The Corporate Affairs Ministry is planning to bring in new provisions in the Companies Law for unlisted companies under which they will have to submit financial statements every three or six months.
“The govt aims to keep track of unlisted companies and be aware of any financial issues if they face during the time,” said a PTI report quoting a government official.
At present, only listed companies are required to update their financials quarterly as per SEBI regulations.
The government might have select categories of unlisted firms who have to submit their financial statements on a quarterly or half-yearly basis.
However, the provision to come into effect would require amendments in the Companies Act.
“If the ministry plans 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.
The development comes in the aftermath of the collapse of IL&FS. The government wants to be aware of the financial crisis of large unlisted firms to avoid such collapse and failures in the future.
Currently, there are around 1.1 million unlisted firms that are active in India.
An unlisted company can submit its financial statement and annual returns to the ministry at least six months after completion of a fiscal.
As per the current financial system, a firm 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 2 months of the AGM, the company is required to furnish the annual returns.
The ministry is hoping to introduce the Bill during the Budget session.