By Simran Jalan (firstname.lastname@example.org)
MCA vide its notification dated July 31, 2018 has brought the Companies (Accounts) Amendment Rules, 2018 which broadly deals with two changes:
- Additional disclosures for companies other than small companies and OPCs;
- Abridged list of contents for small companies and OPCs
Even though the aforesaid amendment in the said Rules have been brought in line with the proposed changes in section 134 of the Companies Act, 2013 (‘CA, 2013’) under the Companies (Amendment) Act, 2017, however, the said amended section has not been enforced till date.
Additional disclosures for companies other than small companies and OPCs:
The additional disclosures required to be made are with respect to:
- Maintenance of cost records in accordance with section 148(1) of the CA, 2013 in case the same is applicable on such company.
- A statement on constitution of Internal Complaints Committee under the Sexual Harassment of the Women at workplace (Prevention, prohibition and Redressal) act, 2013.
Relief for small companies and OPCs:
The Rules state that small companies and OPCs are not required to make the disclosures stated under Rule 8. Instead, as per Rule 8A of the aforesaid Rules, an abridged list of disclosures have been given for small companies and OPCs, which are as follows:
- The web address of the company, where the annual return has been placed;
- Number of meetings of the Boards;
- Director’s Responsibility Statement;
- Details of frauds s reported by auditors to Central Government as per section 143(12) of the CA, 2013;
- Explanations or comments by Board on every observation made by the auditor in his report;
- The state of the Company’s affairs;
- The financial summary or highlights;
- The material changes in the nature of business and its effect on the financial position of the Company;
- The details of appointment/resignation of directors;
- Details of material orders passed by regulators/courts/tribunals which can impact the going concern status of the company and its operations in future;
- The Board’s Report shall also include the particulars of the contract or arrangements entered with related parties as per section 188(1) of the CA, 2013 in the Form AOC-2.
Following the aforesaid change, there are basically three categories of board’s report:
|Category I||Category II||Category III|
|Listed Company and Public Company with PUSC of Rs.25 crores or more||Unlisted Company and every public company with PUSC of less than Rs. 25 crores||Small Companies and OPCs|
|All the matters in the Board’s report as specified in Section 134(3) of the CA, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 (‘Account Rules’).||All matters in the Board’s report as specified under section 134 (3) of the CA, 2013 read with Rule 8 of the Accounts Rules except for the following:
“a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors;”
“a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.”
|All the matters in the Board’s report as specified under Rule 8A of the Accounts Rules.|
 PUSC denotes Paid-up Share Capital