Section 130 of the Companies Act, 2013
Section 130 of the Companies Act, 2013 deals with the Reopening of Accounts on Court's or Tribunal's Orders.
📜 Section 130 – Re-opening of accounts on court’s or tribunal’s orders
This section provides for reopening and recasting of financial statements of a company only under certain exceptional circumstances, and only with the prior approval of a court or tribunal.
🔹 Key Provisions:
When Can Accounts Be Reopened?
The Central Government, the Income Tax authorities, the Securities and Exchange Board of India (SEBI), or any other statutory regulatory body or authority, or any person concerned, may apply to a court or the National Company Law Tribunal (NCLT) for reopening the books of account.
This can be done only if the accounts were earlier prepared in fraudulent manner or are misleading due to mismanagement of affairs.
Authority for Reopening:
The High Court or the Tribunal (NCLT) may order the reopening of accounts if it is satisfied that:
The accounts were prepared in a fraudulent manner, or
The accounts are misleading due to mismanagement.
Manner of Recasting:
If the reopening is permitted, the company must recast its financial statements for the relevant period as directed.
The revised financial statements must comply with the applicable accounting standards and provisions of the Act.
Protection Clause:
No reopening of accounts is allowed merely on suspicion; it requires clear evidence and judicial approval.
📌 Important Notes:
Reopening is not voluntary; it requires judicial intervention.
This is distinct from revision of accounts under Section 131, which deals with voluntary revision in specific cases with board and tribunal approval.
RELATED Blog
0 comments