Circulation and Filing of the Financial Statements

In one line

A copy of the audited financial statement with everything attached to it must reach every member at least twenty-one days before the general meeting, and a copy of the adopted statement must reach the Registrar within thirty days of the meeting.

Section 136: the member's right to a copy

Sub-section (1) sets out what is sent, to whom, and when.

What is sent: a copy of the financial statements, including the consolidated financial statements if any, the auditor's report, and every other document required by law to be annexed or attached to the financial statements, which are to be laid before the company in general meeting.

To whom:

1. every member of the company;
2. every trustee for the debenture-holders of any debentures issued by the company; and
3. all other persons so entitled.

When: not less than twenty-one days before the date of the meeting.

The short-notice exception

Sending late is not automatically a default. The first proviso says that where copies are sent less than twenty-one days before the meeting, they are nevertheless deemed to have been duly sent if the members agree, and the majority required is a heavy one.

Ninety-five per cent is deliberately near-unanimous. The right to twenty-one days' notice can be waived, but practically only by everybody.

Listed companies: the abridged route

The second proviso deems sub-section (1) complied with by a listed company if:

1. the documents are available for inspection at its registered office during working hours for twenty-one days before the meeting; and
2. a statement of the salient features in the prescribed form, or copies of the documents as the company thinks fit, is sent to every member and every debenture trustee not less than twenty-one days before the meeting,

unless the shareholders ask for the full financial statements, in which case they must be given.

The further provisos add that the Central Government may prescribe the manner of circulation for companies of prescribed net worth and turnover; that a listed company shall place its financial statements and all attached documents on its website; and that a listed company with subsidiaries shall place separate audited accounts of each subsidiary on its website.

For a foreign subsidiary of a listed company the Act is practical. Where the foreign subsidiary is required by its own country's law to prepare a consolidated statement, placing that consolidated statement on the website suffices. Where the foreign subsidiary is not required to be audited and is not audited, the Indian holding company may place the unaudited statement, with an English translation if it is in another language.