Query 1)
As per Section 212 (1) of the Companies act, There shall be attached to the balance sheet of holding company having a subsidiary or subsidiaries, following documents in respect of such subsidiary or of each such subsidiary, as the case may be :-
(a) a copy of the balance sheet of the subsidiary;
(b) a copy of its profit and loss account;
(c) a copy of the report of its Board of directors;
(d) a copy of the report of its auditors;
(e) a statement of the holding company's interest in the subsidiary as specified in sub-section (3);
(f) the statement referred to in sub-section (5), if any; and
(g) report referred to in sub-section (6), if any.
As per section 212 (2) (a) The Balance sheet referred to in clause (a) of sub-section (1) shall be made out in accordance with the requirements of this Act. (Schedule VI)
And
As per section 212 (b) The profit and loss account and the reports of the Board of directors and of the auditors, referred to in clauses (b), (c) and (d) of sub-section (1), shall be made out, in accordance with the requirements of this Act (Indian Companies Act 1956).
Now, if the Subsidiary of the Company is Incorporated outside India (say USA), the accounts will be made as per US laws and Audited by US Auditor and the Currency will be US Dollar (as per US laws).
In this case,
a) Do we need to attach the Draft (Unaudited) accounts (made as per Indian laws) of the Subsidiary, which are signed only by the Directors? (who will sign the Audit report in this case ?)
or
b) Do we need to Audit the Accounts of subsidiary by Indian Auditor ? (Is the Indian Auditor Authorised to do that ?)
or
c)Can we attach the Audited Accounts (Audit report, Directors report, B/S & P/L) prepared as per US Companies Act and Audited by the US Auditor ? (Will this not violate Subsection (1) ?)
or
d) Any other Solution ?
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Query 2)
As per Section 212 (3) The statement referred to in clause (e) of sub-section (1) shall specify-
(a) the extent of the holding company's interest in the subsidiary at the end of the financial year.
And
As per section 4 (1), a company shall be deemed to be a subsidiary of another if, but only if,-
(c) the first-mentioned company is a subsidiary of any company which is that other's subsidiary.
say A is Subsidiary of B which is Subsidiary of C.
So, Do C need to enter details of A in 212 Statement ?
if yes
a) Do C need to enter the Extent of Holding (number & value of shares of A) held by B ? (C do not hold any shares of A Directly).
or
b) can the Space be left blank as the Company (C) do not hold any shares in A.
or
c) Any other solution ?
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KaRaN
CAclubindia
