X Ltd is a wholly owned subsidiary of Y Ltd. As on 31st March 2018, X Ltd owns 60% of equity in A Ltd and 26% of equity in B Ltd. Y Ltd has totally 8 shareholders. Y Ltd files consolidated accounts of all subsidiaries in

As per Section 129(3) of the Act, a company which has one or more subsidiary or associate companies shall prepare consolidated financial statements in accordance with the provisions of Schedule III of the Act and the applicable accounting standards. Proviso to Rule 6 of the Companies (Accounts) Rules 2014 stipulates that consolidation of accounts by a Company is not required if: The Company is a wholly owned subsidiary or partly owned subsidiary of another company and all its members have been informed in writing about the company not presenting consolidated financial statements and no member objects to it. The company is not listed or in the process of listing. The ultimate holding company or any intermediate holding company files consolidated financial statements with the Registrar which are compliant with the applicable accounting standards. In respect of X Ltd, it is a wholly owned subsidiary of Y Ltd. Y Ltd files consolidated accounts with the Registrar in compliance with the rules. A Ltd is a subsidiary of X Ltd (60% equity) and B Ltd is an associate company of X Ltd (26% equity). Therefore, in accordance with second proviso to Rule 6 of the Companies (Accounts) Rules, 2014, X Ltd is not required to consolidate the accounts of A Ltd and B Ltd, if Y Ltd intimates in writing to X Ltd for not preparing consolidated financial statements. Provided that proof of delivery of such intimation shall be maintained with the X Ltd.