Interpretation of expression “five years” occurring in clause 24(1) of Part II of Schedule II immediately preceding issue of prospectus - Companies Law - No. 5/72/CL‑VI/65,

Circular : No. 5/72/CL ‑ VI/65, dated 11 ‑ 11 ‑ 1968. Subject:- Interpretation of expression five years occurring in clause 24(1) of Part II of Schedule II immediately preceding issue of prospectus Clause 24(1) in Part II of Schedule II has been recently amended, vide Notification No. GSR 129, dated 3‑1‑1968, whereby the companies are now required to furnish in the prospectus the accounts up to a date not earlier than six months from the date of issue of the prospectus. The said amendment was made with a view to giving the prospective subscribers the latest financial position of the company and the gap of six months was kept having regard to practical considerations in the matter of preparation of such accounts. A doubt has been raised whether the period of five years , mentioned in the last para of the said clause 24(1), refers to the period of five financial years immediately preceding the issue of the prospectus earlier indicated in para (b) of the said clause or to a simple period of five years ending on a date three months before issue of the prospectus. In case the period of five years refers to the five financial years , the companies will be required to furnish details of accounts up to a period not earlier than six months from the date of issue of the prospectus only when their financial year has already been completed on a date three months before the issue of the prospectus but no accounts for that year have been made till the date of issue of the prospectus. On the other hand, if the period of five years refers to a simple period of five years ending on a date three months before the date of issue of the prospectus, every company which issues a prospectus will be required to furnish accounts up to a date not earlier than six months from the date of issue of the prospectus. The matter has been examined carefully in consultation with the Ministry of Law and it has been decided that the period of five years mentioned in last para of clause 24(1) refers to a simple period of five years ending on a date three months before the issue of prospectus and hence every company will have to furnish in the prospectus accounts up to a date not earlier than six months from the date of issue of the prospectus, irrespective of the fact whether or not the financial year of the company closes on a date three months before the issue of prospectus.