Dear All,
as per section 372(A) of the indian companies act 1956 there is a limit of Inter corporate loans and investments ( 60% of paid up capital and free reserves or 100% of the free reserves whichever is more). It is further clarified that free reserves means those reserves as per the latest audited balance sheet of the company,are free for distribution as dividend and includes balance to ther credit of the securities premium account but not include share application money.
Now the question arises what is the meaning of Latest Audited Balance Sheets.
If a company makes Interim accounts( half yearly or so ) and get them audited,will it be considered as Latest Audited Balance Sheets for this section.Please note that the company does not change its financial year which remains the same( annual).
What is the position if interim accounts are adopted by the board,audited by the statutory auditor and placed brfore the shareholders in EGM called for this purpose and also got approved by the members in the EGM.Can these results be consideredas the audited results for the purpose of calculating the limits u/s 372(A).
please give your opinion.
Ca. Arun K. Aggarwal
Delhi
CAclubindia
