Old Notes Disclosure by Companies

The Lok Sabha has recently passed the Specified Bank Notes (Cessation of Liabilities) Bill, 2017. The Bill related to the holding, transfer and receiving of old Rs.500 and Rs.1000 denomination currency makes it unlawful to hold, transfer or receive the currency notes that were demonetized in November 2016. In this article, we look at the disclosure required by all Companies in the Financial Statements pertaining to handling of the depreciated Rs.500 and Rs.1000 bank notes.

Specified Bank Notes (Cessation of Liabilities) Bill, 2017

As per the Specified Bank Notes (Cessation of Liabilities) Bill, 2017, any person who is holding more than 10 banned notes of the Rs.500 or Rs.1000 currency is punishable with a fine of Rs. 10, 000 or five times the cash held, either of which is higher. Further, the Bill also mentions that an Indian citizen, who was outside India between November 9 and December 30 2016, will be entitled to tender the demonetized notes within the specified period.

Mandatory Disclosure in Balance Sheet

As according the Specified Bank Notes (Cessation of Liabilities) Bill, 2017, the Ministry of Company Affairs released G.S.R. 308(E) on 30th March, 2017. As per G.S.R. 308(e), relevant to the Companies Act, 2013, the following is applicable for all Companies:

Every company will reveal the details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as mentioned in the notification. The financial statement of all the Companies for financial year ended 31.03.2017 must compulsory provide for the information along with closing cash in hand as on 08.11.2016, (+) Permitted receipts, (-) Permitted payments, (-) Amount deposited in Banks, Closing cash in hand as on 30.12.2016.
The table for disclosure of old notes can be framed as follows in the financial statement:

	Old Rs. 500 or Rs. 1000 Bank Notes	Other Denomination Notes	Total
Closing Cash in Hand - 08.11.2016
(+) Permitted Receipts
(-) Permitted Payments
(-) Amount Deposited in Banks
Closing Cash in Hand - 30.12.2016

Disclosure in Auditor Report

All companies are mandatorily required to prepare and file audited financial statement with Auditors Report each year. As per MCA Notification No. G.S.R. 307(E) dated 30th March, 2017 there is an amendment in Companies (Audit and Auditors) Rules, 2014. As per the amended rules, Auditors are required to certify:

Whether the company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and if so, whether these are in accordance with the books of accounts maintained by the company.

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Frequently Asked Questions

Common questions about Specified Bank Notes Disclosure by Companies.

The Specified Bank Notes (Cessation of Liabilities) Bill, 2017 is a bill passed by the Lok Sabha that makes it unlawful to hold, transfer or receive the old Rs.500 and Rs.1000 currency notes that were demonetized in November 2016. It imposes fines on individuals holding more than 10 banned notes after a certain period.

The Ministry of Corporate Affairs has mandated that all companies must disclose details of Specified Bank Notes (old Rs.500 and Rs.1000 notes) held and transacted between November 8, 2016 to December 30, 2016 in their financial statements for the year ended March 31, 2017. This is to ensure compliance with the Specified Bank Notes Bill.

Companies must provide information on closing cash in hand as on November 8, 2016, permitted receipts of old notes, permitted payments made in old notes, amount of old notes deposited in banks, and closing cash in hand as on December 30, 2016. This information should be presented in a tabular format in the financial statements.

Yes, the article provides a suggested format for the tabular disclosure of old notes, with separate columns for old Rs.500 and Rs.1000 notes, other denomination notes, and the total cash balance. This standardized format helps maintain uniformity in reporting across companies.

As per the amended Companies (Audit and Auditors) Rules, 2014, auditors are required to certify whether the company has provided the requisite disclosures related to holdings and dealings in Specified Bank Notes (old notes) during the specified period, and whether these disclosures are in accordance with the company's books of accounts.

Yes, the disclosure of old notes transactions is mandatory for all companies as per the notification G.S.R. 308(E) issued by the Ministry of Corporate Affairs under the Companies Act, 2013. No company is exempt from this disclosure requirement in their financial statements for the year ended March 31, 2017.

The main purpose of the old notes disclosure requirement is to ensure transparency and accountability in the handling of demonetized currency by companies during the specified period after demonetization was announced. This disclosure helps regulatory authorities monitor compliance with the Specified Bank Notes Bill.

The article does not explicitly mention penalties for non-compliance with the old notes disclosure norms. However, companies are legally required to comply with the notification issued by the Ministry of Corporate Affairs under the Companies Act, 2013, and non-compliance may attract penalties or legal action.

The old notes disclosure requirement is specifically for the financial year ended March 31, 2017, covering the period from November 8, 2016 to December 30, 2016 after demonetization was announced. It is a one-time disclosure requirement related to the demonetization event.

The article does not specifically mention whether the old notes disclosure requirement applies to foreign companies operating in India. However, since the notification is issued under the Companies Act, 2013, it is likely that all companies registered and operating in India, including foreign companies, would need to comply with this disclosure norm.