Move will enable early fraud detection, ensure statutory compliance
The Centre has moved a step closer towards making certain unlisted companies prepare financial results on a periodical basis, operationalising a provision in company amendment law enacted in September last year.
Besides requiring certain classes of unlisted companies — yet to be specified — to prepare financial results on a periodical basis, the government now wants this information to be filed with the Registrar of Companies (RoC) within 30 days of the completion of the specified period. The period for which results are to be prepared is yet to be announced although the buzz is that quarterly reporting could be introduced. The format of the financial results are also expected to be announced by the government.
The government has also stipulated that the financial results will need Board approval and need to undergo a completed audit or limited review as may be prescribed.
On Friday, through an executive order, the Corporate Affairs Ministry (MCA) brought into effect the provision in company law providing for these changes.
The latest move by MCA would improve governmental oversight of unlisted companies, especially the large private companies, observers say.
In India, there are technically 16 lakh registered companies of which about 11-12 lakh are active ones. There are about 6,500 listed companies with the rest being in the unlisted space.
Team – Intellex Strategic Consulting Pvt Ltd
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