Cerone) Ses 128 _| Books of Accounts to be kept by co/__|133__| C6 to Prescribe AS 129 [Financial Statement 134 | Financial Statement, Boards Report, etc 129A | Periodical financial results 135 _| Corporate Social Responsibility [130° ]Re-opening of accounts on Court's or [136 | Right of Member to Copies of Audited Tribunals Orders FS 131 | Voluntary Revision of FS/Board's Report |137 _| Copy of FS to be Filed with Registrar | [432 Tconstitution of NFRA 138 [Internal Audit AOC1 AOC2 | Details containing contracts or arrangements entered into with related parties AOC3 | Statement containing salient features of the audited FS ‘AOC 3A__| Detailed statement on FS to be filed by co. complying with Cos (End AS) Rules AOC4 __ |Form to file a FS and other documents of the company with the Registrar ‘AOC 4 (XBRL) | XBRL doc. in respect of FS and other documents to be filed with the Registrar ‘AOC 4 (CFS) | Form to file CFS s and other documents with the Registrar ‘AOC 4 (NBFC) | Form for NBFCs to file financial statement and other documents with the Registrar ‘AOC5 [Notice to declare the address of the location in which the BoAs are maintained “Books of account" includes records maintained in respect of: sums of money received _ sales and assetsand items of cost and expended purchase liabilities u/s 148 Financial statement in relation to a company, includes: BS as at P&L account CFS for Statement of Explanatory end of FY (incase of NPO- Income & Expa/e FY* — change inequity note annexed *Provided that FS, w.r.t. OPC, small co. and dormant co. and Private co. (startup), may not include CFS; “Book and Paper” ind "Book or Paper": Includes: [WARM DVD] Books of Accounts deeds Voucher Writings Documents Minutes. Registers maintained on paper or in electronic form:Cry (A For the purpose of this section, books of accounts (BOA) means - Books of account and other relevant books and papers enc-financiat-statement-{FS) 1. eRe inghal (AIR 4) Co, to prepare BoA: Every co. shall prepare and keep BOA and FS at its RO every FY > Giving a true and fair view of state of the affairs > of - the company, including that of its branch office(s), and > explaining all such transactions and Such books shall be kept on accrual basis and as per the double entry system of accounting Note - Such BOA may be kept at such other place in India as Bob may decide. Inform RoC within 7 days of such decision - by filing a notice in writing (Form AOC -5) such place. Provided that - Companies may keep books in e-mode in prescribed manner. ease > Such BOA in e-mode shall remain accessible in India at all times so as to be usable for subsequent reference. Features of accounting software: For FY commencing after 1/4/2023 ~ Every co. using accounting software for maintaining BOA shall use only such software which has the following feature: creating an edit log of recording audit trail of ensuring that audit trail eating an edit log 0} hi ide in BOA every transaction and cannot be disabled, and °"cn change mad in ne + date of such changes. BoA shall be retained completely in original format info. shall remain complete & unaltered. Info. received from branch office - not be altered + keep in manner depicting what was originally received from the branches. Info. of such e-record should be capable of being displayed in legible form, There shall be proper system for storage, retrieval, display or printout of the e-necords Such e-records shall not be disposed of or rendered unusable, unless permitted by law. Backup of such e-records shall be kept in servers physically located in India on daily basis. Co. shall intimate the following to RoC on an annual basis at time of filing FS: (No LIC) v vvv vv v vv internet i where BOA are Name of location theserice protocol (IP) {pcotion of maintained on cloud, such address as provided by rovider adress of rovider* pr service provider e service provider *Where service provider is located o/s India, name & add. of person in control of BoA in India ing full address ofCA Shubham Singhal (AIR 4) (2. Where a co. has branch office (India or o/s India), it shall be deemed to have complied with provisions of BoA, if: > proper BOA relating to transactions ef fected at branch office are kept at that office and > proper summarized returns periodically are sent to company at its RO or other place as u/ ss (1) 3. BOA open for inspection for directors only: BOA maintained > open for inspection at RO or other place in India within India > by any members director > _during business hours BOA maintained |> Director shall furnish a request to co, setting out the full details of outside India the financial info. sought and the period for which it is sought. Co. shall produce such info. to director within 15 days of date of receipt of the written request, > Such info shall be sought for by the director himself and not by or through his power of attorney holder or agent or representative. Note - Inspection of BoA of any subsy co. shall be done by person authorised by a Board resolution, Vv 4, Where inspection is made u/ss (3), officers and other employees of co. to give all assistance to the person making such inspection, 5. BOA to be kept in good order: BOA (together with vouchers relevant for entries) pertaining to the period: > not less than 8 FY immediately preceding a FY, or > where company had been in existence for <8 yrs, w.r.t all preceding years together with vouchers relevant to any entry in such books of account shall be kept in good order. Note - If investigation ordered ~ CG may direct that BoA may be kept for longer period. 6. Incase of contravention of such provision, following shall be responsible: WTD incharge ey Any other person of co. charged by BoD with of finance such duty for a fine which shall not < Rs. 50,000 which may extend up to Rs. 5 lakhs MD Note - This section majorly talks about books of accounts and books and paper. Although, FS is mentioned in the first subsection, but details of FS is discussed in Sec 129 below.Cre — > 1. FS shall: give a true and fair view of comply with the AS shall be in form as state of affairs of the co notified u/s 133, and prescribed in Schedule ITT Provided that the items contained in such FS shall be in accordance with the AS: Provided further that nothing contained in this sub-section shall apply to: insurance or ecticity co, other class of co. for which form of banking co. FS specified in other Act Provided also that FS shall not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose: eae (iia ate Menem ie nie eles Insurance co. Insurance Act, 1938, or IRDA Act, 1999 Banking co. Banking Regulation Act, 1949 Electricity co. Electricity Act, 2003 Governed by other law [by that law 2, At every AGM of co. ~ BoD shall lay before such meeting - FS for the FY 3. Consolidated FS (CFS): Where a co. has one or more subsy - Prepare CFS of the co. and all subsidiaries (in addition to FS) in manner prescribed. Such CFS - Lay before AGM along with FS u/ss (2) Provided that co, shall also attach along with its FS - a separate statement containing the salient features of FS of its subsidiary, associates or JV in Form AOC - 1 isolidation’ CFS shall be made in accordance with provisions of Sch TIT + Applicable AS Provided that - If a co. is not required to prepare CFS under the AS, it shall be sufficient if it complies with provisions of CFS in Schedule IIT of the Act. Provided further that - nothing in this rule shall apply w.r.t. prep of CFS if it meets ALL the following: i. it is wholly/partially owned subsidiary of another company and > all its other members, including those not otherwise entitled to vote, > having been intimated in writing and > do not object to the company not presenting CFS securities are not listed or are not in the process of listing (in or outside India), and iii, ultimate or any intermediate holding co. files CFS with the RoC in compliance with Ind ASCami cre) ‘4, Provisions applicable to preparation, adoption and audit of FS of holding company shall, mutatis mutandis, apply to the CFS referred u/ss (3). 5. Without prejudice to ss (1), where FS do not comply with AS, co. shall disclose in its FS: deviation from AS reasons for deviation _ financial effects, if any, of such deviation 6. C6 may, on its own or on application by cos, exempt any class of companies from complying with this section, if it is considered necessary in public interest. 7. Tf company contravention this section, following shall be responsible: WTD in charge ory Any other person of co. charged by BoD mp of finance with such duty ‘or in absence of any officer mentioned above, all directors Punishable with - Jail up to 1 year or fine Rs, 50,000 to Rs. 5 lakhs or BOTH | Me ee ‘CG may, require such class or classes of unlisted companies, as may be prescribed: : (b) to obtain approval (©) file copy with RoC oe arenas of Bob & complete within 30 days of such periodical bosis ond eudit/limited review of completions of relevant in prescribed Form: such results in manner period with prescribed Y as prescribed: fees. 1. A company shall not re-open it BOA and not recast its FS unless: > Anapplication to Court/Tribunal in this regard is made by: [CISCO] a Income Tax Auth. SEBI Other stat. body —_any person concerned > And an order is made by court or Tribunal to this effect that: © the relevant earlier accounts were prepared ina fraudulent manner, or © the affairs of co. were mismanaged - casting doubt on reliability of FS Provided that the court or Tribunal shall give notice to - CG, ITA, SEBI, etc. and consider their representation, if any, before passing orders. 2. Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under sub-section (1) shall be final 3. No order shall be made u/ss (1) for re-opening of BOA relating to a period earlier than 8 FY immediately preceding current FY. Provided that, on investigation, where CG has directed for keeping BOA for period > 8 years, the BOA may be ordered to be re-opened within such longer period.CA Shubham Singhal (ATR 4) Bocas Notice Representation Order Accounts Served Considered Passed Revised 1. If it appears to directors of a co. that: FS of co, do not comply with Sec 129 or BoD report do not comply with Sec 134, they may prepare revised FS or BoD report: > inrespect of any of 3 preceding FY > after obtaining approval of the Tribunal > onan application made by the company in Form NCLT 1 within 14 days of BoD decision and > a copy of order passed by Tribunal shall be filed with Registrar within 30 days: Provided that Tribunal shall give notice to CG and TTA and shall consider their representation, if any, made by that Government or the authorities before passing any order under this section. Provided further that such revised FS or report shall not be prepared/filed more than once in aFyY Provided also that detailed reasons for revision of such FS or report shall also be disclosed in the Board's report in the relevant FY in which such revision is being made. 2 Raza > Application shall contain following particulars: Co, to advertise application - At least 14 days before date of hearing. Tribunal to issue notice to auditor of original FS and give OOBH. ‘Tribunal to pass appropriate orders as it may deem fit. On receipt of Tribunat's approval, call for GM and notice of such GM publish in 2 newspaper. In GM - Revised FS, statement of directors and auditors - Put up for consideration. On approval in GM - File such revised FS + statement ~ ROC within 30 days. vyvvvvy 2. How much can you alter +t of previous FYs? Where copies of previous FS or report have been sent out to members or delivered to Registrar or laid before the Company in general meeting, the revisions must be confined to:CA Shubham Singhal (AIR 4) 3. (a) correction w.r-t. which previous FS/report do not comply with provisions of sec 129 or 134; and (b) the making of any necessary consequential alteration. C6 may make rules relating to or provisions as > How previous FS or report shall be supplemented by decument indicating correction > Function of company's auditor in case of revised FS > require the directors to take prescribed steps. Note - Here, application will be made to Tribunal only. Courts (e.g., district court) cannot be involved. Concept clarity check: A Ltd. applied to Tribunal for revising FS on Dec 2022. Such application was approved and revisions were made, A Itd again applied in March 2023 for revision board report. Is such application valid? Yes! The limit of once in a year is for each of these - FS and BoD report. As in Dec 2022, application was made to revise FS, one application for revising Board report can be made. CG may constitute NFRA to provide for matters w.r.t. Accounting & Auditing Standards (ASS). Functions of NFRA (subsection 1A and 2 read with Rule 4, 6.7.9) > NFRA to protect public interest and interest of investors, creditors and others by: © establishing high quality AAS, and © exercising ef fective oversight on accounting and auditing functions. > NFRA shall exercise the following function: © Maintain particulars of auditors appointed in Cos./BC © Recommend AAS for CG's approval (NFRA to seek and consider ICAT's recommendation) © Monitor and enforce compliance with AAS. SAE To ensure compliance with accounting standard by a co./BC, NFRA: © may review FS and request additional info. from company/auditor, if necessary © may require personal presence of officers &auditors for additional info. for FS review © shall publish its findings on non-compliance on its website unless not in public interest © where NRA finds violations of AS - it may further investigate, SREREece To ensure compliance with auditing standard by a co./BC, NFRA may: © review working papers and communications related to the audit. © evaluate the auditor's quality control system and documentation,perform other testing of audit and quality control procedures as necessary. require auditors to report on governance practices and risk reduction measures. seek additional information or the personal presence of the auditor for clarifications, shall monitor and enforce through experienced officers or experts in audit. shall publish findings on non-compliances, with exceptions for public interest and confidentiality. send a separate report with proprietary information to the C6. investigate or take enforcement action if laws or standards are violated by an auditor > Oversee Quality of service of professions associated with ensuring compliance of AAS and suggest measures for improvement therein, etna ‘0 NFRA may instruct auditors to improve audit quality, specifying a detailed plan with time-limits, Auditors must implement the required improvements and report compliance to NFRA. o NFRA monitors the auditor's progress and takes appropriate actions based on the improvements made. 0 NFRA may refer cases related to auditors’ quality of service to the Quality Review Board or request reports from the Board. 0 NFRA may seek assistance from experts for oversight and monitoring activities, > Promote awareness for compliance of AAS > Co-operate with national and international organisation for adherence to AAS > Other incidental functions 3. Constitution of NERA: > achairperson-appointed by CG, having expertise in accountancy, auditing, finance or law, and > such other members not > 15 consisting of part-time & full-time members as prescribed: Each division of the NFRA shall be presided over by Chairperson or full-time Member authorised by Chairperson. [Section 3A] Section 3B - There shall be an executive body of the NFRA consisting of Chairperson and full- time Members of such Authority for efficient discharge of its functions, Such chairperson and members shall: give declaration to CG regarding not associate with any audit firm (or related no conflict of interest or lack of |__—_ consultancy firm) during course of such appt indepedence +2 years after ceasingeeu Cte) (~ ||. The following persons shall be appointed as part time members of NFRA, namel MCA Representative Joint Secretary (ex-officio) CAG of India Representative | Accountant General or Principal Director (ex-officio) RBI Representative Executive Director (ex-officio) ‘SEB Representative Executive Director (ex-officio) President, ICAT Ex-officio Chairperson, AS Board, ICAT__ | Ex-officio Chairperson, AAS Board, ICAT_| Ex-officio Two experts From the field of accountancy, auditing, finance, or law 4, Powers to investigate: The NFRA shall: > have power to investigate, either suo motuor onreference by CG into matters of professional or other misconducts under CA Act, 1949 Provided that - where NFRA has initiated such investigation, no other institute shall initiate or continue any proceedings in such matter. > have same power as vested in civil court: [A IPC] © Discovery and production of BoA and other docs at specified place & time: © summoning and enforcing the attendance of persons and examining them on cath; and 0 inspection of any books, registers and other docs. of co. at any place. © issuing commissions for examination of witnesses or documents; > where professional or other misconduct is proved, have the power to make order for a. Eine Rs. 1,00,000 5 times of fees received Rs. 5,00,000 10 times of fees received b. NFRA can debar a member/firm from audits and valuations for 6 months to 10 years | based on their discretion. 5. Any person aggrieved by order of NFRA u/ss (4) - may prefer an appeal before Appellate Tribunal ‘At any place Books of accounts Maintain in manner as prescribed in CG in consultation with C&AG Audit C&AG ‘Annual Report Each FY, giving full account of its activities during FY Forward to CG (annually) |> Accounts as certified by C&AG CG to lay these reports |> Auditor's report thereon before each House of || > Annual Repot | [ParliamentCA Shubham Singhal (AIR 4) NFRA may undertake investigation of auditors of following classes of companies and B > companies whose securities are listed on any stock exchange in India or outside India; > unlisted public companies having: PUSC not less than T/O not less than outstanding loans, debentures and | 500 crores, or Rs. 1,000 crore __deposits of not less than Rs, 500 crores as on the 3ist of March of immediately preceding FY > insurance cos., banking companies, electricity companies or companies governed by special Act. > any BC or company or person, etc. - on a reference made to NFRA by CG in public interest > BC incorporated outside India which is subsidiary or associate of any of the above mentioned companies if the income or net worth of such subsidiary or associate company > 20% of consolidated income or net worth of such above mentioned companies, Every BC, (other than co. as defined in section 2(20)), formed in India, and governed under this rule shall, within 15 days of appointment of an auditor u/s 139, inform NFRA in Form NFRA-1, +the particulars of the auditor so appointed. Where PUSC or T/O or o/s loans fall below limit for 3 consecutive years ~ NFRA stops governing. IW/ Section 133: CG to prescribe Accounting Brae! CG may prescribe AS or any addendum thereto, as recommended by ICAT, constituted u/s 3 of CA ‘Act, 1949, in consultation with and after examination of recommendations made by NFRA. Provided that: > Until NFRA is constituted u/s 132, > the CG may prescribe the AS or any addendum thereto, > as recommended by ICAL, in consultation with and after examination of recommendations by Netional Advisory Committee on Accounting Standard (NACAS) constituted u/s 210A of Companies Act, 1956 (previous law) Note - Since NFRA constituted in 2018, hence this proviso lost it operating ef fects. Vo ee ean ec one ae The FS, including CFS, shall be approved by the BoD before it is signed on behalf of BoD by: > Chairperson of the co., if so authorized by BoD or else - 2 directors (IMD), AND > CEO, CFO and CS before it is submitted to auditor for his report thereon. In case of OPC - Sign by one director only.eS einer (Cute) 2. Auditor's report shall be attached to every FS. 3. In the FS laid before company in GM, a Bob's report shall be attached, which includes [FC WARM Dividend Reserve 3 Policy]: Webaddress eh ang Directors's Details of fraud reported by where ARu/s 92 NAOT responsibility auditors u/s 143(12) other has been placed ings statement (DRS) than those reportable to CG Statement on Explanation & comments on every qualifn, reservatn _state of declaration given _& adverse remark - by auditor in his report or by CS company's by ID u/s 149(6) in practice in his secretarial audit report affairs particulars of material change and commitments - contracts and arrangements loan, guarantee affecting fin. position of co. between _with related parties u/s investments u/s 186 end of FY and date of report 188 (Form AOC -2) @ te the ic amount proposed to \e conservation of energy, tech ee be carried to any absorption, forex earnings and outgo ° dividend reserve as prescribed statement indicating development Policies on director's details of policy developed and implementation of risk mgt. appointment and rem. implemented on CSR initiatives policy and risks identified therein (if covered u/s 178) taken during the year in case of listed company and every other public company having such PUSC >= Rs, 25 crores - statement indicating the manner Other matters as in which formal annual evaluation of performance of Board, its may be prescribed Committees and of individual Directors has been miade Provided that - where above disclosures are made in FS already, such disclosures shall be referred to instead of repeating it in BoD's report Provided further that where policies are made available on company's website, if any, it shall be sufficient compliance of the requirements under such clauses if the salient features of the policy and any change therein are specified in brief in the Board's report and the web-address is indicated therein at which the complete policy is available Note - In case of OPC or Small co, CG may prescribe an abridged Board's report. 4. BoD report shall, in case of a OPC, mean a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by auditor in his report.eel Cu ned, eat ee ie) 5. Director's responsibility statement shall state that: [AS AP Care GC Control Law] ‘._ in preparation of the annual accounts, the applicable AS had been followed along with proper explanation relating to material departures; b. Directors had selected such accounting policies and applied them consistently and made Judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of FY and of the P&L for that period: ¢. Directors had token proper and sufficient care for: + the maintenance of adequate accounting records as per this Act + safeguarding the assets of the co. and +” for preventing and detecting fraud and other irregularities; d. the Directors had prepared the annual accounts on a going concern basis; and e. the Directors, in the case of a listed company, had laid down internal financial controls (IFC) to be followed by the company and that such IFC are adequate and were operating effectively. Explanation: For the purposes of this clause, the term “FC” means: + the policies and procedures adopted by the company + for ensuring the orderly and efficient conduct of its business, + including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information; f. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Sign on BoD report ~ Chairman, if authorised. Or else, 2 directors (1 MD) Note - In case where in the co, there is only 1 director, FS shall be signed by such 1 dir. (e.g. OPC) A signed copy of every FS, including CFS, if any, shall be issued, circulated or published along with: ‘any notes annexed to or forming part of such FS auditor's report Board's report Tf @ company is in default in complying with this section: Co, liable to penalty of Rs. 3 lakhs; OTD shall be liable to penalty of Rs. 50,000 Bob's report shall be prepared based on standalone FS of the co. and shall report on highlights of performance of subsy, associates and JVs and their contribution to overall performance of co.CA Shubham Singhal (AIR 4) 2. Additionally, BoD report shall include following information: (i) the financial summary or highlights; (i) the change in nature of business, if any; (iii) details of directors or KMP who were appointed or have resigned during the year: (iia) statement regarding opinion of Board w.r.t. integrity, expertise and experience of independent director appointed during the year". (iv) names of cos. which have become or ceased to be its subsy, JV or assoc. during the year; (W) the details relating to deposits, covered under Chapter V of the Act: a. accepted b. remaining unpaid or unclaimed as at the end of the year: c. any default in repayment of deposits or interest thereon during the year and if so, number of such cases and the total amount involved: max during the year at the end of year (vl) the details of deposits which are not in compliance with requirements of Chapter V; (vii) details of significant and material orders passed by regulators/courts/tribunals impacting the going concern status and company's operations in future: (vii). details in respect of adequacy of internal financial controls w.t.t. FS (X) a disclosure, as to whether maintenance of cost records as specified by the C6 u/s 148, is required and accordingly such accounts and records are made and maintained, (©) astatement that the co, has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment related Act (xi) details of application made or any proceeding pending under TBC during the year along with their status as at the end of the financial year. (xii) the details of difference between amount of valuation done at time of one time settlement and the valuation done while taking loan from the Banks or FI along with reasons thereof. Read with Companies (Corporate Social Responsibility Policy) Rules, 2014 1. Every co. having: > net worth > Rs, 500 crores, or > turnover >= Rs. 1,000 crore or } During immediately preceding FY > net profit »= Rs. 5 crores shall constitute CSR Committee consisting of 3 or more Directors (at least 1 independent director) Co. which is not required to appoint ID [2 or more directors (without any ID) Private co. with only 2 directors 2 directors Foreign company covered under these |CSR Committee with at least 2 persons - one as per rules section 380(1)(d) & one nominated by the foreign’co.‘CA Shubham Singhal (AIR 4) Note: 1. If any of the limits not met for 3 consecutive FYs - not required to comply with Sec 135. 2. Net profit to be consider as per Sec 198 i.e., Profit Before Tax, Exemption - Where the amount to be spent by co. u/ss (5) <= Rs. 50 lakhs, CSR committee shall not be applicable. In such case, function of CSR committee to be discharged by BoD. 2. Board report u/s 134 to disclose the composition of CSR committee 3. Function of CSR committee: > Formulate and recommend to board CSR policy indicating activities to be undertaken > Recommend amount of expenditure to be incurred on such activity > Monitor CSR policy of company 4, The Board of such company shall: (@) after taking into account recommendations of CSR Committee, approve CSR Policy and disclose contents of thereof in its report and place it on website. (b) ensure that activities as are included in CSR Policy are undertaken by the company. 5. The Board shall ensure that the company spends, in every FY, > at least 2% of average net profits > made during the 3 immediately preceding FY or in pursuance of its CSR Policy Note - Where co, has not completed 3 FY since incorp. - Take average of such immediately preceding FYs (ie., Jitne saal tha, unka average lo) Provided that the co. shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities: Provided further that, if a co. fails to spend such amount: > Board shall specify reasons for not spending the amount in its report u/s 134, and > unless the unspent amt. relates to any ongoing project, transfer it to a Fund specified in Schedule VIT, within 6 months of expiry of the FY Provided that if co. spends excess amounts, such company may set off such excess amount against the requirement to spend for such number of succeeding FY and in such manner as prescribed. = Et || ~ Where co. spends an amount in excess of requirement, such excess amount may be set off | against requirement to spend u/ss (5) up to immediate succeeding 3 FY provided that: (i) such excess amt. shall not include the surplus arising out of such CSR activities (ji) the Board of the company shall pass a resolution to that effect.CA Shubham Singhal (AIR 4) 6. Transfer ongoing project to special account: Amt. remaining unspent u/ss (5), pursuant to any ongoing project, undertaken by a co. in pursuance of its CSR Policy, shall be: > transferred within 30 days from end of FY to a special account to be opened inany scheduled bank to be called "Unspent Corporate Social Responsibility Account", and > spent it in pursuance of obligation towards CSR Policy within 3 FY from date of such trf, > failing which, the co, shall trf. the same to a Fund (as per sch VET) within 30 days from date of completion of the 3rd FY. 7. Default u/ss (5) or (6): Co, shall be liable to penalty - Lower of OLD shall be liable to penalty - Lower of: > 2x of (amt. required to be transferred > _1/10thof (amtrequired tobe transferred to the Fund or unspent CSR account) or to the Fund or unspent CSR account) or > Rs. 1crore > Rs.2 lakhs Companies (Corporate Social Responsibility Policy) Rules, 2014 "CSR" means the activities undertaken by a Company in pursuance of its statutory obligation u/s 135 4s per provisions contained in these rules, but shall not include the following, namely: (SPEL FB) Sponsorship Political Employee Law Foreign Business (i) activities undertaken in normal course of business of the company. Provided that any company engaged in research and development (R&D) activity of new vaccine, drugs and medical devices in their normal course of business may undertake R&D activity of new vaccine, drugs and medical devices related to COVID-19 for FY 2020-21 to 2022-23 subject to the conditions that: (@) such R&D activities is carried out in collaboration with institutes mentioned in Sch VEZ; (b) details of such activity to be disclosed separately in Annual report on CSR (in BoD report); (i) any activity undertaken by co. outside India except for training of Indian sports personnel representing any State or UT at national level or India at international level; (iii) contribution of any amount directly or indirectly to any political party u/s 182 of the Act; (iv) activities benefitting employees of the company; (W) activities supported by cos. on sponsorship basis for marketing benefits for its products; (vi) activities carried out for fulfilment of any other statutory obligations under any other law “Adminis ive overheads” means: > expenses incurred for ‘general mgt. and admin’ of CSR functions > but shall not include expenses directly incurred for designing, implementation, monitoring, and evaluation of a particular CSR project or programme. “Net profit" means net profit of a company as per its FS, but shall not include the following, namely:(i) profit arising from overseas branch(es) of co., whether operated as separate co. or not; and Gil) any dividend received from other companies in India, which are covered under and complying with prov. of sec 135 of the Act. “Ongoing Project” means a multi-year project undertaken in fulfilment of its CSR obligation having timelines <= 3 years excluding FY in which it was commenced, and shall include such project that was initially net approved as a multi-year project but whose duration has been extended beyond one year by the board based on reasonable justification. Every co. including its holding, or subsidiary and a foreign company u/s 2(42) having branch office or project office in India which fulfils criteria u/s 135(1) shall comply with section 135. Provided that net worth, turnover and net profit of a foreign co. shall be computed as per Balance sheet and P&L prepared as per Section 381 and 198 of the Act Provided further that a co. having any amount in its unspent CSR account u/s 135(6) shall constitute CSR committee and comply with CSR Provisions [Amendment] NTATION Board shall ensure that CSR activities are undertaken by the company itself or through: (@) Sec 8 company, or a registered public trust or a registered society’ > established by the co., under Income Tax Act, either singly or along with other co., or > established by CG or State Government; or > having an established track record of at least 3 years in undertaking similar activities (b) any entity established under an Act of Parliament or a State legislature; or 2. Every entity, covered above, who intends to undertake any CSR activity, shall register itself with the CG by filing form CSR-1 with Registrar. @ Form CSR-1 shall be signed and submitted electronically and shall be verified digitally by CA, CS or CMA in practice. (On submission thereof, a unique CSR Registration Number shall be generated automatically. 3. A company may engage international organisations for designing, etc. of the CSR projects or programmes as per its CSR policy as well as for capacity building of their own personnel for CSR, 4, A company may also collaborate with other companies for undertaking projects in such a manner that CSR committees of respective cos. are in a position to report separately on such project. estima:fer Western ei sr-lp(G,84- 909) 5. Board shall satisfy itself that funds so disbursed have been utilised for purposes as approved and CFO (or person responsible for fin. mgt.) shall certify to the effect. 6. Incase of ongoing project, Board shall monitor the implementation of the project w.r-+. the approved timelines and year wise allocation and shall be competent to make modifications, if any, for smooth implementation of the project within the overall permissible time period. Note - International organisation can also be engaged for CSR implementation. = RSs CSR Committee shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR Policy, which shall include the following, namely: (a) the list of CSR projects that are approved to be undertaken in areas specified in Sch VIT; (©) the manner of execution of such projects; (©) the modalities of utilisation of funds and implementation schedules for the project: (d) monitoring and reporting mechanism for the projects: and (2) details of need and impact assessment, if any, for the projects undertaken by the company: Provided that Board may alter such plan at any time during FY, on recommendation of its CSR Committee, based on the reasonable justification to that effect. SRE 1, Board shall ensure that admin overheads shall not exceed 5% of total CSR expense for the FY. 2. Any surplus arising out of CSR activities shall > not form part of business profit of aco. and > shall be ploughed back into same project or > trf. fo Unspent CSR Account and spent as per CSR policy and annual action plan or > trf. to a Fund specified in Sch VIL, within 6 months of expiry of the FY. 3. Covered above. 4, CSR amount may be spent for creation or acquisition of a capital asset, which shall be held by: (@) section 8 company, or a Registered Public Trust or Registered Society, having charitable objects and CSR Registration Number: or (b) beneficiaries of said CSR project, in the form of self-help groups, collectives, entities; or (©) a public authority: Provided that any capital asset created prior to commencement of this Rule, shall within 180 days (may seek further 90 days) comply with this provision. eR Gaareae 1, Board Report pertaining to any FY shall include. an “Annual report on CSR" 2, In case of a foreign co., the Balance Sheet u/s 381 of the Act, shall contain annual report on CSR ** Annual Report on CSR containing particulars specified in Annexure I or IT, as applicable:(Pease Ceci, 3. Impact assessment: (@ Every co. having avg CSR obligation >= Rs. 10 crores in 3 immediately preceding FYs, shall: > undertake impact assessment, > through an independent agency, > of their CSR projects having outlays >= Rs. 1 crore, and > which have been completed not less than 1 year before undertaking the impact study. (b) Impact assessment reports - Place before BoD & annexed to the annual report on CSR. (©) Co, undertaking impact assessment may book expense towards CSR for that FY, not exceeding higher of [Amendment] > 2% of total CSR exp. for that FY or > Rs, 50 lakhs [Amendment] Every co. covered under Sec 135(1) shall furnish a CSR report in Form CSR-2 to Registrar for the preceding FY (2020-21) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or e ‘AQC-4 NBFC (Ind AS), as the case may be. Provided that for the preceding FY (2020-21), Form CSR-2 shall be filed separately on or & before 31dt Mareh June 2022, after filing Form AOC-4, etc. Additional clat ons on CSR: 1. Read Sch from ICAI Module Pg. 9.44 (not imp. from exam point of view. Just read casually) 2. Entries in Sch VET is to be interpreted liberally. 3. CSR activity should be taken up as a project. One-off events such as marathon won't qualify 4. Expense incurred by foreign holding co. for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, it is routed through Indian subsy. EMG ram sip cantons 1. Following spendings are eligible CSR activity: > COVID-19 related activities > Creating health infrastructure for COVED Care > Establishment of medical oxygen generation and storage plants > Manufacturing and supply of Oxygen concentrators, ventilators, cylinders and other | medical equipment for countering COVID-19 > COVID- 19 vaccination for persons other than the employees and their families > Carrying out awareness campaigns or public outreach campaigns on COVED vaccination program. > Setting up makeshift hospitals and temporary COVED Care facilities > For theactivities related to "Harr Ghar Tiranga” campaign, such as mass scale production and supply of the National Flag, outreach and amplification efforts and other related activities 2. Companies including Government co. may undertake the activities or projects or programmes using CSR funds, directly by themselves or in collaboration as shared responsibility with other cos.OP trum ener) Pere soon ‘A copy of following documents laid before GM: FS CFS, if any auditor's report every other doc. required to be attached to FS shall be sent to every: member trustee for DH__all other entitled person not less than 21 days before the date of the meeting. Provided that if copies of docs are sent less than 21 days before date of meeting, it shall be deemed to have been duly sent if it is so agreed by members: ‘Tf.company has share capital: ‘If company has no SC: Majority in numbers + 95% of PUSC 95% of total VP Provided further that, in case of listed co., this sub-section shall be deemed to be complied with if: > copies of documents are made available for inspection at RO during working hours for 21 days before date of meeting, statement containing salient features of such docs or copies thereof is sent to member, DT of DH in Form AOC-3 not less than 21 days before date of meeting unless SH ask for full FS. @ v Note - Cos, which are reqd to comply with Cos (Ind AS) Rules, 2015 shall send in Form AOC- 3A & Mode of sending FS: In case of all: such public companies having: listed companies and - NW of more than Rs. 1 crore and - Turnover of more than Rs. 10 crore the financial Demat form + Email IDs registered with depository | E-mode ‘Otherwise than demat form but members have | E-mode positively consented in writing to e-mode. Tn all other cases Dispatch of physical copies through any recognised mode of delivery u/s 20 Provided - Listed co. shall also place its FS including CFS, and other docs on its website Provided also that every listed company having subsidiary(ies) shall place separate audited accounts w.r.t. each of subsidiary on its website, if any.Provided also that a listed company which has a subsidiary incorporated outside India (herein referred to as “foreign subsidiary (F-sub)"): where such F-sub is statutorily required to where F-sub is not required to get FS prepared CFS under law of the country of audited and hence does not get FS incorporation - this proviso is complied with audited - holding Indian listed co. may if such CFS is placed on website of listed co. place unaudited FS on website** "Where FS is in language other than English, place a translated copy in English on the website, 2. Co. shall allow members/DT to inspect the documents stated u/ss (1) at its RO during biz. hours, Provided that every co. having subsy shall provide a copy of separate audited or unaudited FS, 4s prepared in respect of each of its subsidiary to any member of the company who asks for it. 3. Default in complying with this section: Co. - Liable to penalty of Rs. 25,000 : OID - Liable to penalty of Rs. 5,000 eae meee nee FS + CFS + All documents to be attached to FS oT OO? Duly adopted in AGM Not adopted in AGM AGM is not held orc 180 days File with eee : cee File with ROC within RoC within them es provisional 30 days of last date 30 days =e for holding AGM When adopted in along with reasons adjourned AGM - for not holding AGM File within 30 days of said AGM |]. Elling FS with RO > A copy of FS, > duly adopted at AGM shall be > filed with RoC within 30 days of date of AGM > in the following forms: \cluding CFS, along with all docs required to be attached to FS, AOC 4 Financial Statement and other documents @ AOC 4 CFS Consolidated Financial Statement AQC-4-NBFC (Ind AS) | NBFCs to file FS and other documents with the Registrar ‘AOG-4 CFS NBFC (Ind AS) | NBFCs to file CFS with the Registrar Note - Along with such FS, co. shall attach accounts of its subsy which have been incorporated outside India and which have not established their place of business in India,CA Shubham Singhal (AIR 4) Where FS is not adopted in AGM or adjourned AGM: > Such unadopted FS shall be filed with RoC within 30 days of date of AGM. > RoC to take it in records as provisional till FS are filed after adoption in the adjourned AGM Where FS gets adopted in adjourned AGM - File with RoC within 30 days of such adjourned AGM In case of OPC: File copy of FS duly adopted by its member within 180 days from closure of FY In.case of foreign subsidiary not having audited FS - Send unaudited FS to RoC In case of a subsy incorporated o/s India (foreign subsidiary) which is not required to get FS audited under law of such country and does not get it audited - Holding Indian company to file unaudited FS + declaration to such effect to ROC Where such FS is in language other than English - translated copy to be sent. 7. Where AGM is not held, FS + Documents duly signed shall be filed with RoC within 30 days of last date before which AGM should have been held. 8. Co. fails to file copy of FS: > Co. Liable to penalty of Rs. 10,000 + Rs, 100/days - Max. Rs. 2 lakhs > Person responsible - Liable to penalty of Rs. 10,000 + Rs. 100/days - Max. Rs, 50,000 Person responsible ~ > MD and CFO, or > inabsence of MD and CFO - any other director charged with such responsibility > inabsence of any such director - all directors. Additional Points: 1. Following class of companies shall file FS and other documents ine-form AOC-4 XBRL: co, listed in India and Co. having Co. having Cos, required to prepare their Indian subsy PUSC >= 5 cr. turnover >= 100 cr, FS as per Ind AS Note ~ Once you come in purview of above limit, continue to file AOC-4 XBRL. 2. NBFCs, Housing finance cos. engaged in business of banking or insurance sector - exempted from filing FS.7 Section 138: Internal Audit Prescribed class of cos. shall appoint internal auditor (CA or cost accountant, or such other professional as may be decided by the Board) to conduct internal audit of co's functions and activities Following companies shall be required to appoint an internal auditor (who can be either individual or partnership firm or BC), namely: (@) every listed company; (b) every unlisted public company havin outstanding loans or borrowings from banks or PIs exceeds Rs, 100 cr a during preceding FY ‘At any point during preceding FY outstanding deposit >= Rs, 25 crores PUSC >= Rs. T/O >= Rs. 200 50 crores crores (©) every private company having: ‘outstanding loans or borrowings from banks eee or PFIs exceeds Rs. 100 cr Who shall become an internal auditor - Either individual or partnership firm or body corporate - CA or cost accountant, om€S or such professional as may be decided by the Board to conduct internal audit What is his role? - To conduct internal audit of the functions and activities of the company Note ~ An internal auditor may or may not be an employee. Concept clarity check: Tf an unlisted co. has outstanding loan of Rs. 100 crores exactly, in such case, the provision of internal auditor shall not apply as the law says - outstanding loan and borrowings from banks or financial institution exceeding Rs. 100 crores. So exact 100 crore will not be covered here. + The End