Process of Change in Financial Year of Company
[1]By ordinance, 2018: Power of Tribunal has been transferred to Central Government. Therefore, after
notification of ordinance Financial Year of Company can be change with approval
of Central Government:
MCA on 18th
December, 2018 has published Companies (Incorporation) Fourth Amendment Rules,
2018. They shall come into effect from 18th December, 2018.
By these rules MCA amended Rule 40 “application under section
2(41) change in financial year”
Power of Central Government assigned to Regional Director for approval of Change in Financial year
of Company.
In this
editorial the author shall discuss the process of Change in Financial Year of
Company after 02nd November, 2018.
This is
article no. 408 of the series of editorials written by the author on corporate
laws
{Including
Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.
Short
Summary:
Keeping in view the provisions of
Section 137 in relation to Consolidation
of Financial Statement many companies having foreign subsidiaries or
associates required to change its financial year as per foreign company.
Through this brief write up an
attempt has been made to unlock the technicalities related to Change in
Financial Year of Companies prescribed under Companies Act, 2013.
We believe that the
procedure for Change in Financial Year of Companies along with sample
resolutions discussed through this article would be of some help for everyone.
REGULATORY REQUIREMENTS:
The procedure for Change in
financial year is expounded within the Act with certain statutory requirements
such as alteration of Articles of Association (AOA) of the company.
Legal Provisions related to Change in financial year are given
in Section 2(41) of the Companies Act, 2013 read with Rule 40 of Companies (Incorporation)
[2]Rules,
2014.
1. Section
2(41): It provides for Financial Year.
2.
Rule
40 of Companies (Incorporation) Fourth Amendment Rules, 2018: Application under
sub-section (41) of section 2 for change in financial year.
EXTRACT
OF PROVISION:
financial
year", in relation to any company or body corporate, means the period
ending on the 31st day of March every year, and where it has been incorporated
on or after the 1st day of January of a year, the period ending on the 31st day
of March of the following year, in respect whereof financial statement of the
company or body corporate is made up:
DETAILED
PROCEDURE FOR CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY:
First Step:
STEP – I: Convey Board Meeting of Directors: (As
per section 173 and SS-1)
STEP –II: Held Board Meeting: (As per section
173 and SS-1)
§
To
consider In-principal approval Change in Financial Year by altering Articles.
§ Get Approval to Alteration in Article
of Association and recommending the proposal for members' consideration by way
of special resolution.
§ Fixing the date, time, and venue of the
general meeting and authorizing a director or any other person to send the
notice for the same to the members.
§ To approve Notice of EGM along with
explanatory statement to be annexed with the notice as per Section 102(1) of
the Act.
STEP-
III: Issue Notice of General Meeting: (Section 101)
Notice of EGM shall be
given at least 21 days before the actual date of EGM. EGM can be called on
Shorter Notice with the consent of atleast majority in number and ninety five
percent of such part of the paid up share capital of the company giving a right to vote at such a meeting:
§
All the Directors.
§
Members
§
Auditors of Company
The notice shall specify the place, date, day and time of
the meeting and contain a statement on the business to be transacted at the EGM
Second Step:
STEP-
IV: Hold General Meeting: (Section 101)
§
Check
the Quorum.
§ Check whether auditor is present, if
not. Then Leave of absence is Granted or Not. (As per Section- 146).
§ Pass Special
Resolution.[Section-114(2)]
§ Approval of Alteration in AOA for
Change in Financial Year
STEP- V: Filing of form with ROC:
(Section 117)
File Form MGT-14 (Filing of Resolutions and
agreements to the Registrar under section117) with the Registrar along with the
requisite filing within 30 days of passing the special resolution, along with
given documents:-
§
Certified
True Copies of the Special Resolutions along with explanatory statement;
§ Copy of the Notice of meeting send to
members along with all the annexure;
§ A printed copy of the Altered Article
of Associations.
Note: It is relevant to note that First you have to
file form MGT.14
Third Step:
STEP-
VI: Drafting an Filing of Application with Regional Director (in Form RD-1)-
Application
in Regional Director shall be file at within 60 days from passing of Special
Resolution in e-form RD-1.
Application
shall be accompanied by following Documents:
Following documents
are required to be attached with application for change in financial year under
Section 2(41) of the Act:
§ Copy of articles of association with
proposed alterations
§ Copy of Minutes of General Meeting
(mentioning details of votes cast in favour or against)
§ Copy of Attendance Sheet of General
Meeting
§ Copy of Minutes of Board Meeting.
§ Certified true copy of Board
Resolution.
§ Power of Attorney or Memorandum of
Appearance
§ Details of any previous application
made within last five years for change in financial year and outcome thereof
along with copy of order, if any.
Application
shall mentioned following Information:
§ Grounds and reasons for the Application.
Fourth Step:
File Form RD-1
with the Regional Director with all the above mentioned annexure like:
§ MOA & AOA
§ General Meeting Minutes and Attendance
Sheet
§ Copy of Board Minutes along with CTC of
Board Resolution
Form required filing
with Roc: File e-form INC-28
with ROC within 30 days of confirmation of change in financial
year from Regional Director.
[1]
All the matters filed with NCLT before date of commencement of the Ordinance,
2018 shall be disposed off by the Tribunal in according with earlier
provisions.
[2]
Companies (Incorporation) Fourth Amendment Rules, 2018
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