Latest audited Balance Sheet"

Others 4581 views 5 replies

Arun Kumar Aggarwal

Service

65 Points Joined October 2007

Dear All,

as per section 372(A) of the indian companies act 1956 there is a limit of Inter corporate loans and investments ( 60% of paid up capital and free reserves or 100% of the free reserves whichever is more). It is further clarified that free reserves means those reserves as per the latest audited balance sheet of the company,are free for distribution as dividend and includes balance to ther credit of the securities premium account but not include share application money.

Now the question arises what is the meaning of Latest Audited Balance Sheets.

If a company makes Interim accounts( half yearly or so ) and get them audited,will it be considered as Latest Audited Balance Sheets for this section.Please note that the company does not change its financial year which remains the same( annual).

What is the position if interim accounts are adopted by the board,audited by the statutory auditor and placed brfore the shareholders in EGM called for this purpose and also got approved by the members in the EGM.Can these results be consideredas the audited results for the purpose of calculating the limits u/s 372(A).

please give your opinion.

Ca. Arun K. Aggarwal

Delhi

Replies (5)

Kaustuv

Practicing CA

1778 Points Joined March 2007

Dear Arun, I think that there is no concept of interim accounts as per The Companies Act. Reference to balance sheet in Companies Act necessarily mean Balance Sheet prepared as at the end of the financial year ( which can be more or less than a calendar year though u/s 210 ) I draw your attention to Sec. 211(1) where it states that every B.S. shall give a T&F view of the state of affairs of the company as at the end of the financial year. So I think that B.S. here means annual B.S. and this rule applies to Sec. 372A requirement as well. This is what I think. Please provide more expert opinions on this matter.

Guest

448530 Points Joined August 2012

Audited Balance sheet as on 31.03.08

CA ASHISH GUPTA

FCA LL.B. MBA

390 Points Joined October 2009

It requires more expert comment.

Rajeev kumar Nayak

ACS

283 Points Joined April 2010

Dear Arun,

As per my view the latest audited balance sheet means the latest available audited balance sheet and it need not be as on closure of FY.

The reason being is that, in section it is not written in section 372A that it should be on closure of FY.

I agree with the fact that, in companies Act, there is no provision of auditing of interim accounts but in case of listed company, accounts may get audited.

Even in case of unlisted company, Company may get its accounts audited and approved by shareholders. This may be beacause of due diligence or valuation or any other purpose. In this case, if as per latest audited balance sheet, if limit of 60%/100% is higher than the audited balance sheet as on closure of last FY, then company may take advantage of new ceilings becasue there is no restriction for that.

This is my view.. Views of othe members are solicited..

Thanks & Regards

Cs Rajeev Nayak

M-09873457184

lakshmi

54 Points Joined June 2008

Latest audited balance sheet means latest audited balance sheet available when intercorporate loan investment gurantee security etc were made under sec 372A