Amendments to Schedule III to the Companies Act, 2013

Amendments to Schedule III to the Companies Act, 2013

The ministry of Corporate Affairs in exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 has made further amendments in Schedule III to the Companies Act, 2013 with Notification G.S.R. 207(E) dated on 24-03-2021.

The said notification is effective from 01-04-2021.

Introduction

Sub-section (1) of section 129 of the Companies Act 2013, mandates the Financial Statements of any company shall be prepared in the manner as summarized below.

(a)   Financials Statements shall give a true and fair view of the state of affairs of the Company.

(b)  Financial Statements shall comply with the Accounting Standards prescribed under section 133 of the Companies Act, 2013.

(c)   Financial statements shall be prepared in the form prescribed under Schedule III of the Companies Act, 2013.

The Ministry of Corporate Affairs (MCA) has made certain amendments in Schedule III, and those changes are required to be adopted in preparing the Financial Statements in accordance with Schedule III.

 

Amendments to the Schedule III to the Companies Act, 2013 are briefly summarized below.

1)     The word “Total Income” is to be used in the Statement of Profit and Loss

The word “Turnover” is deleted in the Statement of Profit and Loss. The word “Total Income” is to be used in the Statement of Profit and Loss instead of the word “Turnover” which is presently used.

 

2)     Rounding off the figures in the Financial Statements

The figures appearing in the Financial Statements shall be rounded off depending upon its Total Income as given below.

Total Income	Rounding Off
Less than Rs. 100 Crores	To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
More than or equal to Rs. 100 Crores	To the nearest lakhs, millions or Crores, or decimals thereof

 

3)     Percentage of Shareholding by the Promoters

The note on Share Capital in the Financial Statements of a Company shall also mention the details of shareholding by the promoters.

This disclosure is in addition to the details of shares in the Company held by each shareholder holding more than 5 percent which is presently been given in the Financial Statements.

So, with respect to the Shareholding Pattern of a Company following two disclosures are to be given

a)     Shareholding Pattern of shareholders holding more than 5% in the Company

b)     Shareholding Pattern of Promoters of the Company

The said disclosure is to be given in the format given below.

Sl.No.	Promoter Name	No of Shares	% of Total Shares	% of change during the year

 

 

4)     Classification of Current Maturities of Long-term Borrowings

The current maturities of Long-term Borrowings shall be disclosed under the head “Short-term borrowings”. Currently, it is classified under the head “Other Current Liabilities”.

 

5)     Ageing Schedule for Trade Payables due for payment.

After the note Trade Payables, the “Trade payable due for Payments” shall be disclosed by providing the “Trade Payables Ageing Schedule” in the format given below.

Particulars	Less than 1 Year	1-2 Years	2-3 years	More than 3 years	Total
i)MSME
ii)Others
iii)Disputed dues – MSME
iv)Disputed dues – Others

 

6)     Additional Disclosure for Property, Plant and equipment and Intangible Assets on account of Revaluation.

The amount of change in the Property, Plant and Equipment and Intangible Assets due to revaluation  is to be disclosed if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment.

 

7)     Classification of Security Deposits

The Security Deposits of a Company are required to be disclosed under the head “Other Non-current Assets”. Currently, it is classified under the head “Long-term Loans and advances”.

 

8)     Ageing Schedule for Trade Receivables due for payment.

After the note Trade Receivables, the “Trade receivables due for Payments” shall be disclosed by providing the “Trade Receivables Ageing Schedule” in the format given below.

Particulars	Less than 6 months	6 months -1 year	1-2 years	2-3 years	More than 3 years	Total
Undisputed Trade receivables – considered good
Undisputed Trade Receivables – considered doubtful
Disputed Trade Receivables considered good
Disputed Trade Receivables considered doubtful

 

9)     Usage of Borrowings for non-specific purposes.

Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been used.

 

10) Additional Regulatory Information

a)     The details of the Title deeds of Immovable Property not held in name of the Company shall be given in the format prescribed along with the reason for not being held in the name of the Company.

 

b)     Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.

 

c)     Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties.

They shall be classified as

(i)              repayable on demand or

(ii)            without specifying any terms or period of repayment

Also, the percentage of loans and advances to the total loans and advances at the Balance Sheet date is required to be provided in the format given below.

Type of Borrower	Amount of loan or advance in the nature of loan outstanding	% to the total Loans and Advances in nature of loans
Promoters
Directors
KMPs
Related Parties

 

 

d)     Capital work-in-progress: - CWIP Ageing Schedule and CWIP Completion Schedule shall be given.

“CWIP aging schedule” shall be given in the format as given below.

CWIP	Less than 1 year	1-2 years	2-3 years	More than 3 years	Total
Projects in progress
Projects temporarily suspended

 

“CWIP completion schedule” shall be given in the format as given below.

 

CWIP	Less than 1 year	1-2 years	2-3 years	More than 3 years	Total
Project 1
Project 2

The same way the “Intangible assets under development aging schedule” and the “Intangible assets under development completion schedule” shall also be given.

 

e)     Details of Benami Property held

Where any proceedings have been initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

 

f)      Borrowings on the basis of security of current assets

Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose the following:-

Whether, the quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts. If not, a summary of reconciliation and reasons of material discrepancies, if any adequately disclosed.

 

g)     Wilful Defaulter

Where a Company is a declared wilful defaulter by any bank or financial institution or other lenders the date of declaration as wilful defaulter, amount of defaults, and nature of defaults is to be disclosed.

 

h)     Relationship with Struck off Companies -Where the Company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Company shall disclose the following details.

 

Name of struck off Company	Nature of transactions with struck-off Company	Balance outstanding	Relationship with the Struck off company, if any, to be disclosed
	Investment in securities
	Receivables
	Payables
	Shares held by stuck off company
	Other outstanding balances (to be specified)

 

 

i)      Registration of charges or satisfaction with Registrar of Companies

Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.

 

j)      Compliance with the number of layers of companies.

Where the company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such downstream companies shall be disclosed.

 

k)     Accounting Ratios.

The Company shall disclose the following ratios Current Ratio, Debt-Equity Ratio, Debt Service Coverage Ratio, Return on Equity Ratio, Inventory turnover ratio, Trade Receivables turnover ratio, trade payables turnover ratio, Net capital turnover ratio, Net profit ratio, return on capital employed, Return on Investment.

 

l)      Disclosure on Compliance with approved Scheme(s) of Arrangements.

Where any Scheme of Arrangements have been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements have been accounted for in the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standards’ and deviation in this regard shall be explained.

 

m)   Disclosure on Utilisation of Borrowed funds and share premium.

 

n)     Details of CryptoCurrency or Virtual Currency

Where the Company has traded or invested in Cryptocurrency or Virtual Currency during the financial year, the following shall be disclosed:-

(a) Profit or loss on transactions involving Cryptocurrency or Virtual Currency. (b) Amount of currency held as at the reporting date.

(c) Deposits or advances from any person for the purpose of trading or investing in Crypto Currency/ virtual currency.

 

o)     Reporting on Corporate Social Responsibility (CSR)

Where the company covered under section 135 of the companies act, the following shall be disclosed with regard to CSR activities:-

(a) Amount required to be spent by the company during the year,

(b) Amount of expenditure incurred,

(c) Shortfall at the end of the year,

(d) Total of previous years shortfall,

(e) Reason for the shortfall,

(f) Nature of CSR activities,

(g) Details of related party transactions

(h) The movements in the provision during the year where a provision is made with respect to a liability incurred by entering into a contractual obligation.

 

 

 

✍

CA Sanjay R Shetty