Can the Financial Statements be signed digitally?

Short Summary

Due to COVID 19, it becomes difficult for the Companies throughout the country to hold the physical Board Meeting. Therefore, many companies are holding their Board Meeting for the approval of the financial statement through Video Conferencing.

As many companies are holding Video Conferencing Board Meeting and Directors are not available at the same place, It is difficult to get the financials signed by the Directors physically.

Important Questions: Can the Financial statements be signed digitally by the Directors?

First Question: Who can sign the Financial Statement?

As per Section 134(1), Financial Statement of the company can be signed by,

• the chairperson of the company where he is authorized by the Board or
• by two directors out of which one shall be the Managing Director if any, and
• the Chief Executive Officer, the Chief Financial Officer and the
• Company Secretary of the company, wherever they are appointed, or
• in the case of a One Person Company, only by one director, for the submission to the Auditor for his report thereon.

The above-mentioned person can sign the Financial Statement of company according to the management structure of the Company.

Questions: can the financial statements be signed digitally?

Due to COVID 19 situation, this is a very common question for the professionals and Corporates.

Digital Signature

A digital signature is used to authenticate a document. As the digital equivalent of a handwritten signature or stamped seal.

DSC can only be used for signing the documents. The most popular usage is signing the PDF files for Tax Returns, MCA and other websites. Signing via DSC gives the assurance of not only the integrity of the signer but also the data. It is proof of untampered and unaltered data.

Signing of Financials

As we have already discussed above, who can sign the financial statement of the Company.

As per Section 134, it is specifically mentioned that the Financial statement should be signed. However, there is nowhere mentioned that the Financial statement should be signed physically or digitally

Therefore, as per the meaning of the Digital Signature and Section 134, we can opine that the financial statements of the Company can be signed either physically or digitally.

In simple words, we can opine that the Financial statements of the Companies can be signed through Digital signatures as well.

Conclusion

Companies can get their Financial Statement signed even with the Digital Signature of the Directors, CEO, CFO, CS and the Statutory Auditors.