India plans new financial reporting norms for unlisted firms

New Delhi: Unlisted companies might soon be required to submit their financial statements to the government on a quarterly or half-yearly basis, according to an official.

There are more than 11 lakh unlisted companies that are active in the country and the proposal also assumes significance against the backdrop of instances of financial woes at some large unlisted entities.

The corporate affairs ministry is looking at introducing provisions in the companies law that would require unlisted firms to furnish financial statements every three months or six months.

The aim is to have updated financial details about systemically-important companies that are not listed, the official told PTI.

Listed companies are required to disclose their financials every three months under Sebi regulations.

In the case of unlisted companies, they are currently not required to furnish financial statements on a quarterly or half-yearly basis.

The official said there would be thresholds for deciding which categories of unlisted companies would have to submit their financial statements on a quarterly or half-yearly basis.

To bring this into effect, amendments would be required in the Companies Act.

Currently, an unlisted company can submit its financial statement and annual returns to the ministry at least six months after completion of a fiscal.

After the end of a financial year, a company has to hold its Annual General Meeting (AGM) within six months and the financial statement has to be submitted within 30 days of the meeting.

Within 60 days of the AGM, the company is required to furnish the annual returns.

Under the current system, the ministry would not be updated in case there are any significant financial issues during the course of a financial year, as per the official.

In case the ministry decides to bring in quarterly or half-yearly financial statements reporting requirement for unlisted firms, then the Companies Act, 2013 would have to be amended, the official added.