Amendments in Schedule III of Companies Act
For quite some time now, the Ministry of Corporate Affairs (MCA) has been striving to improve transparency in how critical financial statements are being reported. In line with this, the Ministry had released a statement stating that from April 2021, they were making certain additional disclosures in financial statements mandatory. These were released as amendments to Schedule III of the Companies Act.
Schedule III of the Companies Act
The new disclosures mostly pertain to virtual money transactions, commonly known as cryptocurrency. Another sphere of work that has been included is concerning expenditures for CSR that a company makes in one financial year.
In this blog, we walk you through the details pertaining to each of these disclosures.
- Disclosures for Crypto Currency or Virtual Currency
Every company that has traded or invested in these modes of transactions during a given financial year is now required to provide details regarding:
- Gains and losses on Crypto/Virtual transactions
- The quantum of currency in possession at the date of reporting
- Investments or advances sought to indulge in these transactions
- Disclosures for Corporate Social Responsibility (CSR)
Every company that is covered under section 135 of the companies Act is now required to provide details of their CSR activities about:
- The estimated amount that is likely to be needed for CSR during the year,
- Expenditure for CSR activities in the financial year
- Excess amount spent at the end of the year,
- Historical data of excess amount over the last year,
- The explanation for shortfalls or excess amounts,
- Details about the CSR activities,
- Details about any related transactions for CSR, like contribution to a trust controlled by the company
- Elements of a contract that was entered into where liability was incurred, and thus provisions were given.
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