What is a Directors’ Resolution to Change the Company’s Financial Year End?
A Directors’ Resolution to Change Financial Year End is a resolution passed by the directors of a company to change the financial year-end of a company. There are statutory restrictions on how the financial year-end can be changed. Consult your company secretary before using this resolution. After changing the financial year-end by the Directors’ Resolution, remember to file the relevant form to update the relevant government department or registry within the statutory time limit.
Can a company change its financial year-end?
According to the Company Act 1956, any company can change its financial year-end according to its needs and requirements. For instance, it can start from April 1 and ends on 31st March or start on any random date and ends on any random date. However, the new Companies Act 2013 prohibits changing the company’s financial year-end for uniformity purposes.
How to change the company’s financial year-end?
There are two options when using a directors’ resolution for changing a company’s financial year-end:
- if a meeting of the board of directors is convened to change the financial year-end, use a Board Minutes to Change Financial Year; or
- if the board resolution will be passed by way of a written resolution, use a Board Resolution to Change Financial Year.
Why would a company change its financial year-end?
One of the main reasons companies change their financial year is deferring tax liability. When the company’s profits are decreasing, they try to push back the accounting date. When the company’s profits are increasing, they try to bring it forward.
Directors’ Resolution to Change Financial Year-End FAQs
Companies might decide to change their financial year end for a variety of reasons – for tax purposes, to align with the fiscal year of a parent company or main client, or to spread workloads evenly throughout the year, among others.
There are statutory restrictions on how the financial year end can be changed.
Consult your company secretary before using this Directors’ Resolution to Change Financial Year End.
How to Change Financial Year End
After changing the financial year-end by the Directors’ Resolution to Change Financial Year End, remember to file the relevant form to update the relevant government department or registry within the statutory time limit.
There are two options when using a Directors’ Resolution to Change Financial Year End:
- If a meeting of the board of directors is convened to change the financial year end, use a Board Minutes to Change Financial Year; or
- If the board resolution will be passed by way of a written resolution, use a Board Resolution to Change Financial Year.
What to include in a Directors’ Resolution to Change Financial Year End
- Details of the company;
- Details of the meeting (if using Board Minutes);
- Date of passing the resolution; and
- New financial year-end date.
Conclusion
A Directors’ Resolution to Change Financial Year End is a resolution passed by the board to change the last day of the year on which the company’s annual numbers are calculated.
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