The introduction of the CCFS Scheme has enabled many companies to regularize long-pending statutory filings, but professionals are facing a practical challenge regarding the generation of UDIN (Unique Document Identification Number) for old financial statements. As per ICAI guidelines, UDIN must be generated at the time of signing or within 60 days, and backdating is not permitted. Therefore, if financial statements for earlier years were never prepared or signed, auditors cannot generate UDIN for past dates. The legally sustainable solution is to prepare the pending financial statements now, have the auditor sign them with the current date, and generate UDIN accordingly. After this, the company should convene an AGM, adopt the financial statements, and file Forms AOC-4 and MGT-7/MGT-7A under the CCFS Scheme to benefit from reduced additional fees. However, since AGMs for previous years were not held within statutory timelines, the company remains in default under Section 96 and may require compounding under Section 99 of the Companies Act, 2013.
1. BACKGROUND OF THE ISSUE
With the announcement of the CCFS Scheme, many Companies that have not complied with filing requirements for several years are attempting to regularize their compliances.
A key issue has arisen regarding UDIN generation for old financial statements. Professionals are asking how UDIN can be generated when financial statements for earlier years were never signed and UDIN cannot be generated with backdated dates.
2. UNDERSTANDING UDIN REQUIREMENT
UDIN stands for Unique Document Identification Number issued by the Institute of Chartered Accountants of India (ICAI).
It is mandatory for documents certified or signed by Chartered Accountants to ensure authenticity of documents, prevention of misuse of CA signatures and verification by regulators and stakeholders.
3. ICAI GUIDELINES FOR UDIN GENERATION
As per ICAI guidelines, UDIN must be generated at the time of signing or within 60 days from the date of signing. UDIN cannot be generated beyond 60 days from the signing date and backdating is not permitted.
4. PRACTICAL PROBLEM FACED BY PROFESSIONALS
Many Companies have not prepared financial statements for several years. If the auditor signs the report with backdated date, UDIN cannot be generated. Without UDIN, filing of AOC-4 may lead to compliance issues. Therefore, backdating financial statements is not a valid option.
5. LEGALLY SUSTAINABLE SOLUTION
The Company should prepare financial statements for all pending financial years now. The financial statements will relate to the respective financial year but the date of signing will be the current date.
The statutory auditor should sign the financial statements on the present date and generate UDIN immediately or within 60 days.
6. HOLDING AGM
Once financial statements are ready, the Company should convene a board meeting, issue notice of AGM and hold AGM now. In the AGM, shareholders will adopt the financial statements for the respective financial years.
7. FILING OF FORMS
After adoption of financial statements, the Company may file Form AOC-4 for financial statements and Form MGT-7 or MGT-7A for annual return. The Company can avail the benefit of reduced additional filing fees under the CCFS Scheme.
8. LEGAL IMPLICATION – SECTION 96
Section 96 of the Companies Act, 2013 requires every company to hold AGM within six months from the end of the financial year and the gap between two AGMs should not exceed fifteen months.
Since AGM for earlier years was not held within the prescribed timeline, the company has already committed a default.
9. PENALTY – SECTION 99
In case of failure to hold AGM as required under Section 96, the company and every officer in default may be liable for penalty which may extend up to ₹1,00,000 and in case of continuing default an additional penalty of ₹5,000 per day may apply.
10. BENEFIT OF THE SCHEME
The company may still take benefit of the CCFS Scheme for filing pending forms such as AOC-4 and MGT-7/MGT-7A with substantial reduction in additional filing fees which may go up to 90%.
RECOMMENDED COMPLIANCE STRATEGY
1. Prepare pending financial statements.
2. Get audit reports signed with current date.
3. Generate UDIN immediately.
4. Hold AGM for adoption of financial statements.
5. File AOC-4 and MGT-7 under the Scheme.
6.Apply for compounding for delay in AGM under Section 96 read with Section 99.
CONCLUSION
Due to the UDIN restriction of 60 days, auditors cannot generate UDIN for backdated financial statements. Therefore, the correct compliance approach is to prepare financial statements now, sign them with the current date, generate UDIN accordingly, hold AGM now and file the pending forms under the Scheme. However, delay in holding AGM will still require compounding under the Companies Act, 2013.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Author Bio
SOLUTION FOR THIS ISSUE :
UNDER BOARD Minutes :
THE MEETING WAS ADJOURNED FOR ONE HOUR TO REASSEMBLE TO TAKE NOTE OF AUDITORS’ REPORT ON THE ANNUAL ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31st MARCH 2024 AND TO TRANSACT REMAINING ITEMS OF AGENDA.
Board resumed the meetings and contacted the Auditor office about the report.
Unfortunately, Board was informed that it will take some more months to complete the Audit / Audit Report & Audited Statement. Since, the Due date of convening the 10th AGM due on 30th September 2024, Board was decided to hold AGM within the said Due Date and to pass the remaining items of Agenda if any, other than Financial Statements. Further, it was decided that to hold another Board Meeting on receipt of Audited Annual Accounts and note the qualifications of Auditors if any and then approve the Audited Annual Accounts along with Directors Report and then to convene Adjourned General Meeting Later to pass the said Audited Financial Statements inter-alia Reports in it. Both Directors agreed the same !
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UNDER AGM Minutes :
Chairman of the Meeting informed the Members present that due to unavoidable reasons, the Company could not obtain the finalization of accounts for the financial year ended 31st March, 2024 on or before date of AGM as on 30th September 2024. Therefore, it is not possible to adopt the Financial Statement , Director’s Report inter-alia Reports during this 10th Annual General Meeting. It was informed that Companies Act,2013 does not include any explicit requirements for automatic adjournment of AGM, except in the case of lack of Quoram as per section 103. So,if financial remain unadopted at AGM then the company may explicitly resolve to adjourn the AGM at a future date or sine die in order to comply with the requirements of section 137. After ascertained the views of the Members present, all the Members unanimously decided to adjourned / sine-die the meeting and re-convened the same, after obtaining Audited Financial Statement for the year ended 31-March-2024.
In this regard, the following resolution was passed.
ORDINARY BUSINESS
ITEM No:1 TO APPROVE ADJOURNMENT OF 10TH AGM
Proposed by : Sri. Divesh Goyal ji
Seconded by: Sri. Kasthuri Rangan
The ordinary resolution set at item no. 1 of the notice pertaining to the adjournment of 10th Annual General Meeting, proposed and seconded by the aforementioned shareholders and taken up for consideration with the consent of the Members present.
RESOLVED THAT pursuant to the provisions of Clause no:15.1 of Secretarial Standard on General Meeting – SS-2 of ICSI read with Clause No: 43, 47, 48 of Articles of Association of M/s.abcdefgh Private Limited, the 10th Annual General Meeting of Members of Company be and is hereby adjourned sine-die and the Meeting be re-convened after completion of statutory audit for the year ended 31st March, 2024.
After due deliberation and discussion the aforesaid Resolution was put to vote.
On show of hands the Chairperson Sri. Divesh Goyal ji (DIN : 0000001), declared that the same is passed unanimously with majority.