TaxTMI 
TaxTMI 
RE-OPENING OF ACCOUNTS UNDER NEW COMPANY LAW
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....E-OPENING OF ACCOUNTS UNDER NEW COMPANY LAW<br>By: - Dr. Sanjiv Agarwal <br>Corporate Laws / IBC / SEBI<br>Dated:- 2-11-2013<br><br>Statutory Provisions (Section 130) Section 130 of the Companies Act, 2013 provides as follows - (1) A company shall not re-open its books of accounts and shall not recast its financial statements, unless an application in this regard is made by the Central Governme....
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....nt, the Income-tax authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that - (i) the relevant earlier accounts were prepared in a fraudulent manner; or (ii) the affairs of the company were mismanaged during the relevant period, casting a do....
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....ubt on the reliability of financial statements. Provided that the court or the Tribunal, as the case may be, shall give notice to the Central Government, the Income-tax authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned and shall take into consideration the representations, if any, made by that Government or the authorities, Securities an....
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....d Exchange Board or the body or authority concerned before passing any order under his section. (2) Without prejudice to the provisions contained in this Act the accounts so revised or re-cast under sub-section (1) shall be final. This is a new section which seeks to provide for the re-opening of books of accounts and recasting its financial statements on an order by a competent court or Tribun....
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....al if it was found that earlier accounts were prepared in fraudulent manner or financial statements are not reliable due to mismanagement of affairs of the company. There is no corresponding section available in Companies Act, 1956. Scope of Provision The provisions of section 130 provide for provisions relating to re-opening or re-casting of books of accounts of the company. Accordingly, i) A....
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.... company shall not re-open its books of accounts and shall not recast its financial statements, unless an application in this regard is made by any one or more of the following - a) the Central Government, or b) the Income-tax authorities, or c) the Securities and Exchange Board of India (SEBI), or d) any other statutory regulatory body or authority or any person concerned, and e) an order in....
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.... this regard is made by a court of competent jurisdiction or the Tribunal. ii) The re-opening and recasting of financial statements is permitted only for the following reasons - a) the relevant earlier accounts were prepared in a fraudulent manner; or b) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements. iii) The C....
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....ourt or the Tribunal, as the case may be, shall give the notice to- a) the Central Government, b) the Income-tax authorities, c) the Securities and Exchange Board, d) any other statutory regulatory body or authority concerned and shall take into consideration the representations, if any, made by Central Government or the income tax authorities, Securities and Exchange Board or the body or auth....
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....ority concerned before passing any order under this section. iv) The accounts so revised or re-cast under this section shall be final. Director's report of the year in which such provisions are invoked, should provide for the reasons or circumstances in which such revisions were warranted. It may be noted that the Tribunal will include National Company Law Tribunal (NCLT). This provision provid....
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....es for both, reopening of books after accounts have been closed and recast of financial statements.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....