Saturday, June 3

Government Likely to Ask Unlisted Companies to Submit Quarterly and Half-Yearly Financial Statements

The Ministry of Corporate Affairs (MCA) is planning to add provisions to the Companies Act that would require unlisted companies to provide their financial statements on a quarterly or half-yearly basis.

The objective is to have updated financial details about systemically important companies that are not listed, as per sources.

Over 11 lakh unlisted companies are operating in India and this regulatory measure is expected to enhance governance in such companies.

Unlisted companies are not presently required to submit their financial statements every three or six months. It is only mandatory for listed companies to update their quarterly financial statements under SEBI (Central Listing Authority) regulations. 

According to sources, there would be thresholds for determining which categories of unlisted companies would be required to furnish financials on a quarterly or half-yearly basis.

The Companies Act, 2013 will have to be amended if the corporate affairs ministry plans to introduce quarterly or half-yearly financial statement reporting for unlisted companies.

Currently, an unlisted company is required to file financial statements annually. 

A company has to conduct its Annual General Meeting (AGM) every year with a maximum gap of 15 months between 2 AGMs. The annual general meeting is required to be held within six months from the date of closing of the financial year. 

The ministry mandates filing of financial statements within 30 days from the conclusion of AGM. The annual return has to be filed within 60 days of AGM for the period 1st April to 31st March.

Still many companies often take up to 18 months to submit annual filings, according to government’s assessment.

To address the shortcomings of the current system, the corporate affairs regulator feels the need for periodic disclosures.

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