Signing of company’s financial statement under Company Act
Table of Contents
The Signing of company’s financial statement under the Companies Act
- The Financial Statement is a significant statement for a business that must be prepared every FY & audited by the company’s auditors. The Financial Statement contents the assets, liabilities, and shareholders’ equity of the business.
- Financial Statement is needed to be prepared in order for shareholders to have information about the company’s financial situation and operations.
- Shareholders can use this information to learn about the company’s performance and make decisions about whether or not to invest in it.
Adoption & Circulation of Signed Financial Statement
- Financial Statement must be adopted by the firm at the AGM. The company’s Annual General Meeting might be conducted within six months after the financial year’s conclusion, on September 30th.
- The financial statement, including any consolidated financial statements, should be disseminated after signing, together with a copy of each of—
Definition of financial statement:
According to Section 2 (40) of the Companies Act 2013 The financial statement must include the following information,.
- Statement of Cash flow
- Profit and loss account, or revenue and expenditure account for the financial year in the case of a nonprofit organization
- Balance Sheet
- Statement of changes in equity (if applicable); and
- Annexure to the Financial Statement
What are rules of prepare a financial statement?
- The company’s financial statement must be produced in line with Schedule III of Section 129 of the Companies Act, 2013, and must be presented to the shareholders at the company’s AGM.
Who is authorized to sign financial statements?
According to the Companies Act of 2013 who is authorized to sign financial statements?
The following individuals will sign the Financial Statement in accordance with Section 134 of the Companies Act, 2013:
- The Company’s Chairperson (if the board of directors has allowed him) OR
- Two Directors (one of whom shall be the Managing Director) AND
- Company’s Chief Executive Officer/ Company Secretary/ Chief Financial Officer
- The Company’s Chief Executive Officer, Company Secretary, and Chief Financial Officer (based on their position in the Company).
Note: Regardless of whether he led the meeting or not, the company’s chairperson can sign the financial statements once they have been approved by the Board of Directors.
After the auditor receives the signed financial statement, the auditor will create an auditor’s report, which will be appended to the financial statement.
What is the minimum number of directors required to sign financial statements?
- The firm’s Financial Statement must be signed by two directors, one of whom must be the Managing Director, or by one director if the company has only one director.
Is it compulsory for the company secretary to sign the financial statement?
- According to Section 134(1), the Financial Statement must be signed by the Whole-time Company Secretary in the company in which the Whole-time Company Secretary is appointed. Furthermore, if the firm has appointed a Chief Executive Officer or Chief Financial Officer, they must sign the financial statement.
- Only the chairman can sign the financial statement if the firm does not have a Chief Finance office or a Company Secretary. Signing of financial statements by two directors, one of whom should be managing director and the CFO, if he is a director, if the company does not have a chairman or is not allowed by the board.
Signing of the One-Person Company’s (OPC) Financial Statement
- Only one director can sign the financial statement of a one-person company.
Is it possible to sign financial statements Online?
- The Directors, Chief Executive Officer/ Company Secretary/ Chief Financial Officer, and the Company’s Statutory Auditors can also sign the Financial Statements online using their Digital Signatures.
Date On which Financial Statement can be sign
- The date on which the Financial Statements, comprising the Balance Sheet, Profit and Loss Statement, Cash Flow Statement, and other supporting documents, are signed might be either before or after the date on which the Statutory Audit report is signed.
Is it possible to have multiple signing dates for financial statements?
- The financial statements of the company are sent to the Auditors for signature after they have been signed by the Directors.
- Auditors and directors can sign the financial statement from various locations and on various dates, i.e. the date on which the auditors sign the financial statement may differ from the date on which the directors sign it.
- When both the Directors and the Auditor sign the Financial Statement of the Company, it is approved by the shareholders at the Annual General Meeting of the Company.
Financial Statement Approval Section 134(1)
- According to Section 134(1), the Company’s financial statements must be approved by the board of directors at a meeting and signed on behalf of the board.
Signed Financial Statement Adoption & Circulation
- The Financial Statement is needed be adopted by the company at the AGM. The company’s AGM can be convened within 6 months after the financial year’s conclusion, which is September 30.
Following the signature of the financial statement, which includes the consolidated financial statement:
- Any Annexure or Notes
- Reports of Statutory Auditor
- Report of Board of Director
Content of the Board Report
- The number of board meetings.
- Independent Directors’ Declaration
- Corporate Social Responsibility initiatives and policies
- The company’s website address.
- A statement of the company’s financial situation.
- Contractual or other relationships with a related party (Form No. AOC-2 )
- Statement of the Director’s Responsibilities
- Energy conservation, technological adoption, and foreign exchange.
- Remuneration Policy and Director Appointment
- Any Qualified or negative comments made by the Secretarial Auditor in his Report (MR-3) or the Internal Auditor, as well as the Board of Directors’ response to those comments.
- Fraud details as reported by the auditor
- Information on guarantees, loans, and investments.
- Annual Evaluation Statement
- The amount held in reserve or paid out as a dividend.
Conclusion
- According to Section 134 of the Companies Act 2013 financial statement must be signed in compliance with the Act’s regulations and conditions. Every firm is required to comply with the Act’s stipulations.
- If the company fails to comply with the Act’s provisions regarding the signing of financial statements, the company will be fined three lakh rupees, and each officer of the company who is in default will be fined fifty thousand rupees, and all of the company’s directors and officers will be subject to fines, imprisonment, or both.
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