Industry bodies have appealed to the government seeking extension of the current financial year, ending March 31, by at least three months till June-end, citing the present economic situation amid the coronavirus pandemic.
Representatives from industry chambers including CII, FICCI and Assocham met officials of the Ministry of Corporate Affairs here last week and apprised the government of the issues being faced by them, and gave various suggestions.
"In the current scenario, any financial statement prepared for April 2019 to March 2020 will not give true and fair view as it does not represent one complete business cycle of the entity. Hence, it is imperative to increase the given period to disclose the correct picture of business performances of a company," the Confederation of Indian Industry (CII) told the ministry in its submission.
It further argued that the current economic situation in India and the world over has resulted in impaired valuations of all assets, including commodities and financial assets.
CII also called for allowing companies to pass circular resolutions for restricted matters without the requirement of conducting a board meeting for approving such matters for a period up to June 30, 2020.
"With the current backdrop of coronavirus, the entire economy is getting stagnated for at least a couple of quarters which are kind of missing quarters for corporates. Further, to view the annualised financial statement of any corporate entity, one has to appropriately factor in the impact of current quarter," it said.
Section 179(3) of Companies Act, 2013 read with Rule 8 of the Companies (Meeting of Board and its Powers) Rules, 2014, provides certain matters to be dealt with by the Board of Directors only by means of resolutions passed at meetings of the Board and these matters cannot be passed by circular resolution.
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These matters include making calls on shareholders in respect of money unpaid on their shares; authorising buyback of securities; issuance securities, including debentures, whether in or outside India; approving financial statement and the Board's report; among others.
As follow-up of the meeting, Assocham has submitted a representation to the Ministry of Corporate Affairs stating that extension by three or six months for finalisation of annual accounts would be required to reflect the true and fair statement about businesses.
"This once-in-century kind of an event like virus attack would hopefully recede in the next few weeks or months. It would be only after normalcy returns in the economy that the companies would be able to resume their regular operations. Return to normalcy is required for any fair statement of accounts," Assocham Secretary General Deepak Sood said.
The chamber's letter to Minister of Finance and Corporate Affairs Nirmala Sitharaman and the MCA Secretary Injeti Srinivas recommended that forbearances be given under the Companies Act, 2013.
"AGM for all companies should be allowed to be held within six months of 30th June, 2020, or 30th September 2020 i.e., latest by 31st December, 2020 or 31st March 2021 respectively, and on case-to-case basis. Subsequent relaxation is also desirable in terms of extension of time for filing income-tax returns for companies," Assocham said.