Right of Member to Copies of Audited Financial Statement

Copy of Financial Statement (defined under section 2(40) of the Companies Act, 2013 (‘the Act’) shall be sent to persons as envisaged under Section 136 of the Act.

Section 136 also tells about the mode, time limit and other additional compliance related to same.

This articles briefly elaborates Section 136 of the Act.

Section 136, Rights of Members to Copies of Audited Financial Statements Read with Rule 11 of Companies (Accounts) Rules, 2014

Applicability: All Companies, additional Compliance in case of Listed entities (any security listed) and companies having foreign subsidiaries

Documents to be sent (Sub Section 1)

– Financial Statements,

– Consolidated Financial Statements,

– Auditors Report

–  Other documents required by law to be attached to Financial Statements

• That are to be laid at AGM for approval

To whom to send (Sub Section 1)

– Every Member

– Every Debenture Trustee

– Other persons so entitled

Time limit of sending the Documents (Sub Section 1)

Twenty-One Days (not Twenty‐One Clear Days)

Shorter Period (first Proviso to Sub Section 1)

–  Consent of members should be obtained in case of:

–  Company Having Share Capital

• Majority in Number and 95% of Paid up Share Capital (Present at the Meeting).

– Not having Share Capital

• Not less that 95% of total voting power (exercisable at Meeting)

Special Benefit to Listed Companies (Second Proviso to Sub Section 1)

The aforesaid provisions are deemed to be complied with if following conditions are satisfied.

1. The aforesaid documents are made available for inspection at its registered office during working hours.

2. The documents shall be made available Twenty–One Days before the Meeting. (Not Twenty–One Clear Days).

3. Salient features of the Documents (or copies of such documents) shall be sent in form AOC–3 or AOC–3A to all the persons as aforesaid.

4. AOC-3 or AOC-3A shall be sent Twenty–One Days before the Meeting. (Not Twenty–One Clear Days).

The Shareholders, who ask for full financial statements shall be provided as such.

Mode of Sending Financial Statements (in prescribed Companies only)
(Third Proviso to Sub Section 1 read with Rule 11)

– Prescribed Companies

Mode: (Rule 11)

–  Electronic Mode

• For shares held in Demat form + Email IDS registered
• Shares held in Physical Form + written consent obtained for sending documents in electronic mode

–  Physical Dispatch under section 20

• In all other cases

Additional compliance in case of Listed Company (Fourth Proviso to Sub Section 1)

– All the documents as aforesaid shall be placed on the website also.

Compliance in case of subsidiary of Listed Company (Fifth Proviso to Sub Section 1)

Indian Subsidiary: all financial statements of each subsidiary shall be placed on the Website

Foreign Subsidiary, if accounts consolidation required under law applicable in the Country of its Incorporation: Consolidated Financial Statements shall be placed on the Website of the Holding Company.

Foreign Subsidiary, if Audit of Financial Statements not applicable in the Country of its Incorporation: Unaudited FS shall be placed on the website of the Holding Company.

If in any other language the same shall be translated in English Language

Inspection of the Documents (Sub Section 2)

Persons entitled to Inspect

– Every Member

– Every Debenture Trustee

Place of Inspection: Registered Office

Time of Inspection: Business Hours

Rights of Shareholders to ask for Financial Statements of Subsidiary Companies
(First Proviso to Sub Section 2)

Copy of Audited or Unaudited Financial Statements of subsidiary Companies shall be provided

–  To any members

–  Who asks for it. (no fee has been prescribed under the act)

Penal Clause (Sub Section 3)

– Company: Penalty of Twenty-Five Thousand Rupees

–  OID: Five Thousand Rupees

Exemption (as per Notification dated June 05, 2015)

Section 8 Companies: 14 days instead of 21 days in SS-1
Nidhi Companies: as per notification

Any further observation / improvement be intimated at [email protected].