19 November 2021
In case of making opening balance sheet after merger, I have two questions:-
1. Whether to make comparative opening Balance sheets or not?? 2. If comparative Balance sheets are required then the last year balance sheet must be audited or not?
19 November 2021
https://www.google.com/url?sa=t&source=web&rct=j&url=https://assets.kpmg/content/dam/kpmg/in/pdf/2020/02/chapter-02-business-combinations-ind-as-implementation-guide.pdf&ved=2ahUKEwiLjt3CnqT0AhURgFwKHY9LBJIQFnoECAMQAQ&usg=AOvVaw2A4WsoCTWodW0vSUleIYf8
19 November 2021
This article indicates that make closing Balance sheet and make comparative for the same. There is no mention for the opening Balance sheet and also query is there any compulsion to make opening balance sheet and to file the the same to ROC or SEBI ??
09 August 2024
When dealing with the preparation of an opening balance sheet following a merger, there are several aspects to consider. Let's address your questions:
### **1. Comparative Opening Balance Sheets**
**Comparative Balance Sheets:** - **Not Typically Required:** Generally, you do not need to prepare comparative opening balance sheets. Instead, you need to prepare an opening balance sheet as of the date of the merger. The primary purpose of this balance sheet is to reflect the financial position of the merged entity as of the effective date of the merger. - **Focus on Opening Balance Sheet:** The focus should be on creating an accurate opening balance sheet post-merger to reflect the assets, liabilities, and equity of the newly merged entity.
### **2. Audit Requirement for Last Year’s Balance Sheet**
**Audit of Last Year’s Balance Sheet:** - **Audited Balance Sheet Requirement:** It is crucial that the balance sheets of the entities involved in the merger be audited up to the date of the merger. This ensures that all financial information is accurate and reflects the true position of the entities prior to the merger. - **Impact on Opening Balance Sheet:** While the comparative balance sheet is not required, the accuracy of the opening balance sheet is reliant on the audited financial statements of the merging entities. The last year's balance sheet of each merging entity should be audited to ensure that the opening balance sheet is based on reliable and audited data.
### **3. Compulsion to File Opening Balance Sheet with ROC or SEBI**
**Filing Requirements:** - **ROC Filing:** The opening balance sheet post-merger typically needs to be filed with the Registrar of Companies (ROC) as part of the statutory compliance under the Companies Act, 2013. This is necessary to update the records of the newly merged entity. - **SEBI Filing:** If the companies involved are listed or if the merger falls under SEBI regulations, you may need to file the opening balance sheet with SEBI as well. SEBI regulations may require additional disclosures and filings related to mergers and acquisitions.
### **Steps to Prepare and File the Opening Balance Sheet Post-Merger:**
1. **Prepare Opening Balance Sheet:** - Consolidate the assets, liabilities, and equity of the merging entities based on the merger agreement. - Reflect the fair value adjustments and any other relevant changes as per the accounting standards.
2. **Audit Requirements:** - Ensure that the financial statements of all merging entities are audited up to the date of the merger. - The opening balance sheet should reflect the audited figures from these financial statements.
3. **File with ROC:** - Prepare the necessary forms and disclosures required under the Companies Act, 2013. - Submit the opening balance sheet and other required documents to the ROC.
4. **Compliance with SEBI (if applicable):** - Ensure compliance with SEBI regulations if the entities are listed or if SEBI’s approval is required for the merger. - File the necessary forms and disclosures with SEBI.
### **Summary**
- **Comparative Opening Balance Sheets**: Not required. Focus on the accurate opening balance sheet post-merger. - **Audit Requirement**: Ensure that the balance sheets of the merging entities are audited up to the merger date. - **Filing**: The opening balance sheet needs to be filed with ROC and possibly with SEBI, depending on the nature of the entities involved.
For precise guidance, especially with compliance and regulatory requirements, consulting with a professional advisor or company secretary is recommended. They can provide tailored advice based on the specifics of the merger and the jurisdictions involved.