Who signs a company’s financial statements?
The board approves the financial statements, and they are signed for submission to the auditor by the chairperson, if the board has authorised the chairperson, or by two directors of whom one is the managing director where the company has one. The chief executive officer, the chief financial officer, and the company secretary sign as well, wherever the company has appointed them. A one person company is signed by its one director.
Who signs?
Section 134(1) is an alternative, not a stack. The chairperson signs only where the board has authorised the chairperson. Otherwise two directors sign, and one of those two is the managing director if there is one. The officers named in the section sign in addition to that board signature. A company secretary does not replace the directors. Shareholders do not sign the statements.
A one person company is the exception: its director signs. A private company that has two directors is not that exception.
When are they signed?
The board approves the statements at a meeting and the signatories sign them so they can go to the auditor. The auditor’s report is attached after that examination. The members then consider the audited statements at the annual general meeting. The board meeting is held in time for that meeting. The signing is the board’s approval, not a later signature by the members.
The company files the financial statements in Form AOC-4. A default under section 134 carries a penalty of ₹3 lakh on the company and ₹50,000 on every officer in default.
What is in the statements?
Section 2(40) covers the balance sheet, the statement of profit and loss (or an income and expenditure account where that applies), a cash-flow statement, a statement of changes in equity where that statement applies, and the explanatory notes. A one person company, a small company, and a dormant company do not prepare the cash-flow statement. A private company that is not a small company still prepares one. The small-company test is on the small-company page.
Frequently asked questions
Four questions cover a single director, the members, the cash-flow statement, and the penalty.
Can one director sign?
Only in a one person company. Any other company needs the chairperson, where the board has authorised that person, or two directors.
Do the shareholders sign?
No. The members adopt the audited statements at the annual general meeting. They do not sign them in place of the board.
Does every private company skip the cash-flow statement?
No. The exemption is for a one person company, a small company, and a dormant company. A private company outside those classes still prepares a cash-flow statement.
What is the penalty?
Section 134(8) sets a penalty of ₹3 lakh on the company and ₹50,000 on every officer in default.
Sources
Signing of the financial statements is section 134(1) of the Companies Act, 2013. What counts as a financial statement is section 2(40). The filing is Form AOC-4.