Sunday, March 6, 2011

Important change in Schedule VI of Companies Act, 1956

Earlier Schedule VI stands changed by the new schedule. It is now mandatory for companies to prepare the financial statement/or statement forming part thereof as per the format prescribed in schedule VI. Any addition,deletion and modification as prescribed by the Schedule VI which modifies any compliance requirements in the companies act including Accounting Standards will be modified according. 

But any disclosure requirement specified by Accounting Standards and Companies Act,1956 in addition to the information provided in the financial statement shall be provided by way of  notes or additional statements unless required to be disclosed in the financial statement. 

Notes to accounts shall contain information in addition to that presented in the Financial Statements and shall provide where required

(a) narrative descriptions or disaggregations of items recognized in those statements and 

(b) information about items that do not qualify for recognition in those statements. 

Each item on the face of the Balance Sheet and Statement of Profit and Loss shall be cross-referenced to any related information in the notes to accounts. In preparing the Financial Statements including the notes to accounts, a balance shall be maintained between providing excessive detail that may not assist users of financial statements and not providing important information as a result of too much aggregation.

Section 211 of the Companies Act 1956. The notification reads as under:

General Exemption under Section 211

Section 211 of the Companies Act, 1956 requires that the balance sheet and profit and loss account of a company shall be in the form set out in Part I of Schedule VI or in such other form as may be approved by the Central Government either generally or in any particular case.

The Central Government has, by notification, issued a general exemption whereby the categories of companies in column (2) of the Table below will be exempted from the disclosures given in column 3:-

Serial Number of  Class of Companies Exemptions from para(s) of Part-II  of Schedule VI.

1. Companies producing Defence Equipments para 3(i)(a), 3(ii(a), 3(ii)(d), 4-C,  including Space Research; 4-D (a) to (e) except (d).

2. Export Oriented company para 3(i)(a) 3(ii)(a), 3(ii)(b), 3(ii)(d).  (whose export is more than 20% of the turnover);

3. Shipping companies (Including Airlines); para 4-D (a) to (e) except (d).

4. Hotel companies (including Restaurants); para 3(i)(a) and 3(ii)(d)

5. Manufacturing companies/ para 3(i)(a) and 3(ii)(a).  multi-product companies;

6. Trading companies; para 3(i)(a) and 3(ii)(b).

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