Section 129: Financial statement
This section is for ensuring that companies prepare and present accurate and compliant financial statements.
Penalty
(7) If a company contravenes the provisions of this section, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
The section, clause by clause
What the section says
In plain terms
(1)The financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III:
The financial statements must give a true and fair view of the company's state of affairs, comply with the accounting standards, and be in the form provided for in Schedule III, unless the company is an insurance, banking, or electricity company, or another class of company with a specified form of financial statement.
provisoProvided that the items contained in such financial statements shall be in accordance with the accounting standards:
provisoProvided further that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of financial statement has been specified in or under the Act governing such class of company:
provisoProvided also that the financial statements shall not be treated as not disclosing a true and fair view of the state of affairs of the company, merely by reason of the fact that they do not disclose— (a) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938 (4 of 1938), or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
(1)(b)in the case of a banking company, any matters which are not required to be disclosed by the Banking Regulation Act, 1949 (10 of 1949);
(1)(c)in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by the Electricity Act, 2003 (36 of 2003);
(1)(d)in the case of a company governed by any other law for the time being in force, any matters which are not required to be disclosed by that law.
(2)At every annual general meeting of a company, the Board of Directors of the company shall lay before such meeting financial statements for the financial year.
The Board of Directors must present the financial statements for the financial year at every annual general meeting of the company.
(3)Where a company has one or more subsidiaries or associate companies, it shall, in addition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company and of all the subsidiaries and associate companies in the same form and manner as that of its own and in accordance with applicable accounting standards, which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub-section (2):
provisoProvided that the company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiary or subsidiaries and associate company or companies in such form as may be prescribed:
provisoProvided further that the Central Government may provide for the consolidation of accounts of companies in such manner as may be prescribed.]
(4)The provisions of this Act applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements referred to in sub-section (3).
The provisions of this Act applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements referred to in sub-section (3).
(5)Without prejudice to sub-section (1), where the financial statements of a company do not comply with the accounting standards referred to in sub-section (1), the company shall disclose in its financial statements, the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any, arising out of such deviation.
If a company's financial statements do not comply with the accounting standards, the company must disclose the deviation, the reasons for it, and the financial effects in its financial statements.
(6)The Central Government may, on its own or on an application by a class or classes of companies, by notification, exempt any class or classes of companies from complying with any of the requirements of this section or the rules made thereunder, if it is considered necessary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.
The Central Government can exempt a class or classes of companies from complying with any of the requirements of this section if it is in the public interest, and such exemption can be unconditional or subject to specified conditions.
(7)If a company contravenes the provisions of this section, the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person charged by the Board with the duty of complying with the requirements of this section and in the absence of any of the officers mentioned above, all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
If a company contravenes the provisions of this section, the managing director, whole-time director in charge of finance, Chief Financial Officer, or other person responsible can be punishable with imprisonment for up to 1 year or a fine of at least 50,000 rupees but not more than 5 lakh rupees, or both.
explanationExplanation.—For the purposes of this section, except where the context otherwise requires, any reference to the financial statement shall include any notes annexed to or forming part of such financial statement, giving information required to be given and allowed to be given in the form of such notes under this Act.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The words “with imprisonment for a term which may extend to one year or” omitted by Act 29 of 2020, s. 24 (w.e.f. 21-21- 2020).
- 2. The words “or with both” omitted by s. 24, ibid. (w.e.f. 21-12-2020).
- 1. Subs. by Act 1 of 2018, s. 33, for sub-section (3) (w.e.f. 7-5-2018).
- 2. Ins. by Act 29 of 2020, s. 25 (w.e.f. 22-1-2021).
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.