What compliances does a company have to comply with if it wants to sell/ dispose off a substantial part of its fixed assets??
6 Replies
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 19 November 2011
Check whether company is going to demerge with another company
If not check for the Going concern applicabliity
Batul
(Article assistant)
(207 Points)
Replied 19 November 2011
that wud be the ultimate effect after sale of all assets..
but what the company is expected to do before selling off its assets
i mean according to comapnies act, it might have to pass some resolution and other similar procedures
Roshan Thomas
(C.E.O )
(356 Points)
Replied 19 November 2011
The only requirement that Im aware of is under CARO...
Para 4(i)(c) ... asks "If a substantial part of fixed assets have been disposed off during the year, whether it has affected the going concern."
The word substantial depends upon the facts and circumstances of each case.
Further if going concern assumption is affected then Disclosure is required under AS 1 because fundamental accounting assumption is affected.
Batul
(Article assistant)
(207 Points)
Replied 19 November 2011
Ya roshan im very well aware of the same fact..what i want to know is what procedures the company is expected to follow before it sells of all the assets of its co
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 19 November 2011
Batul
I dont know detail procedures yes it appears a board resolution is to be passed and to be approved by share holders too in the meeting which the practising company secretaries can expalin better why cant u post this query in corporate laws U will get answer since u posted on income tax .From Income tax angles also some procedure would be there for slump sale which Income tax experts can tell much better
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 22 November 2011
As per section 293 of the companies Act, where a substantial part of the undertaking is to sold then the company has to take the prior approval of the shareholders in the general meeting of the company. After that only the Board is authorized to sell the assets.
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