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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Mehra Foods Ltd's financial year ends on 31 March 2026. Its Board approved the financial statements on 20 May 2026, and the AGM is scheduled for 10 September 2026. Rohit, a member, claims the company should have adopted a financial year ending 31 December. The company's holding company, a foreign firm, uses a calendar year, but Mehra Foods is not a company required to follow it. Which statement is correct?

Every company's financial year must end on 31 March, unless the Tribunal permits otherwise. Permission is available only for a holding or subsidiary of a foreign-incorporated company that must follow a different year for consolidation. A Board resolution cannot change it, so Rohit's claim fails.

  1. AAny company may choose any year-end, with no restriction
  2. BThe financial year must end on 31 March, unless the Tribunal permits a different year for a company that is a holding or subsidiary of a company incorporated outside India required to follow a different year for consolidationCorrect
  3. CA different year-end is permitted whenever the Board passes a resolution
  4. DA year-end of 31 December is mandatory for subsidiaries of foreign companies

Explanation

Under the Act, the financial year of every company must end on 31 March. The Tribunal may permit a different year only for a company that is a holding or subsidiary of a company incorporated outside India and required to follow a different year for consolidation. Since Mehra Foods is not required to follow it, Rohit's claim fails, and a Board resolution cannot change the year.

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