17 June 2015
Hello every one i have 2 interesting queries, i would like to know your views on them.
1. As per company act(accounts) amendment any part of rules will not be applicable to company having foreign subsidiary abroad for financial year on or after 1st April 2014. So question is all unlisted companies will get full exemption from consolidation even if single subsidiary is outside, because if we do plain reading of the section this is what is interpretation or only foreign subsidiary is excluded. I feel full exemption will be there.
2. Further what will happen if company is subsidiary as per company act but not as per as 21, because because paid up capital includes convertible preference shares there can be situation company holds 60% of (equity + convertible preference shares) but only 10% of equity shares. so whether consolidation will be required or not, i feel it is not required because it will become absurd.
With the amendment dated 16/01/2015, only those companies who are having 'ONLY' foreign subsidiary or subsidiaries, are exempted for consolidation. It does not say if a company is having both Indian and foreign subsidiaries, then consolidation is exempted. Word 'Only' is the catch point as per my interpretation.
CAclubindia
