Company Law committee recommendation - Realign the Financial year

 

1.Realign the Financial year

Section : Section 2(41) of CA-13

Issue to be addressed :

A company which is the holding company or a subsidiary or associate of a company incorporated outside India, and is required to follow a different FY for consolidation of its accounts outside India, may be allowed to follow such different FY upon making an application to the Central Government. The Committee noted that if such a company, or body corporate, ceases to be a holding, subsidiary or associate company of the foreign entity, CA-13 currently contains no provision allowing such company to revert to the FY required to be followed under CA13. This hinders the company’s or body corporate’s ability to accurately measure its revenue and earnings in that FY, as per Indian laws.

 

Amendments /Proposed Recommended by the Committee

The Committee said that there would also be a need to verify the company’s status and filing position.Thus, the requirement of obtaining an approval from Central Government should be incorporated.The Committee proposed that such companies, which cease to be associated with a foreign entity, should be allowed to file a fresh application with the Central Government in a prescribed form to allow them to revert back to the FY followed under CA-13.