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The Ministry of Corporate Affairs, Government of India, issued notifications dated 24th March, 2021 to amend Schedule III to the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and Companies (Audit and Auditors) Rule, 2014 to enhance the disclosures required to be made by the Company in its:-

i. Financial Statements;

ii. Board Report;

iii. Audit Report

The main aim of the amendments in Schedule III of the Companies Act, 2013 is to improve the transparency in the financial statements of the company.

By these amendments MCA is increasing stringency in compliance and adding numerous additional disclosures in Financial Statement, Directors Report and Audit Report. In recent years, there have been substantial changes in the reporting requirement by the auditors, but no such corresponding amendments were made in Schedule-III for the preparation of the financial statements. Thus, to align the company’s financial statements in accordance with the auditor’s reporting requirements, the following amendments have been discussed in this write-up. majority of the amendments to Schedule III to the Companies Act, 2013 have been undertaken in response to the amendments covered in the newly issued Companies (Auditors and Report Order) 2020 and the Companies (Indian Accounting Standards) Amendment Rules, 2020.

1. Shareholding of Promoter

Notes on share capital shall disclose the following

Sr. no Promoter’s Name No. of shares % of total shares % change during the year

2. Rounding Off

Earlier companies had to round off the figures appearing in the financial statements based on “turnover”; however, based on the latest amendment rounding off will be based on the “total income” of your company.

3. Trade Payable ageing Schedule

Particulars Outstanding for following periods from due date of payments Total
Less than 1 year 1-2 yrs. 2-3 yrs. More than 3 years
Disputed dues- MSME
Disputed dues- Others

4. Debtors ageing Schedule

Particulars Outstanding for following periods from due date of payments Total
Less than 6 months 6 months – 1 year. 1-2 yrs 2-3 yrs More than 3 years
Undisputed trade receivables- considered good
Undisputed trade receivables- considered doubtful
Disputed trade receivables- considered good
Disputed trade receivables- considered doubtfull

5. Loans & advances to Directors/KMP/Related Parties

Details of Loans & advances to Directors/KMP/Related Parties either severally or jointly with any other person, that are:

(a) repayable on demand or

(b) without specifying any terms or period of repayment

Type of Borrower Amount of loan or advance in the nature of loan outstanding Percentage to the total Loans and Advances in the nature of loans
Related Parties

6. Details of Benami Property (if any)

Where any proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder, the company shall disclose the following:-

(a) Details of such property, including year of acquisition,

(b) Amount thereof,

(c) Details of Beneficiaries,

(d) If property is in the books, then reference to the item in the Balance Sheet,

(e) If property is not in the books, then the fact shall be stated with reasons,

(f) Where there are proceedings against the company under this law as an abettor of the transaction or as the transferor then the details shall be provided,

(g) Nature of proceedings, status of same and company‘s view on same.

7. Charge Details:

Details of Registration or satisfaction of charge not registered with ROC beyond the time period needs to be disclosed along with reasons thereof.

8. Title deeds of immovable property not held in the name of company.

Details of immovable property not held in company name (other than lease where company is lessee)

Relevant line item in the Balance sheet Description of item of property Gross carrying value Title deeds held in the name of TD Holder- Promoter, Director or relative of P/D or employee of P/D Property held since which date Reason for not being held in the name of the company

(also indicate if in dispute)

PPE Land & Building
Investment Property Land & Building
PPE retired from active use and held for disposal Land & Building

9. Following ratios to be disclosed

a. Current Ratio,

b. Debt-Equity Ratio,

c. Debt Service Coverage Ratio,

d. Return on Equity Ratio,

e. Inventory turnover ratio,

f. Trade Receivables turnover ratio,

g. Trade payables turnover ratio,

h. Net capital turnover ratio,

i. Net profit ratio,

j. Return on Capital employed,

k. Return on investment.

10. Borrowings from Banks & FI

1. Where the company has borrowed funds from banks/FI (being current assets as collateral security), the company needs to disclose whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts and if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed

2. Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been used.

11. Foreign Exchange earnings

Earnings in foreign exchange shall be classified under the following heads, namely:—

a. Export of goods calculated on FOB basis

b. Royalty, know-how, professional and consultation fees,

c. Interest and dividend

d. Other income, indicating the nature thereof.

12. Undisclosed Income:

The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity for disclosure under any scheme and also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.

13. Revaluation of Plant, Property and Equipment:

Where the Plant, Property or Equipment has been revalued, the details of the same needs to be mentioned in the Auditor’s report. Also whether the same has been done from a registered valuer or not.

14. Willful Defaulter

If the company has been declared willful defaulter by any banks/FI, the same needs to be disclosed.

15. Transactions with Struck off Companies:

If your company has had any transactions with another company whose name has been struck off, disclosures have to be made accordingly.

16. Scheme of arrangement

In case a scheme of arrangement has been approved, relevant disclosure has to be made, such as:

  • The effect of such arrangement on the books of accounts of your company.
  • If there is any deviation from the accounting standards while giving effect to the scheme, the reasons for such deviation have to be explained

Disclaimer: The views expressed in this article are solely the opinion of the author.


Author Bio

A Practicing Company Secretary, Graduate in Commerce; POSH Consultant; an Associate Member of the Institute of Company Secretaries of India, New Delhi, having knowledge in Corporate and Secretarial Law. View Full Profile

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  1. Sachin Rane says:

    Please clarify that if financial statements for the year ended January – December 31, 2021 are to be prepared as per new format prescribed in amended Schedule III of the Companies Act, 2013 as per notifications dated 24th March, 2021.

  2. V. Gopal says:

    I just want to know, have they defined how to calculate Net capital turnover ratio, Return on capital employed and return on investment. Is investment is only net assets or same as total of assets side etc.

    1. Prerna Hunagund says:

      As such they have not specifically defined how to calculate each ratio in the said amendment. But as per my view the same can be calculated as per the accounting standards.

  3. Padmanabh says:

    kindly clarify if financial statements for the year ended March 31, 2021 are to be prepared as per new format prescribed in amended Schedule III of the Companies Act, 2013.

    1. Prerna Hunagund says:

      Sir the provisions are with effect from 1st April, 2021. and hence the same will not be applicable for financial statements to be prepared for the year ended 31.03.2021.

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