Financial year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up. [Section 2(41)]
Where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year. [Section 2(41)]
- Section 2 of Companies Act, 2013
- Rule 40 of the Companies (Incorporations) Fourth Amendment Rules, 2018
- Regulation 30 and 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Mandatory Requirements for Change in Financial Year
- Only a Company which is a holding or subsidiary or associate company shall apply for change in financial year to consolidate the accounts with their Parent Foreign Company.
- Approval required of the Concerned Regional Director for the Change in the Financial Year of the Company.
The Following Procedure is to be followed for “Change in Financial Year”
- Convene a Meeting of Board of Directors [As per section 173 & Secretarial Standard-1 (SS-1)]
- Issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
- Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
- Hold a meeting of Board of Directors of the Company to discuss the agenda.
- Pass requisite Board Resolution with respect to Change in the Financial Year.
- Authorize Company Secretary or any Director to sign and file the relevant form with Registrar of Companies/Regional Director and to do such acts, deeds and things as may be necessary to give effect to the Board’s decision.
- Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
- Making the disclosure of the Board meeting [Regulation 30 and 46(3) of the SEBI (LODR) Regulations, 2015]
In case of listed company, shall first disclose to stock exchange(s) (where shares are listed) about the Board Meeting as soon as reasonably possible but not later than the following:
- thirty minutes from the closure of the meeting of the board of directors in which the decision pertaining to the event or information has been taken
- twelve hours from the occurrence of the event or information, in case the event or information is emanating from within the listed entity
- twenty four hours from the occurrence of the event or information, in case the event or information is not emanating from within the listed entity, from the end of the Board Meeting and update the same on the website of the company within 2 working days.
- Application to Regional Director for change in financial year under section 2(41) [Rule 40 of the Companies (Incorporation)Fourth Amendment Rules, 2018]
- The application for approval of concerned Regional Director under sub-section (41) of section 2, shall be filed in e-Form RD-1 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by the following documents, namely
- Grounds and reasons for the application
- A copy of the minutes of the board meeting at which the resolution authorizing such change was passed, giving details of the number of votes cast in favour and or against the resolution
- Power of Attorney or Memorandum of Appearance, as the case may be
- Details of any previous application made within last five years for change in financial year and outcome thereof along with copy of order.
- Where the Regional Director on examining the application, referred to in above point (A), finds it necessary to call for further information or finds such application to be defective or incomplete in any respect, he shall give intimation of such information called for or defects or incompleteness, on the last intimated e-mail address of the person or the company, which has filed such application, directing the person or the company to furnish such information, or to rectify defects or incompleteness and to re-submit such application within a period of fifteen days. Maximum of two re-submissions shall be allowed.
- In case where the application is found to be in order, Regional Director shall allow and convey the order within thirty days from the date of application or within thirty days from the date of last re-submission, as the case may be.
- Filing of Form INC-28 with ROC
The order conveyed by the Regional Director shall be filed by the company with the Registrar in Form INC-28 within thirty days from the date of receipt of the order along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.