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Exemption is available to unlisted subsidiary companies only, not to holding companies. Not all unlisted subsidiary companies are exempt from preparing consolidated financial statements.

The Ministry of Corporate Affairs, Government of India substituted the Second Proviso of Rule 6 of Companies (Accounts) Rules, 2014 by Companies (Accounts) Amendment Rules, 2016 dated 27.07.2016

After which, on the satisfaction of the following conditions, companies can claim exemption from preparing Consolidated Financial Statements:

• The company should be a wholly/partly-owned subsidiary of another Company.
• Such subsidiary company should neither listed nor being under the process of listing on any stock exchange in India or outside India.
• Such subsidiary company has intimated to its members, other than holding company(ies), over non-preparation of Consolidated Financial Statements in writing and for which the proof of delivery is available with the company.
• No objection has been received from the members over such intimation.
• The ultimate or any intermediate holding company of such subsidiary company files consolidated financial statements with the Registrar of Companies (RoC).
• Such consolidated financial statements of holding companies should comply with the Accounting Standards.

Therefore, the exemption is available to unlisted subsidiary companies only, not to holding companies. Not all unlisted subsidiary companies are exempt from preparing consolidated financial statements. For claiming exemptions, the subsidiary companies are required to comply with conditions mentioned under Second Proviso to Rule 6 of Companies (Accounts) Rules, 2014. However, new rules are silent over the companies which are subsidiaries of Body Corporate incorporated outside India.

 

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