When Cash Flow Statement is mandatory

Cash Flow requirement

The Company Act 2013 defines the financial Statement which includes the cash flow statement and Statement of changes in equity.

The Applicability of Cash Flow Statements is governed by the Companies (Accounting Standards) Rules, 2006. However as per the company act 2013, the Cash flow statement shall to prepare and included in Financial Statements subject to certain exemption specified in the act.

Exemption for applicability of Cash flow Statements 

Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement i.e. there is an exemption given to OPC, small company and dormant Company for preparing the Cash flow statement for purpose of inclusion in financial statement.

Notes:

One Person Company: Section 2(62) defines a One Person Company as “One Person Company”means a company which has only one person as a member.

Dormant Company: a company that has been formed and registered under the Act,

 a) For a future project or to hold an asset or intellectual property and,

 b) Has no significant accounting transaction, is permitted to make an application to the Registrar to obtain the status of a dormant company.

Small Company: Section 2(85) ‘‘small company’’ means a company, other than a public company,—

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

Provided that nothing in this Section shall apply to—

(A) a holding company or a subsidiary company;

(B) a company registered under Section 8; or

(C) a company or body corporate governed by any special Act;