Expert Advisory Committee
ICAI-Expert Advisory Committee
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3.4   Query

 

Clarification regarding Directors’ Report and Auditors’ Report issued consequent to

conversion of a deemed public company to a private limited company.

 

1.A deemed public limited company under section 43A (1) of the Companies Act, 1956, has its accounting year ending on 31.3.1989. The deemed public limited company was converted into a private limited company under section 43A(4) w.e.f. 31.5.1989.

 

2.The querist has sought the opinion of the Expert Advisory Committee on the following issues:

 

a) Whether the Directors’ Report issued after 31.3.1989 on the accounts for the accounting period 1.10.1987 to 31.3.1989 should be addressed to the members of the deemed public limited company or the private limited company.

 

(b) Whether the Auditors’ Report issued after 31.3.1989 on the accounts for the accounting period 1.10.1987 to 31.3.1989 should be addressed to the members of the deemed public limited company or the private limited company.

  

                                                               Opinion                                            November 6, 1989

 

1.The Committee notes that the Directors’ Report and the Auditors’ Report are issued to the members of the company on a particular date. The Committee is of the view that the aforesaid reports should be addressed to the members of that company which is in existence at the time the reports are issued.

 

2.The Committee is accordingly of the following opinion:

 

a) In case the Directors’ Report and the Auditors’ Report are issued before 31.5.1989, they should be addressed to the members of the deemed public limited company since the status of the company was that of a deemed public company before 31.5.1989.

 

b) In case the Directors’ Report and the Auditors’ Report are issued on or after 31.5.1989, they should be addressed to the members of private limited company since the status of the company changed to private limited company w.e.f. 31.5.1989. However, the Directors’ Report and the Auditors’ Report relate to the period during which the company was a deemed public company. In view of this, the fact that the Directors’ Report relate to the period during which the company was a deemed public company should be disclosed in the report in the beginning thereof. It is desirable that similar disclosure is made in the Auditors’ Report also.

 

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