180 SECRETARIAL PRACTICE
company in general meeting,” which includes the balance
sheet, a copy of which must be circulated. It is, how-
ever, probable that where the information is only as to
matters appearing in the profit and loss account, it could
properly be included in that account which there is no statutory
obligation to circulate.
Documents The following documents must be annexed, and in the case
0 10 ok to of items (1) and (2) below attached to every balance sheet.
Pale (x) A report by the directors as to the state of the com-
eet. pany’s affairs, the amount, if any, which they recom-
mend should be paid by way of dividend, and the
amount if any which they propose to carry to any
reserve, specifically shown in the balance sheet [s. 123
(2)]-
The Auditors’ report, which must be read to the general
meeting and be open to inspection by any member
fs. 129 (1)].
If the company holds shares either directly or through
a nominee in any subsidiary company or companies,
a statement signed by the persons who sign the balance
sheet and containing the particulars required by section
126 as to how the profits and losses of the subsidiary
company or companies for the period referred to in
s. 126 (3), have been dealt with in or for the purposes
of the accounts of the holding company. If the
Auditor’s report on the balance sheet of any subsidiary
company is qualified in any way, the statement
required by s. 126 must contain particulars of the man-
ner in which such report is qualified [s. 126 (2)]. If
for any reason the Directors of the holding company are
unable to obtain such information as is necessary for the
preparation of the statement aforesaid, the Directors
who sign the balance sheet shall sign a report to that
effect which must be annexed to the balance sheet in lieu
of the statement [s. 126 (4)]. The Directors and not the
Auditors appear to be responsible for the statement
required by s. 126 (2).

The meaning of subsidiary company is defined in s. 127.
Stated shortly, the relationship of holding company and
subsidiary company is constituted if the former company,
holding directly or through a nominee shares in the latter
company, (1) holds fifty per cent of the issued share capital
of the latter company, or (2) is entitled to more than fifty per
cent. of the voting power in the latter company, or (3) has