Section 212
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 October 2010
If the balance sheets of subsidiary companies are not made available to the holding company. Then what would be the applicability of Section 212. So, whether the holding company would wait for the accounts of subsidiary company or the company could conduct its AGM.
18 October 2010
Hi
If for any reason, the Board of the holding company is unable to obtain information on any of the matter required to be specified by section 212(4) of the Companies Act, 1956, a report in writing to that effect shall be attached to the Balance Sheet of the Holding Company. {Section 212(6)}
Regards
If for any reason, the Board of the holding company is unable to obtain information on any of the matter required to be specified by section 212(4) of the Companies Act, 1956, a report in writing to that effect shall be attached to the Balance Sheet of the Holding Company. {Section 212(6)}
Regards
18 October 2010
As per sec 212(6) If , for any reason , the board of directors of the holding company is unable to obtain information on any of the matters required to be specified by sub sec (4), a report in writing to tahat effect shall be attached to the balancesheet of the holding company.
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 October 2010
What would be the format of report that has to be attached along with balance sheet u/s 212(6) of the companies act.
Also, provide me whether in this case there would be applicability of Section 212(8) of companies act.
Also, provide me whether in this case there would be applicability of Section 212(8) of companies act.
23 July 2025
Applicability and Requirements of Section 212 of the Companies Act, 1956
Section 212 of the Companies Act, 1956 deals with the requirement for the holding company to disclose certain information about its subsidiary companies in its annual accounts. This includes the balance sheets of subsidiary companies, investments, and other important details regarding the subsidiary’s financial position.
The section also addresses situations where the holding company may not have access to the required information from the subsidiary companies.
1. Applicability of Section 212 in case of Non-Availability of Subsidiary Financials
Section 212(4) specifies that the holding company must include certain information regarding its subsidiaries in the financial statements, including the balance sheet of each subsidiary company, and also the details about the financial condition of the subsidiary companies.
If for any reason, the holding company is unable to obtain information (such as the balance sheets of the subsidiaries), Section 212(6) provides a remedy.
Section 212(6) states that if the Board of the holding company is unable to obtain information on any matters required to be specified under Section 212(4), a written report explaining the reason for this non-disclosure must be attached to the balance sheet of the holding company.
2. Report to be Attached under Section 212(6)
If the holding company cannot obtain the necessary information from the subsidiary company, it should prepare a written report indicating the reasons for the inability to obtain the required information.
Format of Report:
While the Companies Act, 1956 does not prescribe an exact format for the report under Section 212(6), the general guideline is to provide the following details:
Heading: "Report under Section 212(6) of the Companies Act, 1956".
Introduction: A statement mentioning that the report is being submitted as per the requirement of Section 212(6).
Reason for Non-Availability of Information: Explain the reasons why the information (such as the balance sheet of the subsidiary) was not provided by the subsidiary company.
Details of Efforts Made: Mention the efforts made by the Board of Directors of the holding company to obtain the necessary information (e.g., communication, requests, meetings, etc.).
Statement of Non-Disclosure: Clearly state that due to the non-availability of the required information, the holding company is unable to disclose the same in its annual accounts.
Conclusion: Conclude the report by confirming that the information was not provided, and no alternative means of obtaining it were available.
Example:
"In accordance with the provisions of Section 212(6) of the Companies Act, 1956, we hereby report that the financial statements of XYZ Ltd., a subsidiary of our company, have not been made available to us despite our repeated requests. Therefore, we are unable to present the consolidated balance sheet and profit & loss account of XYZ Ltd. in our annual accounts as required under Section 212(4) of the Act."
"We have made all reasonable efforts, including communication with the management of XYZ Ltd. and our legal representatives, to obtain the necessary documents, but have been unsuccessful in obtaining them. As a result, the disclosure requirements under Section 212(4) could not be fulfilled for XYZ Ltd."
"This report is being filed in compliance with Section 212(6) of the Companies Act, 1956."
3. Applicability of Section 212(8):
Section 212(8) provides that if the holding company fails to comply with the provisions of Section 212(4) (e.g., failure to attach the required balance sheets of subsidiaries), it may be liable for penalties.
If the holding company is unable to comply with the disclosure requirements of Section 212 (due to non-availability of information from subsidiaries), the report under Section 212(6) should be attached instead of the disclosures.
However, Section 212(8) applies only if the holding company fails to comply with the requirements without any valid reason. If the written report explaining the non-availability of subsidiary information is submitted, and if it is evident that the holding company made reasonable efforts to obtain the information, the penalty provisions of Section 212(8) should not be applicable.
4. Conducting AGM in this Case:
The holding company can proceed with its Annual General Meeting (AGM), even if the information from subsidiary companies is not available, provided:
The report under Section 212(6) is attached with the balance sheet of the holding company.
The AGM should include a note or explanation about the non-availability of the information, as mentioned in the report.
The company is not required to wait for the subsidiary's accounts to hold the AGM. However, the AGM should be informed about the reasons for the non-compliance and the company should pass a resolution in the AGM regarding the report submitted under Section 212(6).
Conclusion:
The holding company should file a written report explaining why the information from the subsidiary companies (such as the balance sheet) is not available, and attach it to the balance sheet.
Section 212(6) provides relief in case of non-disclosure, as long as the report is submitted.
The holding company can still proceed with the AGM, but the report under Section 212(6) must be attached to the balance sheet and the reasons for non-disclosure must be explained during the AGM.
Section 212 of the Companies Act, 1956 deals with the requirement for the holding company to disclose certain information about its subsidiary companies in its annual accounts. This includes the balance sheets of subsidiary companies, investments, and other important details regarding the subsidiary’s financial position.
The section also addresses situations where the holding company may not have access to the required information from the subsidiary companies.
1. Applicability of Section 212 in case of Non-Availability of Subsidiary Financials
Section 212(4) specifies that the holding company must include certain information regarding its subsidiaries in the financial statements, including the balance sheet of each subsidiary company, and also the details about the financial condition of the subsidiary companies.
If for any reason, the holding company is unable to obtain information (such as the balance sheets of the subsidiaries), Section 212(6) provides a remedy.
Section 212(6) states that if the Board of the holding company is unable to obtain information on any matters required to be specified under Section 212(4), a written report explaining the reason for this non-disclosure must be attached to the balance sheet of the holding company.
2. Report to be Attached under Section 212(6)
If the holding company cannot obtain the necessary information from the subsidiary company, it should prepare a written report indicating the reasons for the inability to obtain the required information.
Format of Report:
While the Companies Act, 1956 does not prescribe an exact format for the report under Section 212(6), the general guideline is to provide the following details:
Heading: "Report under Section 212(6) of the Companies Act, 1956".
Introduction: A statement mentioning that the report is being submitted as per the requirement of Section 212(6).
Reason for Non-Availability of Information: Explain the reasons why the information (such as the balance sheet of the subsidiary) was not provided by the subsidiary company.
Details of Efforts Made: Mention the efforts made by the Board of Directors of the holding company to obtain the necessary information (e.g., communication, requests, meetings, etc.).
Statement of Non-Disclosure: Clearly state that due to the non-availability of the required information, the holding company is unable to disclose the same in its annual accounts.
Conclusion: Conclude the report by confirming that the information was not provided, and no alternative means of obtaining it were available.
Example:
"In accordance with the provisions of Section 212(6) of the Companies Act, 1956, we hereby report that the financial statements of XYZ Ltd., a subsidiary of our company, have not been made available to us despite our repeated requests. Therefore, we are unable to present the consolidated balance sheet and profit & loss account of XYZ Ltd. in our annual accounts as required under Section 212(4) of the Act."
"We have made all reasonable efforts, including communication with the management of XYZ Ltd. and our legal representatives, to obtain the necessary documents, but have been unsuccessful in obtaining them. As a result, the disclosure requirements under Section 212(4) could not be fulfilled for XYZ Ltd."
"This report is being filed in compliance with Section 212(6) of the Companies Act, 1956."
3. Applicability of Section 212(8):
Section 212(8) provides that if the holding company fails to comply with the provisions of Section 212(4) (e.g., failure to attach the required balance sheets of subsidiaries), it may be liable for penalties.
If the holding company is unable to comply with the disclosure requirements of Section 212 (due to non-availability of information from subsidiaries), the report under Section 212(6) should be attached instead of the disclosures.
However, Section 212(8) applies only if the holding company fails to comply with the requirements without any valid reason. If the written report explaining the non-availability of subsidiary information is submitted, and if it is evident that the holding company made reasonable efforts to obtain the information, the penalty provisions of Section 212(8) should not be applicable.
4. Conducting AGM in this Case:
The holding company can proceed with its Annual General Meeting (AGM), even if the information from subsidiary companies is not available, provided:
The report under Section 212(6) is attached with the balance sheet of the holding company.
The AGM should include a note or explanation about the non-availability of the information, as mentioned in the report.
The company is not required to wait for the subsidiary's accounts to hold the AGM. However, the AGM should be informed about the reasons for the non-compliance and the company should pass a resolution in the AGM regarding the report submitted under Section 212(6).
Conclusion:
The holding company should file a written report explaining why the information from the subsidiary companies (such as the balance sheet) is not available, and attach it to the balance sheet.
Section 212(6) provides relief in case of non-disclosure, as long as the report is submitted.
The holding company can still proceed with the AGM, but the report under Section 212(6) must be attached to the balance sheet and the reasons for non-disclosure must be explained during the AGM.
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