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CS Executive · Company Law and Practice · Accounts and Auditors

Ketan Textiles Ltd. wishes to re-open its books of account and recast its financial statements for an earlier year because its promoters now believe the old accounts were poorly presented. No application has been made by any authority. Under the Companies Act, 2013, what is the position?

A company cannot re-open its books or recast financial statements on its own. Only if an authorised applicant applies and a court of competent jurisdiction or the Tribunal orders it, on the statutory grounds, can this be done. Board resolution, auditor consent or Registrar intimation is insufficient.

  1. AThe Board may re-open the accounts by a simple resolution
  2. BThe company cannot re-open or recast unless an application is made and a court or Tribunal orders it on specified groundsCorrect
  3. CThe company may do so with the auditor's consent alone
  4. DThe company may do so by intimating the Registrar of Companies

Explanation

Section 130(1) bars a company from re-opening books or recasting financial statements unless an application is made by the Central Government, Income-tax authorities, SEBI, another statutory regulatory body or any person concerned and a court or Tribunal orders it. A Board resolution or auditor consent does not suffice.

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