Companies are to make more disclosures in the Financial Statements

The Ministry of Corporate Affairs vide its Notification dated 24th March 2021 [G.S.R. (E)] has amended the Schedule III of the Companies Act, 2013 (“the Act”) which shall come into force starting the 1st day of April 2021.

The Amendments bring in more compliance and disclosure requirements in the Financial Statements to be prepared by companies. Majority of the amendments are in congruence to the amendments covered in Companies (Auditors and Report Order) and the Companies (Indian Accounting Standards) Amendment Rules, 2020.

The following are the Brief amendments to the Schedule.

  1. The optional rounding off of Turnover will now have to be rounded off on Total Income.
  2. Additional Disclosures to Balance Sheet that include Disclosing the Shareholding of Promotors (as per the format states in the Schedule), Trade Payables that are due for payment (as per the format stated in the Trade Payables ageing Schedule), Trade Receivables that are outstanding (as per the format stated in the Trade Receivables ageing Schedule).
  3. Current maturities of Long-term borrowings shall be disclosed separately.
  4. Instead of Tangible Assets, the words “Property, Plant and Equipment” needs to be mentioned under the heading Tangible Assets.
  5. Plant, Property and Equipment shall also disclose the amount of change due to revaluation if the change is 10% or more in the aggregate of the net carrying value of each class of intangible assets. The Company shall also disclose whether the revaluation is based on valuation by a registered valuer. The details of immovable property whose title deeds are not held in the name of company also needs to be disclosed (as per the format stated in schedule).
  6. Security Deposits maintained shall be reclassified as ‘Other Non- Current Assets’ instead of ‘Long Term Loans and Advances’.
  7. Disclosures regarding the Loans and Advances where loans are granted to promoters, directors, KMPs and related parties (as defined under the Act) either severally or jointly with any other person, that are –
    1. Repayable on Demand or
    2. Without specifying any terms of period of repayment
  8. Intangible assets under development, whose completion is overdue or has exceeded the cost of the original plan, the Intangible Assets under Development Completion Schedule shall be inserted.
  9. Any proceedings that have been initiated against the company under the Benami Transactions (Prohibition) Act, 1988 the following shall be disclosed –
    1. Details of the Property
    2. Amount thereof
    3. Details of Beneficiaries
    4. If property is in the books, then reference to the item in the Balance Sheet. If not mentioned in the Books, then the fact shall be stated with reasons
    5. Nature of proceedings, status, and the company’s view
  10. If the Company has any transactions with the Struck Off Companies under Section 248 of the Act, it shall disclose the Nature of Transaction, Balance Outstanding, the Relationship with the Struck off Company.
  11. Where a company is a declared willful defaulter by any bank or financial institutions or other lender, following details shall be given:
    1. Date of declaration as willful defaulter,
    2. Details of defaults (amount and nature of defaults).
  12. Following Ratios are to be disclosed –
    1. Current Ratio
    2. Debt – Equity Ratio
    3. Debt Service Coverage Ratio
    4. Return on Equity Ratio
    5. Inventory Turnover Ratio
    6. Net Profit Ratio
    7. Return on Capital Employed

For the Detailed Amendment on the Schedule III, follow the link -

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