CA Intermediate · Corporate and Other Laws · Accounts of Companies
Kaveri Pharma Ltd, a listed company, has a financial year ending 31 March 2026. Its holding company Arjun Holdings Ltd has two subsidiaries and also an associate. Which of the following correctly states the obligation of Kaveri Pharma regarding its financial statements, assuming Kaveri Pharma itself has one subsidiary and one associate?
A company having subsidiaries, associates or joint ventures must prepare consolidated financial statements covering all of them, in addition to its own standalone statements. Both sets are laid before the annual general meeting. The duty does not depend on being the ultimate holding company and includes associates.
- AIt must prepare only standalone financial statements, because consolidation is required only for the ultimate holding company
- BIt must prepare standalone financial statements only, and consolidated statements are optional unless the Central Government directs otherwise
- CIt must prepare consolidated financial statements for its subsidiary, associate and joint ventures, in addition to its standalone statements, and lay both before the annual general meetingCorrect
- DIt must prepare consolidated statements only for the subsidiary, as the associate is excluded from consolidation
Explanation
Where a company has one or more subsidiaries, associates or joint ventures, it must in addition to its standalone financial statements prepare a consolidated financial statement of the company and of all of them in the same form and manner as its own, and lay it before the AGM. Option A is wrong because the duty applies to every such company, not only the ultimate holding. Option D is wrong because associates and joint ventures are also included.
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