Section 395 of CA 2013 : Section 395: Annual Reports Where One Or More State Governments Are Members Of Companies

Explanation using Example

Imagine that the State of XYZ has established a company dedicated to the development of renewable energy, called GreenTech Energy Ltd., where the Central Government is not a member, but the State Government of XYZ is the sole member. According to Section 395 of The Companies Act, 2013:

• The State Government of XYZ is required to prepare an annual report on the workings and affairs of GreenTech Energy Ltd. This must be done within the timeline specified in Section 394(1) of the Act.
• Once the annual report is prepared, it must be presented before the Legislative Assembly of the State of XYZ. Along with the report, a copy of the audit report and any comments or supplements to the audit report must also be shared with the legislature.
• If, for some reason, GreenTech Energy Ltd. goes into liquidation, the same rules for preparing and presenting the annual report would still apply, as per Section 395(2).

This ensures transparency and accountability of GreenTech Energy Ltd. to the State Legislature, despite the company being in the domain of the State Government of XYZ.