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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Shreyas Foods Ltd has a subsidiary and an associate. The Board proposes to place only the standalone financial statements before the members at the annual general meeting, saying the consolidated statements are only for the stock exchange. What is the correct legal position under the Companies Act, 2013?

A company having subsidiaries, associates or joint ventures must prepare consolidated financial statements in addition to its standalone statements, in the same form and manner, and lay both before the annual general meeting. It is not limited to listed or wholly owned cases.

  1. AConsolidation is required only for listed companies and not otherwise
  2. BA company with subsidiaries or associate companies must also prepare consolidated financial statements and lay them before the AGM along with the standalone statements, in the same manner as the standalone onesCorrect
  3. CConsolidated statements are required only if the subsidiary is wholly owned
  4. DConsolidated statements need only be filed with the Registrar and not laid before the members

Explanation

Where a company has one or more subsidiaries, it must, in addition to its own financial statements, prepare a consolidated financial statement of the company and of all subsidiaries, including associates and joint ventures, in the same form and manner as its own, and lay it before the annual general meeting. This applies to all such companies, not just listed or wholly owned ones. Treating consolidation as a filing matter only is therefore incorrect.

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