Filing of unadopted and/or unaudited financial statement with ROC

Section 129(2) of the Companies Act, 2013 (‘the Act, 2013’) makes it mandatory, on the part of the Board of Directors of the Company, to lay the financial statements of the Company for the financial year before at every Annual General Meeting (AGM). These financial statements should be adopted in that AGM. Section 137(1) of the Act, 2013 also mandate on Companies to file duly adopted financial statement with ROC within 30 days of date of Annual General Meeting.

Section 137(1) of the Act, 2013 provides that –

“A copy of financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed.”

But in some situations, it is not possible for the Companies to adopt financial statement in AGM as financial statements are not ready or if financial statement is ready but not audited before AGM or audited financial statement are not adopted in AGM.

Now, we would like to discuss herein following questions-

• Whether Companies require to file unadopted financial statement with ROC?
• Whether Companies require to file unaudited financial statement with ROC?
• What is the position of filing of financial statements in case where AGM not held?

Before going to discuss above mentioned questions, first we should see the definition of financial statements as provided under Section 2(40) of the Act, 2013. Section 2(40) of the Act, 2013 provided that –

 “financial statements” in relation to a company, includes-

(i) A balance sheet as at the end of the financial year;

(ii) A profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

(iii) Cash flow statements for the financial year;

(iv) A statement of changes in equity, if applicable; and

(v) Any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv);

Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;”

Section 134 of the Act, 2013 seeks to provide that the financial statement including consolidated financial statements, should be approved by the Board of Directors before they are signed and submitted to auditors for their report. The auditor’s report is to be attached to every financial statement. A report by the Board of Directors containing details on the matters specified including Director’s responsibility statement shall be attached to every financial statement laid before company in general meeting. The Board’s report and every annexure has to be duly signed.

In view of the above, it is submitted that the word “financial statement” is defined in clause (40) of section 2 of the Act, 2013 does not include Board Report and Auditor Report. But the Auditor’s Report and Board’s report shall be attached to every financial statement and be laid before the company in AGM for their adoption as per section 137(1) of the Act, 2013. Further, a signed copy of every financial statement shall be circulated, issued or published along with all notes or documents, the auditor’s report and Board’s report as provided under sub-section (7) of section 134 of the Act, 2013.

Now, we can say that –

• The financial statement shall be approved by the Board of Directors in their meeting and thereafter, the same shall be duly signed as per the provisions of Section 134(1) of the Act, 2013.
• Thereafter, signed financial statement shall be submitted to auditor of the company for their auditor report.
• Then, the audit report shall be attached to every financial statement.
• The Board’s report shall be attached to every financial statement and be laid before the company in AGM for their adoption as per section 137(1) of the Act, 2013.

Remarks: It is clear from the above that the members of the company shall duly adopt the financial statement of the company, along with documents which are required to be annexed to the Financial Statement and/or notes forming part of financial statement and also Auditor Report and Board’s report. Therefore, if the audit of the financial statement is not done, then the members shall not adopt the financial statement. Therefore, in case financial statement has been duly adopted by the member, then the same shall be filed with ROC within 30 days of date of Annual General Meeting.

Whether companies require to file unadopted financial statement with ROC?

Yes: As per the proviso to Section 137(1) of the Act, 2013, where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose.

It is further provided that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed.

Whether Companies require to file unaudited financial statement with ROC?

Yes: As we have mentioned above that if the audit of the financial statement is not done, then the members shall not adopt the financial statement. In this case, the position of financial statement is unaudited and unadopted.

Pursuant to first proviso of Section 137(1) of the Act, 2013, if financial statement of the company is not adopted in AGM or adjourned AGM, due to any reason, then, in the meanwhile, company shall file the un-adopted financial statement as provisional statement within 30 days of date when AGM required being hold or held.

Moreover, as per second proviso company required to file audited/ adopted financial statement within 30 days, once such financial statement adopted by the AGM or adjourned AGM. Until Company doesn’t file adopted financial statement company will registrar unadopted financial statement as provisional.

What is the position of filing of financial statements in case where AGM not held?

The situation where the annual general meeting is not held is dealt with by subsection (2) of section 137 of the Act, 2013. It seeks to provide that the financial statements along with the documents required to be attached under sub-section (1), duly signed along with the statement of facts and reasons for not holding the annual general meeting are required be filed with the Registrar within 30 days from the last date before which the Annual General Meeting should have been held. The manner of filing and fees are same as for the adopted financial statements. It should be noted that this provision in applicable where the financial statements, duly signed and audited are available but no meeting is held within the due date.

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.