Where a company has one or more subsidiaries (including associate company / joint venture), it shall, in addition to its own FS, prepare a Consolidated Financial Statement (CFS) of the company and of all its subsidiaries.
### Disclosure of Subsidiary Information
The company shall also attach a statement containing salient features of the FS of its:
Subsidiary
Associate Company
Joint Venture
👉 This statement is filed in Form AOC-1.
### Rule 6 – Manner of Consolidation
CFS shall be prepared as per the Accounting Standards and Schedule III.
If the company is not required to prepare CFS under the AS, it is sufficient that it complies with Schedule III for consolidation.
### Exemption from Preparing CFS
A company is NOT required to prepare CFS if ALL three conditions are satisfied:
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Condition
(i)
It is a subsidiary (wholly or partly owned) of another company, AND all its other members (including non-voting share holders) have been intimated in writing and they do not object to the company not presenting CFS
(ii)
Its securities are not listed or not in the process of being listed on any stock exchange, whether in India or outside India
(iii)
Its ultimate (or any intermediate) holding company files CFS with the ROC which complies with applicable AS
### Other Provisions
Provisions applicable to standalone FS regarding preparation, adoption and audit shall, mutatis mutandis, apply to CFS.
Worked example
### Example 1
Q: ABC Pvt. Ltd. is a wholly-owned subsidiary of XYZ Ltd. Its securities are not listed anywhere. XYZ Ltd. files CFS with the ROC as per applicable AS. Is ABC Pvt. Ltd. required to prepare CFS?
A: No. ABC Pvt. Ltd. satisfies all three conditions under Rule 6 — (i) it is a wholly-owned subsidiary (so intimation/no-objection from other members is not relevant), (ii) its securities are unlisted, and (iii) its holding company XYZ Ltd. files CFS with the ROC. Hence, ABC Pvt. Ltd. is exempt from preparing CFS.
### Example 2
Q: PQR Ltd. has 2 subsidiaries, 1 associate and 1 joint venture. In which form must it disclose their salient financial details?
A: PQR Ltd. must attach Form AOC-1 containing the salient features of the FS of its subsidiaries, associate and JV, along with its own FS.
⚠️ Common exam mistakes
Forgetting that the exemption from preparing CFS requires ALL THREE conditions to be met — not any one.
Confusing AOC-1 (subsidiary/associate/JV salient features) with AOC-4 (filing of FS with ROC).
Believing only subsidiaries are covered – associates and JVs are also included for AOC-1 disclosure and CFS as per AS.
Ignoring that the intimation to 'other members' must be in writing and the absence of objection is required.
Bare-Act text Section 129(3) & Rule 6 · Companies Act, 2013 read with Companies (Accounts) Rules, 2014 · click to expand
Where a company has one or more subsidiaries, it shall, in addition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own and in accordance with the applicable accounting standards, which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub-section (2). Provided that the company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiary or subsidiaries in such form as may be prescribed.