Note on Change in Financial Year

NOTE ON FINANCIAL YEAR AND HOW TO CHANGE IT

{Section 2(41) of the Companies Act, 2013}

Effective from 1^st April, 2014

DEFINITION

1.      Section 2 (11) of Companies Act, 2013, “Body Corporate" or "Corporation" includes a company incorporated outside India, but does not include—

                                i.            a co-operative society registered under any law relating to co-operative societies; and

                              ii.            any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf;

2.      Section 2 (20) of Companies Act, 2013, "Company" means a company incorporated under this Act or under any previous company law.

3.      Section 2 (41) of Companies Act, 2013, Financial year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up.

Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year.

Provided further that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause.

INTRODUCTION

As per the definition of financial year,

1.      Every company is required to follow uniform financial year that is 1^st April to 31^st March. In the current scenario, the Companies are using different-different financial year, some are using Calendar year that is 1^st January to 31^st December, some are using fiscal year that is 1^st April to 31^st March and some are using different period to consolidate its accounts.

2.      If a company incorporated on or after 1^st January, 2017, no need to close financial in year 2017, it can be closed next year i.e. 31^st March, 2018. Means first financial year can be of maximum 15 Months.

3.      Please note that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause.

APPLICATION FOR CHANGE IN FINANCIAL YEAR

If a holding company or a subsidiary of the company incorporated outside India or body corporate wants to follow different financial year for the consolidation of its accounts, may file an application to the Tribunal to change in financial year and if the Tribunal satisfied, it may allow any period as its financial year, whether or not that period is a year.

Before filing the application to NCLT, pass the Board resolution to change financial year and also appoint a professional to represent the company before the NCLT.

As per section 432 of the Companies Act, 2013, A party to any proceeding or appeal before the Tribunal or Appellate Tribunal, as the case may be, may either appear in person or authorise one or more Chartered Accountants or Company Secretaries or Cost Accountants or legal practitioners or any other person to present his case before the Tribunal or the Appellate Tribunal, as the case may be.

As per rule 67 of the NCLT Rules, 2016, the Petition shall be filed in form NCLT-1 along with the fee and along with the following attachments:

1.      Copy of MOA and AOA

2.      Copy of Balance sheet of Companies

3.      Affidavit verifying the petition in form NCLT-6

4.      Bank Draft evidencing payment of application fee

5.      Memorandum of appearance in Form NCLT-12 with copy of the Board resolution or the executed Vakalatnama, as the case may be

6.      Other documents, if any.

The order of NCLT shall be filed to ROC in the e-form INC-28 along with the fees and within the prescribed time.

Contact Details:

VISHAL SHARMA

Company Secretary

Mob: 9716763754

Email: csvishalpbs@gmail.com

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Disclaimer: The Content is prepared on the basis of our general understanding and on the basis of relevant provision of Companies Act, 2013 read with rules made there under. The whole content is only for the knowledge sharing purpose, we do not take any responsibility for the correctness of the same.