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SHORT SUMMARY

In this editorial, the Author shall discuss the concept of Signing of Financial Statement of a Company (OPC, Small, Private, Public, Listed etc). Further, the author shall try to answer the following questions:

1. How Many directors must sign the financial statement?
2. Whether the Chairman of the Meeting can solely sign the Financial Statement?
3. Can an independent Director sign Financial Statement?
4. Do all the directors needs to sign the Financial Statement?
5. Whether it is mandatory to get sign Financial Statement from the Company Secretary of the Company?
6. Can a financial statement be signed digitally by Directors?

Signing of Financial Statements

A. FINANCIAL STATEMENT

'financial statement' in relation to a company, includes -

(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):

B. APPROVAL OF FINANCIAL STATEMENT

Sub-section (1) of section 134 of the Act provides for approval and signing of financial statements (as defined in clause (40) of section 2) including consolidated financial statements, if any. Such approval of financial statement
needs to be given in a duly convened board meeting. Such meeting can be held through video conferencing or any other audio-visual means also as provided in rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014.

C. SIGNING OF FINANCIAL STATEMENT

Such approved financial statements will be signed on behalf of the company by the following:

i. Chairperson of the company where he is authorized by the Board OR

ii. by two directors out of which one shall be managing director AND

iii. the Chief Financial Officer, wherever appointed c. the Company Secretary of the company, wherever appointed.

 

CONCLUSION

A. HOW MANY DIRECTORS MUST SIGN THE FINANCIAL STATEMENT?

Where the company does not have a chairperson or if he is not authorized by the board:-

'Signing of financial statements by two directors out of which one shall be managing director, if any'.

If there is no Managing Director in the Company, then atleast 2 directors shall sign the Financial Statement.

B. WHETHER, CHAIRMAN OF MEETING SOLELY SIGN THE FINANCIAL STATEMENT?

It should be noted that for signing the financial statements, chairperson of the company is recognized and not chairperson of the meeting. Hence, the person who is appointed as chairperson of the company may sign
the financial statements solely after authorization by the Board irrespective of whether he chaired the meeting or not.

C. CAN AN INDEPENDENT DIRECTOR SIGN FINANCIAL STATEMENT?

As per Question 'A' financial statement needs to sign from the Directors of the Company. The Independent Director being a director of the Company can sign the financial statement of the Company.

D. WHETHER ADDITIONAL DIRECTOR CAN SIGN FINANCIAL STATEMENT?

As per Question 'A' financial statement needs to sign from the Directors of the Company. The Additional Director being a director of the Company can sign the financial statement of the Company.

E. DO ALL THE DIRECTORS OF THE COMPANY NEEDS TO SIGN FINANCIAL STATEMENT?

Where the company does not have a chairperson or if he is not authorised by the board:-

'Signing of financial statements by two directors out of which one shall be managing director, if any'.

If there is no Managing Director in the Company, then atleast 2 directors shall sign the Financial Statement.

 

F. WHETHER IT IS MANDATORY TO GET SIGN FINANCIAL STATEMENT FROM THE COMPANY SECRETARY OF THE COMPANY?

As per Section 134(1), the Chief Financial Officer and the company secretary of the company, wherever they are appointed needs to sign the financial statement. Here doesn't matter whether company is Private Company or Public Company.

G. WHO WILL SIGN THE FINANCIAL STATEMENT OF ONE PERSON COMPANY 'OPC'?

In the case of an OPC, such statements are required to be signed only by one
director.

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