The Ministry of Corporate Affairs vide Notification G.S.R. 207(E) dt. 24th March 2021 has amended Schedule III to the Companies Act, 2013 which shall be effective from the 1st day of April 2021.
With this notification, various additional disclosures are being incorporated which are to reported while preparing the financial statements of an entity. Schedule III of the Companies Act, 2013 are divided into 3 sub- divisions:
Division I: Applicable to companies whose Financial Statements are required to comply with the Companies (Accounting Standards) Rules, 2006.
Division II: Applicable to companies whose Financial Statements are required to comply with the Companies (Indian Accounting Standards) Rules, 2015
Division III: Applicable to non-banking financial institutions preparing their financial statements as per Ind AS.
Brief on the amendments to Schedule III of the Companies Act,2013
1. Rounding Off: Earlier it was optional, now It has become mandatory for the companies to round off the figures on the basis of ‘Total Income’ instead of turnover.
2. Promoter’s Shareholding: The entities shall now disclose each class of shares held by the promoters at the end of the year along with any % change during the year in tabular format in the notes to account.
3. Short Term Borrowings: ‘The Current maturities from long term borrowings’ shall be disclosed separately under the heading Short Term Borrowings.
4. Trade Payables Ageing Schedule: Ageing Schedule of trade payables shall be provided in the form of less than 1 year, 1-2 year, 2-3 year and more than 3 years. It shall be provided for all trade payable due for payment whether or not due date of payment is specified on the bill. Unbilled dues shall also be required to disclosed separately.
5. Trade Receivable Ageing Schedule: Ageing Schedule of trade receivables shall be prepared in a tabular format as notified by MCA whether or not due date of payment is specified on the bill. Unbilled dues shall also be required to disclosed separately.
6. Tangible & Intangible Assets: The word ‘Tangible Assets’ has been replaced with ‘Property, Plant and Equipment’ and Intangible Assets has been inserted after the words ‘Property, Plant & Equipment’. In case, the company has revalued its Property, Plant & Equipment, disclosure shall be provided on whether the revaluation is based on the valuation done by the registered valuer as defined under Rule 2 of the Companies (Registered Valuer and Valuation) Rules, 2017. Also, a reconciliation statement shall be provided in respect of gross and net carrying amount of each class of assets at the beginning and at the end of the reporting period showing additions, disposals, acquisitions, revaluations and other adjustments.
7. Title Deeds of Immovable Property: The company are required to provide the details of all immovable property whose title deeds are not in the name of the company (except where the entity is the lessee and lease agreements are duly executed) and where such properties are jointly held with others, disclosure shall be provided to the extent of entity’s share.
8. Loans and Advances granted to promoters, KMPs and Related Parties: The company shall disclose its loans and advances in the nature of loan granted to promoters, directors, KMPs and related parties either severally or jointly with any other person that are repayable on demand or without specifying any terms or period of repayment.
9. Benami Property held: The company shall disclose all the details of the benami property held where any proceedings have been initiated or pending against the company for holding any property under the Benami Transactions (Prohibition) Act, 1988 along with all other disclosures in the manner prescribed.
10. Wilful Defaulter: If the company is declared as wilful defaulter by any bank or financial institution or other lender then company shall disclose certain disclosures.
11. Struck Off Companies: The company shall disclose whether it has entered into a transaction with such entities whose name has been struck off under Section 248 of the Act.
12. Registration of Charges: The company shall disclose any charges or satisfaction yet to be registered with the Registrar of Companies beyond the statutory period along with the reasons thereof.
13. Ratios: Company shall disclose all the ratios which are prescribed and shall explain the items included in numerator and denominator for computing the ratios. The company shall also declare the reasons for change in ratios by more than 25% as compared to the previous year.
14. Undisclosed Income: Where a company has surrendered or disclosed any income under the relevant provisions of the Income Tax Act and which are not disclosed earlier shall be disclosed in the books of accounts, unless there is immune impact.
15. Corporate Social Responsibility: Where the company is covered under Section 135 of the Companies Act, disclosures shall be made in the manner prescribed in regard to those CSR Activities.
16. Crypto-Currency and Virtual Currency: Where the company is involved in trading or invested in Crypto or Virtual Currency during the financial year, disclosures shall be made in respect of profit and loss on the transaction and the amount of currency held at the reporting date shall be reported in Notes to Accounts.
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