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2017 (2) TMI 699 - Tri - Companies LawPrayer to follow financial year from 1st January to 31st December as per the First Proviso to Sec.2(41) of the Companies Act, 2013 - consolidation of accounts - Held that - As in the Board Resolution passed by the applicant company on 11 November, 2016, it has been decided to seek permission from the NCLT to follow the calendar year starting from 1st January to 31st December as financial year, to which the Board of Directors of M/s. Bill Forge Private Limited does not have any objection. A copy of the said Resolution is placed on record. Besides this, the latest Balance Sheet of the Holding Company incorporated in India with whom the Applicant company is aligning its financial year, is also placed on record along with the Board resolution dated 11th November, 2016 passed by the Holding Company. The proof of despatch of a set of application to the Registrar of Companies, Coimbatore, Tamil Nadu, is also placed on file. The set of application seems to have been forwared on 2nd of December 2016 to the ROC concerned. Thus we are satisfied that the applicant company which is a subsidiary of M/s. Bill Forge Private Limited (Holding Company), which is further a subsidiary of M/s. Mahindra CIE Automotive Limited (the Holding Company of M/s. Bill Forge Private Limited) and which is a subsidiary of M/s. CIE Automotive SA (Ultimate Holding Company), a Company incorporated outside India , essentially requires to follow financial year from January 1st ending December 31st as its financial year for consolidation of its accounts outside India. Therefore, in exercise of the powers conferred under First Proviso of Section 2(41) of the Companies Act, 2013, we allow the application of the Company.
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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