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Section-212

Jyoti Malik (ACCOUNTANT) (2644 Points)

10 February 2011

Is section 212 of Companies Act 1956 is applicable to Private Limited company?

our company is Private Limited company and having 80% Share holding of a foreign entity(by JV). Is it mendatory to consolidate the books u/s 212.

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6 Replies

CS Asmita Mehta (CS) (308 Points)
Replied 10 February 2011

First of all i want to say section 212 does not require consolidations it just require some information (in the form of statement) of all the subsidiaries and the Audited statement of Accounts, the Reports of the Board of Directors and Auditors of the subsidiary companies are annexed.

1.Section 212 of companies Act is applicable to all companies. (private/public, listed/unlisted)
2. In the case of listed companies therefore consolidation (therefore As-21) as well as section 212 has to be complied with.

In the case of foreign subsidiary, it would be required to prepares its financial statements in accordance with the law of the country in which it is registered. The Auditor's Report and the Directors Report would also be made out in accordance with the requirements of the applicable law of the concerned country. In these circumstances, in order to comply with the requirements of provisions of sub-sections 2(a) and 2(b) of section 212 of the Act, the foreign subsidiaries will be required to prepare their accounts in accordance with the provisions of the Act. This would mean that foreign subsidiary would be required to prepare two sets of accounts one as per the law applicable to the concerned country and two as per the provisions of the Act.

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Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 10 February 2011

Fully agree with Nikita.

cs ashwini kumar (Company Secretary in Practice) (173 Points)
Replied 10 February 2011

Agee with Ms. Nikita

Also wish mention that please also refer General Circular No: 2 /2011 dated Feb 08, 2011 as issued by MCA. The same is available on MCA web portal.

Regards

CS Ashwini Kumar

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Azim Khan ACA,CS,CMA*,LLB* (Proprietor) (1312 Points)
Replied 10 February 2011

I agreed

1 Like

Jyoti Malik (ACCOUNTANT) (2644 Points)
Replied 10 February 2011

Thanks to all

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Sumiti Jain (FP) (1364 Points)
Replied 11 February 2011

Originally posted by : nikita
	First of all i want to say section 212 does not require consolidations it just require some information (in the form of statement) of all the subsidiaries and the Audited statement of Accounts, the Reports of the Board of Directors and Auditors of the subsidiary companies are annexed. 1.Section 212 of companies Act is applicable to all companies. (private/public, listed/unlisted) 2. In the case of listed companies therefore consolidation (therefore As-21) as well as section 212 has to be complied with. In the case of foreign subsidiary, it would be required to prepares its financial statements in accordance with the law of the country in which it is registered. The Auditor's Report and the Directors Report would also be made out in accordance with the requirements of the applicable law of the concerned country. In these circumstances, in order to comply with the requirements of provisions of sub-sections 2(a) and 2(b) of section 212 of the Act, the foreign subsidiaries will be required to prepare their accounts in accordance with the provisions of the Act. This would mean that foreign subsidiary would be required to prepare two sets of accounts one as per the law applicable to the concerned country and two as per the provisions of the Act.