09 September 2015
Kindly give your opinion on the following case:- We have a query that one of our Private Limited Company which has 5 directors out of which 4 directors are directors of unlisted public limited company. Further Unlisted Public Limited Company has total 6 Directors. There is no shareholding of company in each other. But, Directors and relatives hold 100% shareholding in both companies. Also, Turnover of Pvt. Limited Company is more than unlisted public limited company for the FY 2014-15. Is consolidation of financial statements required for the financial year ended 31.03.2015 as per Companies Act, 2013.
10 September 2015
Under the provisions of the companies Act 2013, consolidation is required only if there is a holding and subsidiary relationship between two companies. For holding and subsidiary relationship, there must be investment in shares or by the process of an agreement one company will have power to appoint directors of other company. Having common directors between two companies does not require consolidation.
10 September 2015
Under Section 129(3) of the Companies Act, 2013 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).
In your query, there is no holding subsidiary company relationship exists, because neither any of the Company holding more than 50% shares in other company nor company have signed agreement to appoint directors of the other company. Having same directors in both the Companies, does not requires consolidation of annual accounts.
CAclubindia
