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Annexed vs Attached
These terms have considerably totally different meanings within the Companies Act. therefore is that the case with `approval’ and `adoption’,
The words `annexed’ and `attached’ are similar in the common idiom, however, have considerably totally different meanings within the Companies Act, 2013 and Companies Act, 1956, and with respect to annual accounts cropping up at varied places within the Act. As per Section 227 (2) of the Companies Act 1956, an auditor shall create a report back to the members of the corporate on the accounts examined by him, and on each balance-sheet and profit and loss (P&L) account and on each different document declared by the Act to be a part of, or annexed to, the balance-sheet or P&L account.
As per the Companies Act 1956
Annexed: P&L account (Section 216); list of investments (Section 372 (10)); and any data needed to incline by the Act, allowed and given within the kind of notes or documents (Section 211(6)).
Attached: Particulars needed to incline within the case of subsidiaries (Section 212(1)); auditor’s report (Section 216); and directors’ report (Section 217(1)).
While the aforesaid rule holds smart usually, within the case of directors’ report, Section 222 provides associate degree exception — any reference within the Act to documents annexed or needed to be annexed shall not embrace a directors’ report, provided any data that’s needed to incline within the accounts could also be given within the directors’ report and if given within the directors’ report, it shall render the directors’ report `annexed’.
The auditors, therefore, can get to think about the data given within the directors’ report for the needs of their report and thereto extent, the directors’ report can become an auditable document.
A case in purpose may be a demand on the corporate contested by it, which might be within the nature of a contingent liability. whereas Schedule VI to the Act needs the knowledge to be disclosed during a note to the balance sheet, the administrators could, if they contemplate the problem to be very important, subsume it within the directors’ report instead of within the notes to the accounts. Once this can be done, the administrators could choose to not disclose the matter once more within the notes to the accounts. this can be a counselled procedure as repetition is tedious and serves no purpose.
On the opposite hand, if a full revelation is formed within the directors’ report and a short version is given within the notes to the account, there’s a component of risk. coping with a sensitive matter in two completely different places in two different versions carries with it its own risks, particularly in these times once commas and full stops (or absence of them) square measure fiercely fought over. Therefore, an urged course of action is, once notes to accounts are ready, to incorporate a statement drawing the members and readers attention to the very fact that the matter has already been incorporated and dealt within the directors’ report. If this is often done, then the directors’ report becomes an auditable document albeit to the extent of the actual matter restricted within the directors’ report.
In annual accounts, this provision is never invoked or taken advantage of. One could consult with ITC Ltd’s annual accounts for the year concluded March thirty-one, 2001. ITC selected to debate a high excise duty demand in a complete manner within the directors’ report with an appropriate relevancy the notes to accounts and restricted it in note (v) of notes to accounts within the following manner.
The standing on excise matters, that is treated as an annexure to those accounts, as printed during this year’s report of the administrators below the Excise section. As per the opinion of the administrators, the corporate doesn’t accept any further liability.
“Approval and adoption”
According to the scheme of things within the Companies Act 1956, as per Section 215 (3), the balance sheet and P&L account got to be approved by the board of directors and signed on their behalf before they’re submitted to the auditors for his or her report on that.
If the complete procedure is to be followed, the board of directors can essentially hold an extra directors’ meeting to contemplate the audit report and the addendum to the directors’ report, that is time overwhelming and expensive, or at least pass a circular resolution that once more is time overwhelming. Therefore, so as to remedy this situation, the Department of Company Affairs (DCA), in an exceedingly pragmatic move, has kick off with recommendation to the company sector to the impact that the auditors and therefore the management ought to perform in an exceedingly harmonious manner and therefore the auditors might create accessible their remarks on the accounts to the board of directors at the time of approval of accounts which might alter them to reply to the auditor’s remarks, thereby avoiding them to hold another meeting
While the Board of Directors ` approves’ accounts, it’s the annual general meeting (AGM) that `adopts’ the accounts. The Act additionally contemplates things wherever annual general meeting AGM might not adopt the accounts. According to Section 220 (2), if in the AGM of an organization before which balance -sheet is tabled doesn’t adopt the balance-sheet, or the meeting is adjourned while not adopting the balance-sheet, or if the AGM of an organization for any year has not been held, a statement informing that reality and of the explanations for it’s to be filed beside the balance-sheet filed with the Registrar of firms (RoC).
This raises a noteworthy question on the legitimacy of the accounts in the subsequent year once the closing balances contained within the un-adopted accounts become the gap balances of the following year. According to the viewpoint of the Expert Advisory Committee of the Institute of Chartered Accountants of India, there’s no bar against an organization making ready the accounts for the following years with the gap balances incorporated from the un-adopted accounts.
However, it’d be the duty of the auditors to confer with that reality within the report of the following year (Expert Advisory Committee Opinions, Volume I, page 268). Presumably, once the accounts of the following year are adopted by the members within the AGM, there would not be a necessity to form a remark within the following years’ reports.
As per Companies Act 2013
According to the provisions of Companies Act, 2013 and the Companies (Registration Offices and Fees) Rules, 2014, document have to be attested and authenticated by some professional’s or Individual(s). Further, we will discuss that documents have to be attested and by whom.
The provision under Companies Act, 2013 with interpretation
Interpretation according to the Rule 8 of The Companies (Registration Offices and Fees) Rules, 2014:
(1) An e -form shall be authenticated by authorized signatory using a DSC.
(Interpretation and Suggestion: – A person has to be approved and authorised to Digitally Sign the E-Forms, for that we are able to significantly approved one person for the actual purpose, In the normal parlance of industry we can authorize any of the Director for the specified period in effect through resolution for filling that exact e-form.
We can additionally do for ease:- Authorize any of the director for the specified period in first board meeting to file all the e-form(s) for the year, as we’ve got to inform the Authority number and therefore the date of passing of such resolution within the explicit e-form, therefore it’s better to pass one resolution within the 1stBoard meeting of the financial year.)
(2) Change in any directors or secretaries, the e -form relating to the appointment of such directors or secretaries has to be filed by an existing director or the secretary of the company.
(Interpretation and Suggestions :- When there’s new appointment or any amendment in Board of Directors or re-appointment than the e-form for that appointment/Re-appointment/change ought to be signed/ filed by continued Director/ Secretary which Director/Secretary ought to be aside from, whose appointment goes to be filed within the specific kind. The aim for such filing is that very same individual can’t file/authenticate its own Appointment/Re-appointment/Change.)
(3) The authorized signatory and the professional, who certify e-form shall be responsible for the correctness of the contents of the enclosures attached with the electronic form.
(Interpretation and Suggestions:- It is the responsibility of the authorized signatory and the professional who certify the e-Form. The professional and authorised signatory ought to take care whereas certifying/authenticate the e-form, one mistake will result in vast penalty/prosecution or maybe cancellation of membership .)
(4) Every person approved for authentication of e-forms, documents or applications etc., that is needed to be filed or delivered as per the Act or rules created under that, shall acquire a digital signature certificate from the Certifying Authority for the aim of such authentication and such certificate shall not be valid unless it’s of sophistication II or category III specification beneath the knowledge Technology Act, 2000 (21 of 2000).
(Interpretation and Suggestions:- The person Certifying/authenticate the e-form must obtain a Valid digital signature certificate(DSC) of class II or Class III from the Certifying Authority.)
(5) The electronic forms needed to be filed as per the Companies Act or the rules and provisions under it shall be genuine on behalf of the corporate by the manager or Director or Secretary of the corporate or different key social control personnel.
(Interpretation and Suggestion:- Such E-form ought to be attested on behalf of the corporate by any of the below under:
(i) Managing director or
(ii) Director or
(iii) Company Secretary of the corporate or
(iv) different key managerial personnel (KMP as outlined in Section two (51) of the Act)
(6) Scanned image of documents shall be of original signed documents relevant to the e-forms or forms and additionally, the scanned document image shall not be left blank whereas not bearing the actual signature of the approved person.
(Interpretation and Suggestions:- The Scanned documents/attachment of specific e-form ought to be originally signed and No scanned sign ought to be used and will not use sd/- in respect of signature. conjointly within the attachment, no page ought to be left blank. Such documents/ attachment ought to be clear and visual.)
(7) It shall be the only real responsibility of the one who signed the form and professional who is certifying the form to make sure that each one the desired attachments relevant to the form are hooked up utterly and decipherable as per provisions of the Act, and rules created under it to the forms or application or come back filed.
(Interpretation and Suggestions:- It is the responsibility of the one that certifying/authenticates the E-form to make sure the attachment ought to be complete and as per provisions of the Act, and rules created under that and may be kept in mind that no Omission of Facts.)
(8) The documents or application filed might contain an authorisation letter or power of attorney issued to an Advocate or CA or Cost Accountant or Company Secretary who is in whole time practice and to any others person supported by Board resolution to make appearance in front of the registering or approving authority failing that a Director or key social control personnel will make representation before such authority .
(Interpretation and Suggestions:- If the authority is given to Professionals or the other person to represent on behalf of the corporate than Such Document /form/application ought to be supported by POA/Board Resolution.)
(9) Where any instance of filing document, application or any sort of return etc, containing a false or deceptive data or omission of important truth, requiring action under section 448 or section 449 is ascertained, the person shall be liable under section 448 and 449 of the Act.
(Interpretation and Suggestions:- As mentioned earlier that the professionals or the person authenticating the Document ought to keep in mind that no Omission of Facts or dishonourable info mustn’t be provided by design or accidentally. Provision of Sec 448 and 449 of the Act ought to be remembered.)
(10) Without prejudice to the other liability, just in case of certification of any kind, document, application or any return under the Act containing wrong or false or deceptive info or omission of material truth or attachments by the person, the Digital Signature Certificate shall be de-activated by the Central Government until a judgment is taken during this regard.
(Interpretation and Suggestions:- Apart from alternative Liabilities for wrong/ false/ dishonest information/ omission of important truth and reality, the Digital Signature Certificate shall be de-activated by the Central Government until a final judgment of the explicit matter.)
(11) The Central Government shall establish and maintain for the filing of electronic forms, documents and applications, and for viewing and review of documents within the electronic written record or for getting certified copies thereof-
(a) an internet site or portal to produce access to the electronic registry; and
(b) as several Registrar’s Facilitation Offices as could also be necessary and at such places and for such time because the Central Government could confirm.