Company granted permission to change financial year aligning with holding company's practices The National Company Law Tribunal (NCLT) granted permission to 'BF Precision Private Limited' to change its financial year from 1st April to 31st March to ...
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Company granted permission to change financial year aligning with holding company's practices
The National Company Law Tribunal (NCLT) granted permission to "BF Precision Private Limited" to change its financial year from 1st April to 31st March to January 1st to December 31st, aligning with its Holding Company's reporting practices for consolidation purposes. This decision, made under the First Proviso of Section 2(41) of the Companies Act, 2013, emphasizes compliance with statutory provisions and international standards for effective accounting practices. The application was disposed of, with the order to be forwarded to the Registrar of Companies for record-keeping.
Issues: Application under Sec. 2(41) of the Companies Act, 2013 to change financial year from 1st April to 31st March to January 1st to December 31st.
Analysis: The application before the National Company Law Tribunal (NCLT) requested permission for a company, "BF Precision Private Limited," to alter its financial year from 1st April to 31st March to January 1st to December 31st, in accordance with the First Proviso to Sec.2(41) of the Companies Act, 2013. The applicant company, a subsidiary of M/s. Bill Forge Private Limited, sought this change due to the alignment of its financial year with the Holding Company, M/s. Mahindra CIE Automotive Limited, which follows the calendar year for financial reporting. The applicant company passed a Board Resolution on 11th November 2016 to seek NCLT's approval for this change, supported by the Holding Company's Board resolution and the latest Balance Sheet. The application was forwarded to the Registrar of Companies (ROC) but was not received by the Tribunal's Registry.
The Tribunal noted that the applicant company, being a subsidiary of M/s. Bill Forge Private Limited, which is in turn a subsidiary of M/s. Mahindra CIE Automotive Limited, and ultimately a subsidiary of M/s. CIE Automotive SA, an Ultimate Holding Company incorporated outside India, required alignment of its financial year with the Ultimate Holding Company for consolidation of accounts outside India. In the exercise of powers under the First Proviso of Section 2(41) of the Companies Act, 2013, the Tribunal granted permission for the applicant company to change its financial year to January 1st to December 31st for consolidation purposes. The application was disposed of, and a copy of the order was to be forwarded to the ROC for information and record-keeping.
This judgment highlights the legal process involved in changing a company's financial year, emphasizing the need for alignment with the Holding Company's reporting practices for consolidation purposes. The decision by the NCLT underscores the importance of following statutory provisions and aligning financial reporting with international standards for effective consolidation and accounting practices.
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