Schedule III under Companies Act, 2013 has been amended by Ministry of Corporate Affairs (MCA) resulting in increased detailed disclosure requirements in the Financial Statements vide notification dated 24th March, 2021, which shall be effective from 1st April, 2021, which means these amendments shall effect the financial statements ended as on 31st March, 2022 i.e. FY 2021-22.
Schedule III under Companies Act, 2013 contains general instructions for preparation of Balance Sheet and Statement of Profit and Loss of a Company. It contains three divisions which are as below:
Division I – Financial Statements for a company whose Financial Statements are required to comply with the Companies (Accounting Standards) Rules, 2006.
Division II – Financial Statements for a company whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015.
Division III – Financial Statements for a Non-Banking Financial Company (NBFC) whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015.
Schedule III Amendments under Companies Act, 2013 by MCA detailed below:
– Rounding off requirement:
Now Companies have to round off the figures appearing in the financial statements, earlier it was optional. Further, the criteria for rounding off shall be based on “total income” in place of “turnover”.
| Total Income | Rounding Off |
| Less than 100 Crore Rupees | To the nearest hundreds, thousands, lakhs or millions or decimals thereof |
| 100 Crore Rupees or more | To the nearest lakhs, millions or crores, or decimals thereof |
– Promoters Shareholding:
The note on Share Capital in the Financial Statements shall mention details of the Shareholding of the Promotes along with changes, if any, during the Financial Year under review w.e.f. 1st April, 2021.
The format of such disclosure shall be as follows:
| Shares held by Promotes at the end of the Year | % Change during the Year | |||
| S. No. | Promoter’s Name | No. of Shares | % of total shares | |
| Total |
– Reclassification of Current Maturities of Long-Term Borrowings:
As per the Amendment Current Maturities of Long-Term Borrowings during the Financial Year are required to be disclosed separately under the head ‘Short Term Borrowings’ instead of ‘Other Current Liabilities’.
– Trade Payables:
Companies are required to provide an ageing schedule in respect of trade payables for the period covering less than one year, 1-2 years, 2-3 years, and more than 3 years in the following format:
| Particulars | Outstanding for following periods from due date of payment | Total | |||
| Less than 1 yr. | 1-2 yrs. | 2-3 yrs. | More than 3 yrs. | ||
| (i) MSME | |||||
| (ii) Others | |||||
| (iii) Disputed dues- MSME | |||||
| (iv) Disputed dues- Others |
When no due date of payment is specified, the date of the transaction shall be considered for the purpose of this disclosure. Unbilled dues shall be disclosed separately by the Company.
– Reclassification of Security Deposits:
Security Deposits maintained with the Company shall be reclassified as ‘Other Non- Current Assets’ instead of ‘Long term loans and advances.’
– Trade Receivables:
Companies are required to provide an ageing schedule in respect of Trade Receivables for the period of less than 6 months, 6 month – 1 year, 1-2 year, 2-3 year and more than 3 years in the following format:
| Particulars | Outstanding for following periods from due date of payment | Total | ||||
| Less than 6 months | 6 months- 1 year | 1-2 yrs. | 2-3 yrs. | More than 3 yrs. | ||
| (i) Undisputed Trade receivables- considered good | ||||||
| (ii) Undisputed Trade Receivables- Considered Doubtful | ||||||
| (iii) Disputed Trade Receivables considered good | ||||||
| (iv) Disputed Trade Receivables considered doubtful |
When no due date of payment is specified, the date of the transaction shall be considered for the purpose of this disclosure. Unbilled dues shall be disclosed separately by the Company.
– Property, Plant and Equipments:
In Division I, the word Tangible Assets has been replaced with Property, Plant, and Equipment (PPE).
A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinations, amount of change due to revaluation (if change is 10% or more in the aggregate of the net carrying value of each class of Property, Plant and Equipment) and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately.
Also, a company is required to provide the details of the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the Company in the prescribed format. If such immovable property is jointly held with others, details are required to be given to the extent of the Company’s share.
If the Company has revalued its property, plant and equipment or intangible asset, it shall disclose as to whether the revaluation is based on the valuation by a registered valuer.
These disclosures are based on the requirements under the revised CARO 2020.
Furthermore, a company is required to provide ageing schedule in respect of:
(a) Capital Work-In-Progress (CWIP);and
(b) Intangible Assets under developments for less than I year, 1-2 years, 2-3 years and more than 3 years.
– Utilization of borrowings:
Where the Company has not used the borrowings from banks and financial institutions for the purpose for which it was taken at the Balance Sheet date, the Company shall disclose the details of where they have been used.
– Disclosure on Loans/ Advance to Directors/ KMP/ Related parties:
Companies are required to make disclosures where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, that are:
(a) repayable on demand or
(b) without specifying any terms or period of repayment
– Details of Benami Property held:
In case, any proceedings have been initiated or pending against the entity under the Benami Transactions (Prohibitions) Act, 1988, the corresponding disclosures shall be provided in the financial statements. The Company shall disclose the followings:
a. Details of such property, including year of acquisition,
b. Amount thereof,
c. Details of Beneficiaries,
d. If property is in the books, then reference to the item in the Balance Sheet,
e. If property is not in the books, then the fact shall be stated with reasons,
f. Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor then the details shall be provided,
g. Nature of proceedings, status of same and company’s view on same.
– Wilful Defaulter:
Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, following details shall be given:
a. Date of declaration as wilful defaulter,
b. Details of defaults (amount and nature of defaults),
* “wilful defaulter” here means a person or an issuer who or which is categorized as a wilful defaulter by any bank or financial institution (as defined under the Act) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
– Relationship with Struck off Companies:
Where the Company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Company shall disclose the following details:-
| Name of struck off Company | Nature of transactions with struck-off Company | Balance outstanding | Relationship with the Struck off company, if any, to be disclosed |
| Investments in securities | |||
| Receivables | |||
| Payables | |||
| Shares held by stuck off company | |||
| Other outstanding balances (to be specified) |
– Registration of charges or satisfaction with Registrar of Companies:
Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.
– Compliance with number of layers of companies
Where the Company has not complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such downstream companies shall be disclosed.
– Disclosure of Ratios
The amendment requires the Companies covered under division I and II of schedule III to disclose the following ratios:
a. Current Ratio,
b. Debt-Equity Ratio,
c. Debt Service Coverage Ratio,
d. Return on Equity Ratio,
e. Inventory turnover ratio,
f. Trade Receivables turnover ratio,
g. Trade payables turnover ratio,
h. Net capital turnover ratio,
i. Net profit ratio,
j. Return on Capital employed,
k. Return on investment.
The Company shall explain the items included in the numerator and denominator for computing the above ratios and an explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding year.
– Compliance with approved Scheme(s) of Arrangements:
Where any Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements have been accounted for in the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standards’ and deviation in this regard shall be explained.
Additional Disclosure in Notes to Profit & Loss Account:
– Undisclosed Income (Reconciliation of Income Tax and Companies Act):
The Company shall give details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961, unless there is immunity for disclosure under any scheme and also shall state whether the previously unrecorded income and related assets have been properly recorded in the books of account during the year.
– CSR Disclosure:
Where the company covered under section 135 of the Companies Act, the following shall be disclosed with regard to CSR activities: –
a. amount required to be spent by the company during the year,
b. amount of expenditure incurred,
c. shortfall at the end of the year,
d. total of previous years shortfall,
e. reason for shortfall,
f. nature of CSR activities,
g. details of related party transactions, e.g., contribution to a trust controlled by the company in relation to CSR expenditure as per relevant Accounting Standard,
h. where a provision is made with respect to a liability incurred by entering into a contractual obligation, the movements in the provision during the year should be shown separately.
– Details of Crypto Currency or Virtual Currency:
Where the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the following shall be disclosed: –
a. profit or loss on transactions involving Crypto currency or Virtual Currency
b. amount of currency held as at the reporting date,
c. deposits or advances from any person for the purpose of trading or investing in Crypto Currency/ virtual currency.