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Note on Amendments to Schedule III of the Companies Act, 2013 for Non-Ind

Note on Amendments to Schedule III of the Companies Act, 2013 for Non-Ind

Note on Amendments to Schedule III of the Companies Act, 2013 for Non-Ind

The Ministry of Corporate Affairs has introduced certain new amendments to the existing Schedule III of the Companies Act, 2013 on 24th March, 2021, which requires the companies to make disclosures w.r.t key parameters pertaining to the business, in the Balance Sheet and Notes to Accounts. The said Notification is effective from 1st April, 2021 i.e. the Notes to Accounts should include said amendments in the Notes to Accounts of Balance Sheet and Profit & Loss Statement for the period ended on 31st March, 2022 and onwards.

Following are the newly added amendments to the Schedule III of the Companies Act, 2013:

For Division I – Financial Statements for a company whose Financial Statements are required to comply with the Companies (Accounting Standards) Rules, 2006 i.e. Non-Ind AS Companies
For Part I- Balance Sheet:

  1. In Para 4 of the General Instructions following has been substituted:
  • Depending upon the Total Incomeearlier Turnoverof the company, the figures appearing in the Financial Statements shallearlier may be rounded off as given below:


 [Total Income- earlier Turnover] Rounding off
less than one hundred crore rupees To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
one hundred crore rupees or more To the nearest lakhs, millions or crores, or decimals thereof.

Hence, the companies will now be required to mandatorily round off figures.

  1. Shareholding of Promoters: Companies are now required to disclose the shares held by the promoters at the end of the financial year and % change during the year in notes to accounts in tabular form as per the format prescribed in the Schedule.
  1. Short Term Borrowings: As per the Amendment, Current Maturities of Long-Term Borrowings during the Financial Year are required to be disclosed separately under the head ‘Short Term Borrowings’ instead of ‘Other Current Liabilities’.
  2. Trade payables aging schedule: Disclosure of trade payables due for repayment is to be provided separately in the Notes to Accounts. Further, it shall be prepared in tabular form and whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed.
  3. Trade Receivables outstanding: Ageing schedule shall be prepared for trade receivables in a tabular form in the format as prescribed in the Schedule, whether or not, due date of payment is specified on bill. However, unbilled dues shall be separately disclosed.
  4. Disclosure for Tangible and Intangible Asset: At the beginning and end of the reporting period, a reconciliation of the gross and net carrying amounts of each class of assets showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation and other adjustments and the related depreciation and impairment losses or reversals shall be disclosed separately, if the changes is 10% or more in each class of asset.
  5. Borrowing from Banks and Financial Institutions: As at 31st March, the companies shall disclose the details of those funds which were borrowed from banks and financial institutions for a specific purpose. 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.

Additional Regulatory Information:

  1. Title deeds of Immovable Property: The companies now are required to give details of all those immovable properties whose title deeds are not in the name of the company, except those immovable properties in which the company is lessee and lease agreement are executed, in the format as prescribed in the Schedule.


  1. Loan Granted to Promoters, Directors, KMPs and the Related Parties: The company shall disclose all the loans and advances in the nature of loan granted to promoters, directors, KMPs and related parties, severally or jointly with any other person either repayable on demand, without specifying any terms or period of repayment.


  1. Capital WIP aging Schedule: Disclosure regarding Capital WIP giving details of projects in progress and projects temporarily suspended, year wise, as per tabular format prescribed in the Schedule is mandated.


  1. Intangible Assets under development aging schedule: Similar to disclosure of Capital WIP, disclosure regarding Intangible Assets under development giving details of projects in progress and projects temporarily suspended, year wise, as per tabular format prescribed in the Schedule is mandated.


  1. Details of Benami Property: Company shall disclose all the benami property in which proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rule made thereunder, disclosures shall be made in the manner prescribed in Schedule.


  1. Security of current assets against borrowings: Where the company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose details like whether quarterly returns or statements of current assets filed by the company with banks or financial institutions are in agreement with the books of accounts.


  1. Wilful Defaulter: If the company is declared as wilful defaulter by the bank or financial institution or any other lender, then such disclosures as prescribed in the Schedule viz. date of declaration, details of default shall be made by the company in the manner prescribed.


  1. 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 details viz. name of the struck off company, nature of transactions with such company, balance outstanding if any etc


  1. 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.


  1. Compliance with 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.


  1. Analytical Ratios: The company shall explain the financial statement line items included in numerator and denominator for computing the ratios viz. current ratio, debt-equity ratio, return on equity ratio etc. Moreover, if any change in the ratio is more than 25% as compared to the preceding year then explanation for the same shall be provided.


  1. Compliance with approved Scheme(s) of Arrangements: Where any Scheme of Arrangements has 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.


  1. Utilisation of Borrowed funds and share premium: Where company has advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall directly or indirectly lend or invest or provide guarantee or security, then certain disclosures like date and amount of fund advanced or loaned or invested and a declaration under FEMA to be disclosed. This disclosure requires company to cover transactions that do not take place directly between the company and the ultimate beneficiary but are camouflaged by including a pass- through entity in order to hide the ultimate beneficiary.


  1. Grants or donations received in case of section 8 companies: This additional disclosure requires Section 8 companies to disclose separately in the notes to accounts, the details regarding grants or donations received.


  1. Undisclosed income: Where a company has surrendered or disclosed any income under the relevant provisions of the Income Tax Act and which are not disclosed earlier shall be disclosed in the books of accounts, unless there is immune impact.


  1. Corporate Social Responsibility: Where a company under section 135 of the Companies Act, 2013, then details shall be disclosed with regard to CSR activities viz amount required to be spent by the company during the year, amount of expenditure incurred etc.


  1. Crypto Currency or Virtual Currency: If any company has traded or invested in Crypto Currency or Virtual Currency then following disclosures shall be made in the financial statements:-


  • Profit and loss made from crypto currencies.
  • Amount of currency held at reporting date.
  • Deposit or advance taken from any person for trading or investment in crypto.

If you need any further assistance with the amendments to the schedule III of the Companies Act, 2013, get in touch with us.