1.12     Query

Authentication of annual accounts

Section 383A of the Companies Act, 1956 requires all companies having a paid-up share capital of more than Rs. 25 lacs to appoint a whole-time Secretary having such qualifications as are prescribed by the Company (Secretary’s Qualifications) Rules, 1975. Section 215 of the Act requires that every balance sheet and profit and loss account should be signed on behalf of the Board of Directors by, among others, the “Secretary, if any”. In this context, the querist has sought the opinion of the Expert Advisory Committee as to whether

(i)         the accounts are properly authenticated in the case of a Company having a paid-up share capital of more than Rs. 25 lacs, which at the relevant time, does not have any Secretary and consequently the annual accounts have been authenticated by the Directors only;

(ii)        if the response to (i) is in the negative, whether there is any duty cast upon the auditor to make a reference to this fact in his audit report.

                                                         Opinion                                                        May 7, 1986

1.The Committee notes that Section 215 of the Companies Act, 1956 lays down as below:

“every balance-sheet and every profit and loss account of a company shall be signed on behalf of the Board of Directors

(ii)        in the case of any other company, by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one”

            (emphasis supplied by the Committee).

2.The Committee is of the view that signing of the balance sheet and the profit and loss account of the company by the secretary is obligatory only if the company has appointed a Secretary, even though it was required to do so u/s 383 (a) of the Companies Act, 1956. The requirements of Section 215 would be met, among other things, if the balance sheet and the profit and loss account are signed by the manager, if any, and requisite number of directors as per Section 215.

3.On the basis of the above, the opinion of the Expert Advisory Committee on the issues raised by the querist is as below

(i)         The accounts are properly authenticated in the case of a company having a paid up share capital of more than Rs. 25 lakhs which at the relevant time does not have any Secretary and the balance sheet and the profit and loss account have been authenticated by the manager, if any, and the directors as per the requirements of Section 215 of the Companies Act, 1956.

(ii)        This question does not arise as the answer to (i) above is not in the negative.

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