As
per Section 2(40) of the CA, 2013 “financial statement” in relation to a
company, includes—
(i)
a balance sheet as at the end of the financial year;
(ii)
a profit and loss account, or in the case of a company carrying on any activity
not for profit, an income and expenditure account for the financial year;
(iii)
cash flow statement for the financial year;
(iv)
a statement of changes in equity, if applicable; and
(v)
any explanatory note annexed to, or forming part of, any document referred to
in sub-clause (i) to sub-clause (iv)
Provided
that the financial statement, with respect to One Person Company, small company
and dormant company, may not include the cash flow statement;
It
means all the companies whether private or public needs to include cash flow
statement in its financial statement except the One Person Company, small
company and dormant company. Now we have to check the definition of One
Person Company, small company and dormant company
One Person Company: As per sec 2(62) of The CA, 2013 -One Person Company”
means a company which has only one person as a member;
Small company
Sec
2(85) ‘small company’’ means a company, other than a public company,—
(i)
paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore
rupees; and
(ii)
turnover of which as per its last profit and loss account does not exceed two
crore rupees or such higher amount as may be prescribed which shall not be
more than twenty crore rupees: Provided that nothing in this clause
shall apply to—
(A)
a holding company or a subsidiary company;
(B)
a company registered under section 8; or
(C)
a company or body corporate governed by any special Act;
Dormant company
As
per sec 455 of The CA, 2013 “Dormant Company” means a company
(i) Where a company is formed and registered under this Act
for a future project or to hold an asset or intellectual property and has no significant
accounting transaction, such a company or an inactive company may
make an application to the Registrar in such manner as may be prescribed for
obtaining the status of a dormant company.
Explanation.—For the purposes of this section,—
(i) “inactive company” means a company which has not been
carrying on any business or operation, or has not made any significant
accounting transaction during the last two financial years, or has not filed
financial statements and annual returns during the last two financial years;
(ii) “significant accounting transaction” means any
transaction other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this
Act or any other law;
(c) allotment of shares to fulfil the requirements of this
Act; and
(d) payments for maintenance of its office and records.
Crux and comparison analysis:
A
public company will never be a small company, therefore incase of private
companies , the limit has been decreased as far as turnover is concerned
earlier it was exceeds 50 crores. Now it has been decreased to 2 crores
resulted in increase in the compliance of the companies. In nutshell , it is
applicable to almost all the private companies as 2 crores turnover is very
nominal amount. Also there is no limits of borrowing as specified in accounting
standards.MCA has also put a check on paid-up share capital for the
applicability of CFS( Which is 50Lacs)
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