Right of member to copies of Audited Financial Statement (Section 136 of the Companies Act, 2013) :
Section 136 of the Companies Act, 2013 came into force from 1st April, 2014 which provides for right of member to copies of audited financial statement. According to this section:
(i) Who are entitled for audited financial statement?
(a) A copy of the financial statements, which are to be laid before a company in its general meeting, shall be sent to the following:
(1) every member of the company,
(2) to every trustee for the debenture-holder of any debentures issued by the company, and
(3) to all persons other than such member or trustee, being the person so entitled.
(b) Consolidated financial statements, if any, auditor‘s report and every other document required by law to be annexed or attached to the financial statements shall be annexed with financial statements.
(c) These financial statements shall be sent in not less than 21 days before the date of the meeting.
(d) In the case of a listed company:
(1) The above provisions shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of 21 days before the date of the meeting.
(2) Along with it a statement containing the salient features of such documents in the Form AOC-3 or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company.
(3) The statement is to be sent not less than 21 days before the date of the meeting unless the shareholders ask for full financial statements.
(e) A company shall also allow every member or trustee of the debenture holder to inspect the audited Financial Statement at its registered office during business hours.
[Note: Vide Notification dated 5th June 2015 for the companies under section 8 the word “twenty one days”, the words “Fourteen days” shall be substituted]
(ii) Manner of circulation of financial statements in certain cases:
(a) In case of all listed companies and such public companies which have a net worth of more than one crore rupees and turnover of more than ten crore rupees, the financial statements may be sent-
(1) by electronic mode to such members whose shareholding is in dematerialized format and whose email Ids are registered with Depository for communication purposes;
(2) where Shareholding is held otherwise than by dematerialized format, to such members who have positively consented in writing for receiving by electronic mode; and
(3) by despatch of physical copies through any recognised mode of delivery as specified under section 20 of the Act, in all other cases.
(b) A listed company shall also place its financial statements including consolidated financial statements, if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company.
(iii) Subsidiary Companies:
Every company having a subsidiary or subsidiaries shall,—
(1) place separate audited accounts in respect of each of its subsidiary on its website, if any;
(2) provide a copy of separate audited financial statements in respect of each of its subsidiary, to any shareholder of the company who asks for it.
This sub-section (1) of the Section 136 shall apply to the Nidhis company in the case of members who do not individually or jointly hold shares of more than one thousand rupees in face value or more than1% of the total paid up share capital whichever is less. It shall be sufficient compliance with the provisions of the section if an intimation is sent by public notice in newspaper circulated in the district in which the registered office of the Nidhi is situated stating the date, time and venue of the annual general meeting and the Financial statement with its enclosures can be inspected at the registered office of the company, and the financial statement with enclosures are affixed in the Notice Board of the company and a member is entitled to vote either in person or through proxy. [ As per the notification dated 5th June 2015]
(iv) Contravention:
(a) If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of ` 25,000.
(b) Every officer of the company who is in default shall be liable to a penalty of ` 5,000.
Vide General Circular No. 11/2015, dated 21st July 2015, clarification was issued by Ministry of Corporate Affairs with regards to circulation and filing of financial statement.
It has been clarified that a company holding general meeting after giving shorter notice as provided under section 101 of the Act may also circulate financial statements(to be laid/ considered in the same general meeting) at such shorter notice.
It has also been clarified that in case of foreign company which is not required to get its accounts audited as per the legal requirements prevalent in the country of its incorporation and which does not get such accounts audited, the holding or parent Indian may place or file such unaudited accounts to comply with requirements of section 136(1) and 137(1) as applicable. Further, the format of accounts of foreign subsidiaries should be, as far as possible, in accordance with requirements under the Companies Act, 2013. In case this is not possible, a statement indicating the reasons for deviation may be placed/ filed along with such accounts.