Section 228 — Consolidated financial statements

(1) There shall be attached to
the financial statements of a holding company having a subsidiary or subsidiaries,
at the end of the financial year at which the holding company’s financial statements
are made out, consolidated financial statements of the group presented as those of
a single enterprise and such consolidated financial statements shall comply with the
disclosure requirements of the relevant Schedule and financial reporting standards
notified by the Commission:

Provided that nothing in this sub -section shall apply to a private company
and its subsidiary, where none of the holding and subsidiary company has the paid
up capital exceeding one million rupees.

(2) Where the financial year of a subsidiary precedes the day on which
the holding company’s financial year ends by more than ninety days , such
subsidiary shall make an interim closing, on the day on which the holding
company’s financial year ends, and prepare financial statements for consolidation
purposes.

(3) Every auditor of a holding co mpany appointed under section 246
shall also report , in the specified form, on consolidated financial statements and

49 Inserted vide the Companies (Amendment) Act, 2021 dated 1st December, 2021.
50 Substituted vide the Companies (Amendment) Act, 2021 dated 1st December, 2021. The substituted
sub-section (6) was read as under:
(6) Whoever contravenes any of the provisions of this section shall—
(a) in respect of a listed company, be punishable with imprisonment for a term which
may extend to two years and with fine may extend to five hundred thousand rupees
and with a further fine which may extend to ten thousand rupees for every day
after the first during which the default continues; and
(b) in respect of any other company, be punishable with imprisonment for a term
which may extend to one year and with fine which may extend to one hundred
thousand rupees.

exercise all such rights and duties as are vested in him under sections 248 and 249
respectively.
(4) There shall be disclosed in the consolidated financial statements any
note or saving contained in such accounts to call attention to a matter which, apart
from the note or saving, would properly have been re ferred to in such a
qualification, in so far the matter which is the subject of the qualification or note is
not covered by the holding company’s own accounts and is material from the point
of view of its members.
(5) Every consolidated financial statement shall be signed by the same
persons by whom the individual financial statements of the holding company are
required to be signed, under section 232.
(6) All provisions of sections 223, 233, 234, 235 and 236 shall apply to
a holding company required to prepare consolidated financial statements under this
section as if for the word “company” appearing in these sections, the words
“holding company” were substituted.
(7) The Commission may, on an application of a holding company,
direct that the provisions of this section shall not apply to such extent as may be
specified in the direction.
(8) Any contravention or default in complying with requirements of this
section shall be an offence liable to a penalty of level 2 on the standard scale.