Decoding Amendments To Schedule III of Companies Act,2013

The Ministry of Corporate Affairs has issued notification dated 24^th March 2021( Amendment to Schedule III of Companies Act 2013 wef 01.04.2021) to enhance the disclosures required to be made by the Company in its Financial Statements, Board’s report and Auditor’s report with an objective to increase transparency and provide additional disclosures to users of financial statements. These amendments are applicable from 1^st April 2021. These amendments bring in numerous additional disclosures in Financial Statement, Directors Report and Audit Report. Companies will have to gear up to comply with the additional disclosure requirements. with regards to these requirements, MCA/ICAI should come up with guidance/clarifications so as to enable consistency in reporting.

This article provides brief overview of the requirement of schedule III specifically with respect to Division-II of Schedule-III-Financial Statements for a company whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015. Let us see these amendments in detail.

1. Promoter’s Shareholding.

As per amendment, the company shall disclose the shareholding pattern of promoters at the end of the year as follows:

Sl.No	Promoter Name	Number of Shares Held	Percentage of Total Shares	Percentage Change During the Year
Total

> Details to be given separately for each class of shares

> Percentage change shall be computed with respect to the number at the beginning of the year or if issued during the year for the first time then with respect to the date of issue.

2. Statement of changes in Equity

For equity share capital, now additionally following disclosures are required.

>  Changes in equity share capital due to prior period errors.

>  Restated balances at the beginning of the current reporting period.

The statement of changes in equity shall look like below after the amendment for Equity Share Capital

“STATEMENT OF CHANGES IN EQUITY

Name of the Company…………..

A. Equity Share Capital

(1) Current Reporting Period

Balance at the beginning of the current reporting period	Changes in Equity Share Capital due to prior period errors	Restated balance at the beginning of the current reporting period	Changes in equity share capital during the current year	Balance at the end of the current reporting period

(2)Previous Reporting period

Balance at the beginning of the Previous reporting period	Changes in Equity Share Capital due to prior period errors	Restated balance at the beginning of the Previous reporting period	Changes in equity share capital during the previous year	Balance at the end of the Previous reporting period

3. Trade Receivables

The amendment brought in schedule 3 requires extensive additional categorization of trade receivables and also requires the ageing of trade receivable in 5 different categories. As per the amendment, following additional categorization needs to be done apart from the sub-classification done currently.

PARTICULARS	Outstanding for following periods from due date of payment
	Less than 6 months	6 months-1year	1-2 years	2-3 years	More than 3 years	Total
(i) Undisputed Trade receivables – considered good
ii) Undisputed Trade Receivables – which have significant increase in credit risk
(iii) Undisputed Trade Receivables – credit impaired
(iv) Disputed Trade Receivables– considered good
(v) Disputed Trade Receivables – which have significant increase in credit risk
(vi) Disputed Trade Receivables – credit impaired

• where no due date of payment is specified in that case disclosure shall be from the date of the transaction.
• Unbilled dues shall be disclosed separately.

4. Other Financial Assets

The amendment requires that other financial assets shall include:

(i) Security deposits.

(ii) Bank deposits with more than 12 months maturity.

(iii) Others (to be specified).

5. Current Maturities of Long-term Debts 

Ind AS Schedule III requires presenting “current maturities of long-term debt” under “Other Financial Liabilities” grouped under “Current Liabilities”. As per Amendment, Current maturities of long–term borrowings shall be disclosed under “Short term borrowings” separately, namely: “Current maturities of long-term borrowings”.

6. Trade payables 

Trade payables were required to be segregated into dues of micro enterprises and small enterprises (MSME) and other than micro enterprises and small enterprises. Schedule III also required disclosure of specific details which are mandated as per the MSMED Act, 2006.As per Amendment, additional classification of the above are to be given and also the ageing of the same into 4 categories.

PARTICULARS	Outstanding for following periods from due date of payment
	Less Than 1 Years	1-2 years	2-3 years	More than 3 years	Total
MSME
Others
Disputed dues – MSME
Disputed dues – Others
Total

7. Disclosure of Ratios

The amendment requires the companies to disclose the following 11 ratios:

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

The company shall explain the items included in numerator and denominator for computing the above ratios. Further, explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding year.

8. Details of Crypto currency or virtual currency

Details of crypto currency or virtual currency where the company has traded or invested in crypto currency or virtual currency during the financial year, the following shall be disclosed:

a) Profit or loss on transactions involving crypto currency or virtual currency

b) Amount of currency held as at the reporting date

c) Deposits or advances from any person for the purpose of trading or investing in crypto currency/ virtual currency

9.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.

10. Rounding Off

Currently, depending upon the turnover of the company, the figures appearing in the financial statements are required to be rounded off. As per amendment, depending upon the total income of the company, the figures appearing in the financial statements are required to be rounded off. Total income is sum of revenue from operations and other income.