Regulation 55 — Audit Regulations 2020

Audit Regulations 2020regulations-audit

# 55. Intimation of formation and closure of a Government company or any other company by the Government
The administrative ministry/department concerned shall intimate the Comptroller and Auditor General in writing about the formation of a new Government company or any other company and forward a copy of its certificate of incorporation within one month of its incorporation. The administrative ministry/department concerned shall also intimate to the Comptroller and Auditor General if a Government company or any other company ceases to be so, within one month of such an occurrence. The administrative ministry/department shall also intimate to the Comptroller and Auditor General about a company becoming a Government company any other company within one month of such an occurrence.
Regulations on Audit and Accounts 2020 40

What This Means

Whenever a new government company is formed, or an existing company becomes or ceases to be a government company, the concerned administrative ministry or department must inform the CAG in writing within one month. A copy of the certificate of incorporation must also be forwarded for new companies. This ensures the CAG's records of auditable entities remain current and complete.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

1Administrative ministry must inform CAG within 1 month of incorporation of a new government company
2Certificate of incorporation must be forwarded along with the intimation
3If a company ceases to be a government company, intimation is required within 1 month
4If an existing company becomes a government company, the same 1-month rule applies
5The obligation is on the administrative ministry/department, not the company itself (though Reg 56 covers the company's obligation)

Practical Example

The Ministry of Steel forms a new joint venture company with 51% government shareholding for a greenfield steel plant. The Ministry must write to the CAG within 30 days of incorporation, enclosing the certificate of incorporation. Similarly, if the government later sells its majority stake and the company ceases to be a government company, the Ministry must again inform CAG within one month.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What if the ministry fails to intimate CAG within one month?▼

While the regulation does not specify a penalty, failure to intimate delays the appointment of a statutory auditor by CAG and may result in the company's accounts not being audited for the relevant period. This could be flagged as a compliance failure in audit reports.

Does this apply to state government companies as well?▼

Yes. The regulation applies to all government companies as defined under the Companies Act, 2013, which includes companies where state governments hold majority shareholding. The concerned state administrative department must intimate the CAG.

What counts as 'ceasing to be a government company'?▼

A company ceases to be a government company when the combined shareholding of the Central and State governments falls below 51% of paid-up share capital, typically through disinvestment or sale of shares.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Regulation 55 — Audit Regulations 2020

Original Rule Text

What This Means

Key Points

Practical Example

Frequently Asked Questions

Related Rules