CS D Hem Senthil Raj

CS D Hem Senthil RajOVERVIEW OF SECTION 129 OF CA, 2013

Section 129 of the Companies Act, 2013 lays down that the financial statements shall give a true and fair view of the state of affairs of the Company or Companies comply with the Accounting Standards and the format of those financial statements shall be as per Schedule III of CA, 2013.

Sub Section (3) of Section 129 of the Companies Act, 2013 mandates every company to prepare a consolidated financial statement for all the Companies having one or more subsidiaries.

The Financial Statements of the Company shall be laid by the Board of Directors before the shareholders at the Annual General Meeting for each financial year.

Key Points to Note in Subsidiary Definition under CA, 2013:

Subsidiary includes Associate Companies and Joint Ventures both in India and Foreign country.

Applicability of Consolidated Financial Statement (CFS):

  • Private Limited Company
  • Public Unlisted Company and
  • Listed Company

Objective of CFS:

The Concept of CFS was brought with an objective of achieving the true and fair view of reporting the position of the company for the financial year, since the consolidated financial Statements are generally considered as the primary financial statements from an economic entity perspective, whereas the standalone Financial Statements projects only the position of the company in its individual performance and it does not provide the true and fair view to the shareholders about the overall performance of the company with its subsidiaries.


Currently listed companies which are having subsidiary companies (Associate or Joint Venture is not included in the definition of Subsidiary Company) are required to prepare the consolidated financial statements under the Securities and Exchange Board of India (SEBI) Regulations.

Now the CA, 2013 mandates every Listed, unlisted public and private limited companies to prepare consolidated financial statements which are having subsidiary companies as defined under Section 2(8 7) of the Companies Act, 2013, which includes Associate Company and Joint Venture (Both in India and Abroad).

Additional Disclosures:

The Company in addition to the financial statements shall also attach a separate statement containing the salient features of the financial statements of the subsidiaries.

Format of Financial Statement:

The Format of Financial Statement shall be as per Schedule III of the Companies Act, 2013.

General Instruction for the preparation of Consolidated Financial Statement are given in the Schedule III of the CA, 2013 which provides an option to the companies to disclose the list of subsidiaries or associates or joint ventures which have not been consolidated in the consolidated financial statements along with the reason for not consolidating the financial statements.

In case of non-Compliance of Accounting Standards:

The Company shall disclose in its financial statements with regard to any deviation from the accounting standards along with the reasons for such deviation and the financial effects, if any arising out of such deviation.

Penal Provisions for non-compliance of section 129 of CA, 2013:

If any company contravenes with the provisions of section 129 of CA, 2013, the following officials viz.,

a) Managing Director

b) Whole Time Director in charge of finance

c) Chief Financial Officer

d) Any other person authorized by Board with the duty of complying with this provision.

e) In the absence of any of the officers mentioned above, all the Directors shall be punishable.

Details of Punishments:

(i) Imprisonment for a term which may extend to one (1) year or

(ii) Fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/- or

(iii) With both.

Click here to Read Other Articles of CS D Hem Senthil Raj

More Under Company Law


  1. Himani Agrawal says:

    For purpose of first time consolidation, which year we can take as base for analysis of subsidiaries profit and for calculation of capital reserve/ goodwill in case of multiple subsidiaries and change in shareholding year by year.

    Please guide me in this regard so that we can prepare CFS of a company having more than 20 subsidiaries, JV & Associates.

    Himani Agrawal

  2. nupur kalra says:

    whether we can consolidate (unaudited ) financial statement of a foreign subsidiary with the audited financial statement of parent company ?? question arises because of difference in accounting period and last date of getting the accounts audited.

  3. K Balaji says:

    Company A, incorporated in India, having 4 subsidiaries B, C, D and E, all are incorporated in India. Company B has a subsidiary F, which is incorporated outside India. As per Explanation to Sec 2(87)(ii), Company F is also deemed to be a subsidiary of Company A in the above example.
    As per the new proviso to Rule 6, Company (Accounts) Rules, 2014 says “…..nothing in this rule shall apply in respect of consolidation…….by a company having subsidiary or subsidiaries incorporated outside India only for the FY commencing after 1st April 2014”.
    Please let me know whether Company A can avail exemption from consolidation in the light of the above proviso to Rule 6, as it has got a subsidiary (Company F) incorporated outside India.

  4. Mayank Kejriwal says:



  5. Gautham says:

    Is this applicable for the company whose year ended is 31 December 2014? It it ha subsidiaries, associates, then is it required to prepare the CFS. Or any exemption is there for year beginning before 1 April 2014

  6. Ca Yagnesh Desai says:

    Your attention is drawn to

    1. Notification no.GSR-E dated 14th October ,2014, which has amended the Companies ( Accounts) Rules 2014 provides for relaxation – under Rule 6 of the Companies (Accounts) Rules 2104 for the companies which may have associates or JVs but no subsidiaries for FY 2014-15.

    2. Clarification on matters related to CFS vide circular no 39/2014 dated 14th October,2014.

    Ca Yagnesh Desai email ymdesaiandco@gmail.com 09820133227

Leave a Comment

Your email address will not be published. Required fields are marked *