2016 (9) TMI 353 - Tri - Companies Law

Companies Act: Tribunal Allows Subsidiary to Align Financial Year for Consolidation

The Tribunal granted the application under Section 420 read with Section 2(41) of the Companies Act, 2013, allowing the subsidiary company to change its ... Adoption of financial year by subsidiary company same as its holding company - Held that:- As seen the documents along with petition and also the report of the Registrar of Companies, Karnataka, Bengaluru who recommended for change of financial year as requested by the Petitioner Company. Certified copy of latest Balance sheet of the Holding Company is enclosed with Petition. We have seen the Board Resolution of the Petitioner Company and also the consent letter of Holding Company. Affidavit of the Director of the Petitioner Company discloses that Applicant Company is one of the subsidiaries of 'UNIVERSAL ROBOTS A S' and the other subsidiary companies adopted the same calendar year as financial year. So there are grounds to permit the Petitioner Company to adopt calendar year as financial year of Holding Company for the purpose of consolidation of accounts. Accordingly, the following order is passed under section 420 read with section 2 (41) of the Companies Act, 2013:- The Petitioner Company 'UNIVERSAL ROBOTS (INDIA) PRIVATE LIMTIED' is permitted to adopt its financial year as 1st January to 31st December to match with the financial year of the Holding Company. Issues:1. Application under Section 2(41) of the Companies Act, 2013 for changing the financial year pattern.2. Request to permit a subsidiary company to align its financial year with the holding company for consolidation of accounts.3. Compliance with the provisions of the Companies Act, 2013 regarding financial year patterns.4. Consideration of documents, resolutions, and consent letters in support of the application.Analysis:1. The Petition was filed under Section 2(41) of the Companies Act, 2013, seeking permission for the subsidiary company to change its financial year pattern. The Applicant, a Private Limited Company involved in robotics and artificial intelligence, requested to follow the calendar year for financial reporting purposes to align with its holding company's financial year.2. The Applicant Company, a subsidiary of a body corporate registered outside India, aimed to match its financial year (1st January to 31st December) with the holding company's financial year for consolidation of accounts. The Board of Directors passed a resolution supporting this change, and the holding company provided consent for the adjustment.3. The Tribunal considered the provisions of Section 2(41) of the Companies Act, 2013, which allows companies, especially subsidiaries of foreign entities, to adopt a different financial year for consolidation purposes with approval from the Tribunal. The Registrar of Companies recommended the change, and all necessary documents, including balance sheets and resolutions, were reviewed to ensure compliance.4. After examining the application, supporting documents, and the affidavit of the Director confirming alignment with other subsidiary companies, the Tribunal granted the order under Section 420 read with Section 2(41) of the Companies Act, 2013. The Petitioner Company was permitted to change its financial year to match with the holding company's financial year for consolidation purposes, facilitating smoother accounting processes and compliance with the Act.