Company's Financial Statements : Understand its meaning and Filing Process 2024

If you are an entrepreneur and you have a business in India then you must file annual returns and financial statements to MCA. By providing the annual financial statements to MCA, your company will show transparency to the stakeholders. Also, it will ensure that all the compliance connects with legal requirements and maintains your company's reputation.

However, filing annual returns and financial statements is important for your company's stakeholders to understand your financial health and performance. Other than stakeholders, the creditors, and customers also need to know your company’s past years' performances, so filing financial statements every year will help your business gain authority in the market. Below in the article, we shared reasons why you should file annual statements to MCA and what is the procedure.

What are Financial Statements?

Financial statements are the most sensitive and important documents which contain the annual financial data systematically so that these can be comprehended by the reader or users. Financial statements show a picture of the company's financial status. This is like a health report of your business.

Filing these statements is an essential requirement for companies to operate in India. The Ministry of Corporate Affairs (MCA) has established regulations that mandate companies to submit their financial statements annually. The financial statements include three parts:

1. Balance Sheets
2. Profit & Loss Accounts
3. Cash Flow

The definition of financial statements is clearly defined under the Companies Act, 2013. Reporting of financial statements is a mandatory requirement under the Companies Act, 2013. Under the Act, there are only two forms, namely, AOC-4 and MGT-7 which are prescribed for annual filing in Delhi. Both forms are filed online to ROC.

Related Post: Understand Section 447 of the Companies Act 2013

Why Reporting Financial Statements to MCA is Important?

Companies need to file their financial statements with the MCA and below are the several reasons why this is necessary.

• It is a legal obligation for companies registered in India to file financial statements. This ensures that you comply with the Companies Act, 2013, and other relevant regulations. Failure to do so can result in penalties, fines, and even legal repercussions.
• Filing financial statements promotes transparency and accountability in corporate operations. It allows stakeholders such as investors, creditors, employees, and regulators to assess a company's financial health, performance, and governance practices.
• Filing financial statements every year demonstrates that the company follows financial reporting standards and best practices. This helps to enhance credibility and build trust among investors, lenders, and other stakeholders.
• So, the process of filing financial statements with the MCA is crucial for ensuring legal compliance, promoting transparency and accountability, and building credibility and trust.

Documents Required for Filing Financial Statements 

For filing the financial statements for private companies, the following documents are required: 

• Balance sheet

• Profit and loss account

• Annual return

• Cost audit report

• Compliance certificate

• Board's report

• Auditors' report

• CSR policy details

• Statement of subsidiaries

How to File Financial Statements with MCA

In India, the form used to file business financial statement of company is Form AOC-4. To submit financial statement for company with the MCA, follow the steps explained below:

1. Prepare financial statements following the Indian Accounting Standards or the applicable accounting framework. Make sure the financial statement includes the balance sheet, profit and loss statement, cash flow statement, and notes to accounts. 

Note: Make sure to examine and certify the accuracy and fairness of the financial statements before filing them with MCA.

2. Before filing financial statements, the board of directors must call a meeting to appoint statutory auditors who will independently examine and certify the accuracy and fairness of the financial statements. Keep the board resolution and audited financial statements as records.

3. Obtain board approval and the auditor's report before filing financial statements with the MCA within the prescribed timelines. 

4. For filing eform AOC-4, the applicant needs to visit the MCA's online portal. Thereafter, the applicant must login into the portal to upload this form. After login, the applicant has to enter a valid corporate identification number (CIN) for cancellation of unused issued shares of one class and increase in share capital. Then, using the drop-down menu, the purpose of eform must be selected. 

5. The eform must be digitally signed and then submitted. If the person digitally signing the eForm AOC-4 is a Director, then Director Identification Number (DIN) needs to be provided. 

6. Once the form has been filed, an acknowledgement will be sent to the company’s email address.

Make sure to file business financial statements within 30 days from the date of the Annual General Meeting (AGM) to comply with due dates. Failure to meet deadlines can result in penalties and negatively impact the company's reputation.

Benefits of Financial Statements

• Companies need to file their financial statements with the Ministry of Corporate Affairs (MCA) within the deadline to avoid penalties and maintain a positive reputation. There are various benefits to filing financial statements and these are as follows:
• Establishing credibility for business transactions, complying with banking and regulatory requirements, enhancing stakeholder confidence, and avoiding legal consequences.
• By filing financial statements, companies can provide reliable and timely information about their financial performance to stakeholders, including shareholders, creditors, employees, and regulators. This can strengthen relationships and promote a positive image in the business ecosystem.
• Updated financial statements are often required as part of the loan application process for banks and financial institutions.
• Financial statement filing is a crucial aspect of corporate governance and regulatory compliance in India. By meeting the deadlines and complying with the requirements, companies can demonstrate their financial position, stability, and growth potential while avoiding legal consequences and penalties.

Conclusion

Financial statement filing with the MCA in India is a crucial aspect of corporate governance and regulatory compliance. It ensures transparency, accountability, and trust in business operations. By adhering to the prescribed timelines and filing accurate financial statements, companies can reap the benefits of enhanced credibility, access to capital, and stakeholder confidence.

Businesses must recognise the significance of financial statement filing and dedicate the necessary resources to fulfil this vital obligation. To fulfil the vital obligation of financial statement filing, it is important to recognize its significance and allocate the necessary resources. At Registrationwala, we assist the company in filing financial statements.

Frequently Asked Questions (FAQs)

Q1. How are financial statements prepared?

A. For preparing financial statements of a company, accounting transactions recorded in the company’s book are used in accordance with the Indian accounting standards.

Q2. Where to find financial statements of companies?

A. Financial statements of public companies can be found on the MCA portal. Go to the MCA homepage, then click on MCA services. Now, click on View Public Documents. 

Q3. Who needs to file financial statements?

A. All the companies registered under the Companies Act, 2013 are required to file their business financial statements with the Registrar of Companies using eform AOC-4. 

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.