Right of Member to Copies of Audited Financial Statement

Right of Member to Copies Of Audited Finacial Statement

Section 136 corresponds to Section 219 of the Companies Act, 1956 i.e. right of a member to copies of balance sheet and auditors' report. The provisions of section 136 provide for the right of members, debenture holders, to have copies of audited financial statements.

Copy of Financial Statement (defined under section 2(40) of the Companies Act, 2013 shall be sent to persons as envisaged under Section 136 of the Act.

Section 136 also tells about the mode, time limit and other additional compliance related to the same.

Section 136, Rights of Members to Copies of Audited Financial Statements Read with Rule 11 of Companies Accounts Rules, 2014.

Applicability: All Companies, additional Compliance in case of Listed entities (any security listed) and companies having foreign subsidiaries

Documents to be sent (Sub Section 1)

– Financial Statements,

– Consolidated Financial Statements,

– Auditors Report

–  Other documents required by law to be attached to Financial Statements

• That is to be laid at AGM for approval

To whom to send (Sub Section 1)

– Every Member

– Every Debenture Trustee

– Other persons so entitled

A time limit of sending the Documents (Sub Section 1)

Twenty-One Days (not Twenty‐One Clear Days)

Shorter Period (first Proviso to Sub Section 1)

–  Consent of members should be obtained in case of:

–  Company Having Share Capital

• Majority in Number and 95% of Paid-up Share Capital (Present at the Meeting).

– Not having Share Capital

• Not less than 95% of total voting power (exercisable at Meeting)

Special Benefit to Listed Companies (Second Proviso to Sub Section 1)

The aforesaid provisions are deemed to be complied with if the following conditions are satisfied.

1. The aforesaid documents are made available for inspection at its registered office during working hours.

2. The documents shall be made available Twenty–One Day before the Meeting. (Not Twenty–One Clear Days).

3. Salient features of the Documents (or copies of such documents) shall be sent in form AOC–3 or AOC–3A to all the persons as aforesaid.

4. AOC-3 or AOC-3A shall be sent Twenty–One Day before the Meeting. (Not Twenty–One Clear Days).

The Shareholders, who ask for full financial statements shall be provided as such.

Mode of Sending Financial Statements (in prescribed Companies only)(Third Proviso to Sub Section 1 read with Rule 11)

– Prescribed Companies

The Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed.

Type of Company	Particulars	Amount (In Rs. Cr.)
Listed Company	–	–
Public Company	Net Worth	1
	Turnover	10

1. Electronic Mode: 

The financial statement may be sent by electronic mode to such members whose:

i) Shareholding is in dematerialized format and whose email Ids are registered with Depository for communication purposes;
ii) Shareholding is held otherwise than by dematerialized format and who have consented in writing for receiving by electronic mode; and

2. Physical Copy:

In all other cases, the financial statement may be sent by the despatch of physical copies through any recognized mode of delivery as specified.

A listed company shall also place its financial statements including consolidated financial statements if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company.

Additionally, every company having a subsidiary or subsidiaries shall,

a) place separate audited accounts in respect of each of its subsidiary on its website, if any;
b) provide a copy of separate audited financial statements respect of each of its subsidiary, to any shareholder of the company who asks for it.

Punishment for Contravention of Section 136 of Companies Act, 2013

According to section 136(3), if any default is made in complying with the provisions of Section 136 of CA 2013:

1) The company shall be liable to a penalty of ₹25,000; and
2) Every officer of the company who is in default shall be liable to a penalty of ₹5,000.