Section 136 Companies Act: Right of member to copies of audited financial statement

Section 136 of Companies Act: Corporate Governance & Statutory Compliance

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

1. Without prejudice to the provisions of section 101, a copy of the financial statements, including consolidated financial statements, if any, auditor's report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting:

Provided that: in the case of a listed company, the provisions of this sub-section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements:

Provided further that: the Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed:

Provided also that a listed company shall also place its financial statements including consolidated financial statements, if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company:

Provided also that every company having a subsidiary or subsidiaries shall,

a. place separate audited accounts in respect of each of its subsidiary on its website, if any;

b. provide a copy of separate audited financial statements in respect of each of its subsidiary, to any shareholder of the company who asks for it.

2. A company shall allow every member or trustee of the holder of any debentures issued by the company to inspect the documents stated under sub-section (1 ) at its registered office during business hours.

3. If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 136

Section 136 of the Companies Act, 2013 guarantees members, debenture trustees, and other entitled persons the statutory right to receive copies of the company's audited financial statements, auditor's report, and attachments at least twenty-one days prior to the general meeting.

Twenty-One Clear Days Dispatch Mandate: Audited financial statements (including consolidated financial statements, board reports, and auditor reports) must be sent to every member, debenture trustee, and entitled person not less than twenty-one clear days before the date of the meeting.
Shorter Notice Exception Threshold: Statements may be circulated on shorter notice if consented to in writing or by electronic vote by members holding not less than ninety-five per cent of the paid-up share capital carrying voting rights (or ninety-five per cent of total voting power where there is no share capital).
Listed Company Concessions and Subsidiary Inspection Rights: Listed companies may satisfy the section by making copies available for inspection at the registered office and publishing them on their website while circulating a salient statement (Form AOC-3); members retain an absolute statutory right to inspect the financial statements of every subsidiary at the registered office.

Key Landmark Precedents:

B.R. Somavanshi v. Bajaj Auto Ltd., (1998) 93 Comp Cas 845 (Bom): The Bombay High Court held that the requirement of circulating audited balance sheets and profit and loss accounts twenty-one days prior to the AGM is a mandatory statutory safeguard; non-compliance invalidates the adoption of accounts at the general meeting.
N. Narayanan v. Adjudicating Officer, SEBI, (2013) 12 SCC 152: The Supreme Court underscored the paramount right of shareholders to receive timely, complete, and unadulterated financial disclosures, affirming that delayed or false accounting circulation undermines the bedrock of corporate governance.

Courtroom Practice & Strategic Litigation Guidance:

When challenging an AGM resolution adopting annual accounts in an oppression petition under Section 241, calculate the dispatch dates to establish that twenty-one clear days were denied to minority shareholders without obtaining ninety-five per cent shorter notice consents. Further, issue a formal demand to inspect foreign or domestic subsidiary accounts under Section 136(1) proviso; refusal by management constitutes an independent act of oppression.

Section 136: Right of member to copies of audited financial statement

Section 136 of Companies Act: Corporate Governance & Statutory Compliance

Legal Commentary & Landmark Judgments: Section 136