Schedule III of the Companies Act 2013 has been amended by vide notification no G.S.R 207(E) dated 24.03.2021. These amendments come into force with effect from 01-Apr-2021. i.e., these amendments shall apply to financial statements of Companies for FY 2021-22 and subsequent financial years.

The detailed analysis of the aspects which are covered are discussed below:

  • Title deeds of immovable property not held in the name of the company:

This clause requires the reporting of whether the title deeds of all the immovable properties disclosed in the financial statements are held in the name of the company. If not, Description of property, gross value, held in the name of, period held, reason for not being held in the name of the company

  • Revaluation of Property, Plant and Equipment:

The Company shall disclose whether any revaluation is done during the year, if so, the reporting is required as to whether the revaluation is based on the valuation by a registered valuer as defined under Rule 2 of Companies (Registered valuers and valuation) Rules, 2017.  A reconciliation of the gross and net carrying amounts  of each class of assets at the beginning and end of the reporting period showing additions, deletions, change due to revaluation, depreciation and impairment loss  has to be made by the management

  • Benami Property held:

Disclosure of the any proceedings initiated or pending against the company for holding any Benami property has to made under this clause in the following manner: Details of the property, year of acquisition, amount, beneficiaries, disclosure in the books, any other proceedings under the law has to be made.

  • Working capital limits from Banks/FIs on the basis of security of current assets:

If the company has borrowings from any banks or FIs on the basis of security of current assets it shall disclose whether quarterly returns of current assets filed are in agreement with the books of accounts if not, the summary of reconciliation and reasons for material discrepancies if any to be disclosed.

  • Loans and Advances in the nature of loan repayable on demand or without specifying the terms or period of repayment:

Management is required to report whether any loan is granted to directors, promoters, KMPs, Related parties, percentage to the total loans.

  • Undisclosed Income disclosed in tax assessments:

The Company shall give details of any income not recorded in the books that has been surrendered as income during the year in the assessments unless there is immunity for disclosure under any scheme. Also required to state whether the same has been properly recorded in the books during the year.

  • Wilful defaulter:

The reporting under this clause is required where a company is a declared wilful defaulter by any banks or FIs. Date of declarations as wilful defaulter and the nature of defaults, amount of default to be stated. Any person will be categorised as a wilful defaulter if it is in accordance with the guidelines on wilful defaulters issued by the RBI.

Additional Regulatory Information Disclosure Requirements of Schedule III W.E.F 1.04.2021

  • End use of borrowings:

If the company has borrowed any money from banks or FIs for the specific purpose and has not used the funds for the purpose for which it was taken at the balance sheet date, the company is required to report the reason for the funds not being used for the purpose for it was borrowed and disclose where the funds have been used

All the above stated disclosure is required to be provided by the management along with the Schedule III of Companies Act 2013 and auditor is required to verify the information and reproduce the same in the CARO 2020 wherever it is applicable.

Certain companies covered by para 1(2) of CARO 2020 are exempted from the reporting requirements of CARO while Schedule III requirements would apply even to companies exempted from CARO.

Additional regulatory Information requirements of schedule III ensure that the readers of financial statements of companies exempted from CARO would also get the relevant information duly audited by the auditor.

The auditor is bound to verify the disclosures in notes on accounts whether or not the CARO is applicable to the Companies.

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February 2024