Reporting of Loans, Guarantee, Security & Investment provided by Company under [CARO, 2020]
UNDERSTANDING CARO, 2020
In simple terms CARO, 2020 is a set of guidelines notified by Ministry of Corporate Affairs (MCA) that outlines the auditing and reporting requirement for companies. The Primary objective is to provide comprehensive and reliable information about the Company’s financial performance.
APPLICABILITY OF CARO, 2020
It is applicable on all companies including foreign companies (section2(42)) except:
- a banking company as defined in Banking regulation Act, 1949
- an Insurance company as defined in Insurance Act, 1938
- Section 8 company
- a One Person Company and a Small company
- a private limited company not being a subsidiary or holding of a public company,
a) having paid up capital and reserve and surplus not exceeding 1 crore as on balance sheet date
b) does not have total borrowing exceeding 1 crore at any point of during the financial year
c) which does not have total revenue as disclosed in scheduled III to the Companies Act, 203 (including revenue from discontinuing operations) exceeding 10 crore during the financial year as per the financial statements.
PARAGRAPH 3 (iii) OF CARO, 2020 – REPORTING OF LOANS, GURANTEE, SECURITY & INVESTMENT PROVIDED BY A COMPANY: whether during the year the company has made investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, LLP or any other parties, if so,-
a) whether during the year the company has provided loans or provided security to any other entity [not applicable to companies whose principal business is to give loans ], if so, Indicate-
(A) the aggregate amount during the year, and balance outstanding at the balance sheet date wrt to such loans and guarantee or security to subsidiaries , joint ventures and associates;
(B) the aggregate amount during the year , and balance outstanding at the balance sheet date wrt to such loans or advances and guarantee or security to parties other than subsidiaries, joint venture and associates.
b) whether the investment made, guarantees provided , security given and the terms and condition of the grant of all loans and advances in the nature of loans and guarantee provided are not prejudicial to the company’s interest;
c) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular;
d) if amount is overdue state the total amount pf overdue for more than 90 days , and whether reasonable steps have been taken by the company for recovery of the principal and interest.
e) whether any loan or advance in the nature of loan granted has fallen due during the year, has been renewed or extended or fresh loans granted to settle the overdues of existing loans given to the same parties , if so specify the aggregate amount of such dues renewed or extended or settled by fresh loans and the percentage of the aggregate to total loan or advances.
f) whether company has granted any loans which is repayable on demand or without specifying any terms terms or period of repayment , if so, specify the aggregate amount of percentage thereof to the total loans granted , aggregate amount of loans granted to promoters ,related parties as defined in section 2 (76) of the Companies act, 2013.
Author Bio
