government may either appoint a chartered accountant or the company’s auditor himself.
Cost audit 1) Cost audit is a process for verifying the cost of manufacture
or production of an article on the basis of the accounts as regards utilisation of material or labour or other items of costs maintained by the company.
2) The cost auditor is to be appointed by the Board of directors of the company, if the Central Government so directs. The cost auditor has to be a cost accountant within the meaning of the Cost and Works Accountants Act, 1959.
Audit Committee The Company (Amendment) Act, 2000 provides for
constitution of and audit committee in case of a public company having a paid up capital of not less than Rs. 5 crore (section 292A).
Constitution of National Advisory Committee on Accounting Standards
1) The Central Government has constituted an Advisory Committee on Accounting Standards to advise the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or a class of companies.
2) This advisory committee shall comprise of 12 members who shall be nominated by different professional bodies/authorities mentioned in sub-section (2).
3) These are ICAI, ICSI, ICWA, RBI, CBDT etc.,.
4) The committee shall give its recommendations to the Central Government on matters relating to accounting standards and auditing.