It is mandatory for every company, to forward to its members, along with its annual Financial Statement the Board of Director’s report. Report of Board of Directors should be ‘ATTACHED’ to the Balance Sheet laid before the AGM
Provisions Relating to Director’s Report:
Applicability of Provision of Section-134 of Director Report:
The provision of Director Report (u/s 134) is applicable only to financial year commencing on or after 1st April, 2014.
Signing of Director’s Report along with Annexure:
As per Section 134(6) Board Report and annexure thereto shall be signed by
• its ‘CHAIRPERSON’ if he is authorized by Board of director; Where he is not so authorized by,
• At least 2 (Two) Director, one of whom shall be a Managing Director.
• If there is no Managing Director then by Two Directors.
As per Section 134(3) of Companies Act, 2013 Director Report shall include:
DISCLOSURE MANDATORY TO BE MADE BY EVERY COMPANY
Board Report Content- Every Company
I. State of Company’s Affairs- S 134(3)(I)
The Directors’ report starts with the financial results of the year which will show the working results for the year under review, the Net Profit Before Tax (PBT) and the Net Profit After Tax (PAT) and the appropriation of profit including the transfer to general reserve which has been left to the Director to decide.
The Report will mention yearly total Sales Turnover and Income and Point out any problems faced by the company which have affected the profits and measures which have been taken to improve the working and reduce costs.
II. Extract of the Annual Return: As per Section 92(3) r/w Rule 12 of Companies (Management & Administration) Rules, Board’s Report required attaching extract of Annual Return of company in form MGT-9
III. Number Of Board Meeting 134(3) (b)
Board Report required to mention the following Details:
• Number of Board Meeting held during the year
• Date of Board Meetings held during the year
• Number and Date of Committee meeting held during the year
• No. of Board Meeting attended by the each Directors during the year
IV. Inter Corporate Loans And Investments- 186
There is required to disclose by director in Board’s Report that, the company has complied with the proviso ions of Section 186 of companies Act, 2013 in relation to Loan, Investment & Guarantee given by the company during the financial.
V. Related Party Transaction- 188
There is required to disclose by director in Board’s Report all the related party transaction entered along with the justification for entering into such contract and arrangement by the company during financial year.
VI. Subsidiaries, JVs or Associate Companies- Rule 8(5)(iv)
The name of Company which has become or ceased to be its subsidiaries, Joint Venture or associate company during the year
VII. Report on performance of subsidiaries, associates companies and joint ventures:
The Board’s Report shall be prepared based on “STAND ALONE FINANCIAL STATEMENT OF THE COMPANY”
But the Board’s Report shall contain a Separate section wherein a report on the performance and financial position of each:
• Joint venture companies, including in the consolidated financial statement is presented.
VIII. Details of Directors/KMP/ appointed/resigned during the year As per Section 134(3)(q) r/w Rule 8(5)(iii) of Companies (Account) Rules,2014
Board Report required to mention the following Details:
• Director/KMP appointed during the year.
• Director/KMP resigned during the year.
IX. Explanation on Auditor Qualification- S 134(3)(f)
Explanation or comments by Board on every qualification, reservation or adverse remarks or disclaimer made by Statutory Auditor or Secretarial Auditor (if applicable) in its report.
X. Dividends- S 134(3)(K)
Where it is proposed to pay dividend, Report shall contain the recommendation of the Board as to the rate of dividend for the year under review for the approval of members at the AGM.
XI. Material Events Occurring After Balance Sheet Date- S 134(3)(L)
Post Balance Sheet Events
Material Changes and Commitments, if any, affecting the Financial position of the Company which have occurred between the end of financial year of the Company to which the financial statement relate and the date of the report. The term material included items, the knowledge of which might influence the decision of use of financial statement.
XII. Transfer To Reserve- S 134(3)(J)
The report of the Board of Directors shall state the amount which it proposes to carry to any reserve in the Balance Sheet like debenture redemption reserve in terms of Section 71(13) etc.
XIII. Risk Management Policy- S 134 93) (n)
A statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, this in the opinion of the Board may threaten the existence of the company XIV. Disclosure under Sexual Harassment of Women & Workplace (Prevention, prohibition & redressal) Act, 2013
Company should make disclosure in Board Report relating to Sexual Harassment of Women & Workplace.
XV. Financial Highlights & Change in the Nature of Business- Rules 8(5)(i) &(ii)
Disclosure on financial summary or highlights and Change in the nature of business, if any.
XVI. Voluntary revision of financial statements or Board Report- S131
Detailed reason for revision of such financial statement or Board’s Report to be disclosed in the Board’s report in the relevant f.y. in which such revision is being made.
XVII. Adequate Internal Financial Control- Rule 8(5)(vii)
In case of private limited company board of director is required to comment only on the adequacy of Internal Financial Control (Sec-134(5)(e)} and not on its effectiveness.
XVIII. IV. Conservation of energy, technology absorption & foreign exchange dealing:
The report of the Board shall contain the following information and details, namely:-
(A) Conservation of energy
(i) the steps taken or impact on conservation of energy;
(ii) the steps taken by the company for utilizing alternate sources of energy;
(iii) the capital investment on energy conservation equipments;
(B) Technology absorption
(i) the efforts made towards technology absorption;
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-
(a) the details of technology imported;
(b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and
(iv) the expenditure incurred on Research and Development.
(C) Foreign exchange earnings and Outgo
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.
XIX. DIRECTOR RESPONSIBILITY STATEMENT 134(3) (c)
The Directors‘ Responsibility Statement referred to in clause (c) of subsection (3) shall State that-
a. Accounting Standard
b. Accounting Policy
c. Proper and efficient care for three things:
• Going concern Basis
• Adequate Internal Financial Control
• Compliances with all applicable law
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