MINISTRY OF CORPORATE AFFAIRS
New Delhi,the 31st March, 2014
G.S.R.239 (E).- In exercise of the powers conferred under sub-sections (1) and (3) of section 128, sub-section (3) of section 129, section 133, section 134, sub-section (4) of section 135, sub-section (1) of section 136, section 137 and section 138 read with section 469 of the Companies Act, 2013, and in supersession of the Companies (Central Government’s) General Rules and Forms, 1956 or any other rules prescribed under the Companies Act, 1956 (1 of 1956) on matters covered under these rules, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely:-
1. Short title and commencement
(1) These rules may be called the Companies (Accounts) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014. [Effective Date]
2. Definitions.- (1) In these rules, unless the context otherwise requires,-
(a) “Act” means the Companies Act, 2013 (18 of 2013);
(b) “Annexure” means the Annexure to these rules;
(c) “Fees” means the fees as specified in the Companies (Registration Offices and Fees) Rules, 2014;
(d) ”Form” or ‘e-Form” means a form set forth in Annexure to these rules which shall be used for the matter to which it relates;
(da) "Indian Accounting Standards" means the Indian Accounting Standards referred to in rule 3 and Annexure to the Companies (Indian Accounting Standards) Rules, 2015 [clause (da) inserted vide - Notification No. G.S.R. 680(E) dated 04.09.2015] [Notified / Effective on 07.09.2015]
(e) “Schedule” means the Schedule to the Act;
(f) “section” means the section of the Act;
(2) The words and expressions used in these rules but not defined and defined in the Act or in the Companies (Specification of definitions details) Rules, 2014, shall have the meanings respectively assigned to them in the Act or in the said Rules.
2A. Notice of address at which books of account are to be maintained.—For the purposes of the first proviso to sub-section (1) of Section 128, the notice regarding address at which books of account may be kept shall be in Form AOC-5. [Rule 2A has been inserted - Notification No. G.S.R. 37(E) dated 16.01.2015]
3. Manner of books of account to be kept in electronic mode.-
(1) The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.
(2) The books of account and other relevant books and papers referred to in sub-rule (1) shall be retained completely in the format in which they were originally generated, sent or received, or in a format which shall present accurately the information generated, sent or received and the information contained in the electronic records shall remain complete and unaltered.
(3) The information received from branch offices shall not be altered and shall be kept in a manner where it shall depict what was originally received from the branches.
(4) The information in the electronic record of the document shall be capable of being displayed in a legible form.
(5) There shall be a proper system for storage, retrieval, display or printout of the electronic records as the Audit Committee, if any, or the Board may deem appropriate and such records shall not be disposed of or rendered unusable, unless permitted by law:
Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a periodic basis.
(6) The company shall intimate to the Registrar on an annual basis at the time of filing of financial statement-
(a) the name of the service provider;
(b) the internet protocol address of service provider;
(c) the location of the service provider (wherever applicable);
(d) where the books of account and other books and papers are maintained on cloud, such address as provided by the service provider.
Explanation.- For the purposes of this rule, the expression "electronic mode" includes “electronic form” as defined in clause (r) of sub-section (1) of section 2 of Information Technology Act, 2000 (21 of 2000) and also includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) and “books of account ” shall have the meaning assigned to it under the Act.
4. Conditions regarding maintenance and inspection of certain financial information by directors.-
(1) The summarised returns of the books of account of the company kept and maintained outside India shall be sent to the registered office at quarterly intervals, which shall be kept and maintained at the registered office of the company and kept open to directors for inspection.
(2) Where any other financial information maintained outside the country is required by a director, the director shall furnish a request to the company setting out the full details of the financial information sought, the period for which such information is sought.
(3) The company shall produce such financial information to the director within fifteen days of the date of receipt of the written request.
(4) The financial information required under sub-rules (2) and (3) shall be sought for by the director himself and not by or through his power of attorney holder or agent or representative.
4A. Forms and items contained in financial statements - The financial statements shall be in the form specified in Schedule III to the Act and comply with Accounting Standards or Indian Accounting Standards as applicable:
Provided that the items contained in the financial statements shall be prepared in accordance with the definitions and other requirements specified in the Accounting Standards or the Indian Accounting Standards, as the case may be. [sub-rule (4A) has been inserted - Notification No. G.S.R 680(E) dated 04.09.2015] [Notified / Effective on 07.09.2015]
5. Form of Statement containing salient features of financial statements of subsidiaries.-
The statement containing the salient feature of the financial statement of a company’s subsidiary or subsidiaries, associate company or companies and joint venture or ventures under the first proviso to sub-section (3) of section 129 shall be in Form AOC-1 [ AOC-1 substituted vide Notification No. G.S.R (742(E) effective from 27.07.2016]
6. Manner of consolidation of accounts.-
The consolidation of financial statements of the company shall be made in accordance with the provisions of Schedule III of the Act and the applicable accounting standards:
Provided that in case of a company covered under sub-section (3) of section 129 which is not required to prepare consolidated financial statements under the Accounting Standards, it shall be sufficient if the company complies
with provisions on consolidated financial statements provided in Schedule III of the Act.
2[Provided further that nothing in this rule shall apply in respect of preparation of consolidated financial statements by a company if it meets the following conditions:-
(i) it is a wholly-owned subsidiary, or is a partially-owned subsidiary of another company and all its other members, including those not otherwise entitled to vote, having been intimated in writing and for which the proof of delivery of such intimation is available with the company, do not object to the company not presenting consolidated financial statements;
(ii) it is a company whose securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India; and
(iii) its ultimate or any intermediate holding company files consolidated financial statements with the Registrar which are in compliance with the applicable Accounting Standards.] [the second privisio substitued vide Notification No. G.S.R (742(E) effective from 27.07.2016]
Provided also that nothing contained in this rule shall, subject to any other law or regulation, apply for the financial year commencing from the 1st day of April, 2014 and ending on the 31st March, 2015, in case of a company which does not have a subsidiary or subsidiaries but has one or more associate companies or joint ventures or both, for the consolidation of financial statement in respect of associate companies or joint ventures or both, as the case may be. [The second & third proviso inserted vide - Notification No. G.S.R. 723(E) dated 14.10.2014]
Provided also that nothing in this rule shall apply in respect of consolidation of financial statement by a company having subsidiary or subsidiaries incorporated outside India only for the financial year commencing on or after 1st April, 2014. [In Rule 6 the fourth proviso inserted vide - Notification No. G.S.R. 37(E) dated 16.01.2015]
7. Transitional provisions with respect to Accounting Standards.-
(1) The standards of accounting as specified under the Companies Act, 1956 (1 of 1956) shall be deemed to be the accounting standards until accounting standards are specified by the Central Government under section 133.
(2) Till the National Financial Reporting Authority is constituted under section 132 of the Act, the Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India in consultation with and after examination of the recommendations made by the National Advisory Committee on Accounting Standards constituted under section 210A of the Companies Act, 1956 (1 of 1956).
8. Matters to be included in Board’s report.-
(1) The Board’s Report shall be prepared based on the stand alone financial statements of the company and the report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented. [substitued for the words "and the report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented" vide Notification No. G.S.R (742(E) effective from 27.07.2016]
(2) The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2.
(3) The report of the Board shall contain the following information and details, namely:-
(A) Conservation of energy-
(i) the steps taken or impact on conservation of energy;
(ii) the steps taken by the company for utilising alternate sources of energy;
(iii) the capital investment on energy conservation equipments;
(B) Technology absorption-
(i) the efforts made towards technology absorption;
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-
(a) the details of technology imported;
(b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and
(iv) the expenditure incurred on Research and Development.
(C) Foreign exchange earnings and Outgo-
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.
Provided that the requirement of furnishing information and details under this sub-rule shall not apply to a Government Company engaged in producing defence equipment. [ proviso inserted vide - Notification No. G.S.R. 680(E) dated 04.09.2015] [Effective on 07.09.2015]
(4) Every listed company and every other public company having a paid up share capital of twenty five crore rupees or more calculated at the end of the preceding financial year shall include, in the report by its Board of directors, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.
(5) In addition to the information and details specified in sub-rule (4), the report of the Board shall also contain -
(i) the financial summary or highlights;
(ii) the change in the nature of business, if any;
(iii) the details of directors or key managerial personnel who were appointed or have resigned during the year;
(iv) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;
(v) the details relating to deposits, covered under Chapter V of the Act,-
(a) accepted during the year;
(b) remained unpaid or unclaimed as at the end of the year;
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved-
(i) at the beginning of the year;
(ii) maximum during the year;
(iii) at the end of the year;
(vi) the details of deposits which are not in compliance with the requirements of Chapter V of the Act;
(vii) the details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future;
(viii) the details in respect of adequacy of internal financial controls with reference to the Financial Statements.
9. Disclosures about CSR Policy.-
The disclosure of contents of Corporate Social Responsibility Policy in the Board’s report and on the company’s website, if any, shall be as per annexure - [The Companies (Corporate Social Responsibility Policy) Rules, 2014] attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014.
10. Statement containing salient features of financial statements.-
The statement containing features of documents referred to in first proviso to sub-section (1) of section 136 shall be in Form AOC-3.
11. Manner of circulation of financial statements in certain cases.-
In case of all listed companies and such public companies which have a net worth of more than one crore rupees and turnover of more than ten crore rupees, the financial statements may be sent-
(a) by electronic mode to such members whose shareholding is in dematerialised format and whose email Ids are registered with Depository for communication purposes;
(b) where Shareholding is held otherwise than by dematerialised format, to such members who have positively consented in writing for receiving by electronic mode; and
(c) by despatch of physical copies through any recognised mode of delivery as specified under section 20 of the Act, in all other cases.
12. Filing of financial statements and fees to be paid thereon.-
1[Rule 12 sub-rule (1) has been substitued with the following sub-rule (1) - Notification No. G.S.R 680(E) dated 04.09.2015] [Notified / Effective on 07.09.2015]
(1) Every Company shall file the financial statements with Registrar together with Form AOC-4 and the consolidated financial statement, if any, with Form AOC-4 CFS [AOC-4 substituted vide Notification No. G.S.R (742(E) effective from 27.07.2016]
(2) The class of companies as may be notified by the Central Government from time to time, shall mandatorily file their financial statement in Extensible Business Reporting Language (XBRL) format and the Central Government may specify the manner of such filing under such notification for such class of companies.
Explanation.- For the purposes of this sub-rule, the term “Extensible Business Reporting Language” means a standardised language for communication in electronic form to express, report or file financial information by companies under this rule.
(3) The fees or additional fees referred to in sub-section (1) of section 137 and in the second proviso to the said subsection and in sub-section (2) of the said section shall be as specified in the Companies (Registration Offices and Fees) Rules, 2014.
13. Companies required to appoint internal auditor.-
(1) The following class of companies shall be required to appoint an internal auditor which may be either an individual or a partnership firm or a body corporate, namely:- [substituted for the words 'or a firm of internal auditors' vide Notification No. G.S.R (742(E) effective from 27.07.2016]
(a) every listed company;
(b) every unlisted public company having-
(i) paid up share capital of fifty crore rupees or more during the preceding financial year; or
(ii) turnover of two hundred crore rupees or more during the preceding financial year; or
(iii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year; or
(iv) outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year; and
(c) every private company having-
(i) turnover of two hundred crore rupees or more during the preceding financial year; or
(ii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year:
Provided that an existing company covered under any of the above criteria shall comply with the requirements of section 138 and this rule within six months of commencement of such section.
Explanation.- For the purposes of this rule –
(i) the internal auditor may or may not be an employee of the company;
3[(ii) the term “Chartered Accountant” or “Cost Accountant” shall mean a “Chartered Accountant” or a “Cost Accountant”, as the case may be, whether engaged in practice or not.] [ Explanation (ii) substituted for the words vide Notification No. G.S.R (742(E) effective from 27.07.2016] .
(2) The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.
[F. No. 1/19/2013-CL-V]
RENUKA KUMAR, Jt. Secy.
1. Prior to Substitution, Rule 12 sub-clause (1) be read as under:
(1) Every company shall file the financial statements with Registrar together with Form AOC-4.
2. Prior to Substitution w.e.f 27.07.2016, second provisio to Rule 6 read as under:
Provided further that nothing in this rule shall apply in respect of preparation of consolidated financial statement by an intermediate wholly-owned subsidiary, other than a wholly-owned subsidiary whose immediate parent is a company incorporated outside India:
3. Prior to Substitution w.e.f 27.07.2016, second explanation to Rule 13(1)(c)(ii) read as under:
" the term “Chartered Accountant” shall mean a Chartered Accountant whether engaged in practice or not"