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