How to Prepare Director Report

DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 1 HOW TO PREPARE THE DIRECTORS’ REPORT AS PER COMPANIES ACT, 2013’ I. ADDRESS TO MEMBERS: Language: How To Check The Financial Year Your Directors have pleasure in presenting the (No. of Financial Years) Annual Report together with the Audited Statement of Accounts of your Company for the financial year ended March 31, 2016 i. Check from the Annual Return/Directors’ Report of previous financial year. ii. Check the incorporation date and calculate to verify. II. FINANCIAL HIGHLIGHTS: Language: How To Fill the Figures The Company’s financial performance for the year ended March 31, 2016: Check the Statement of Profit & Loss Account for the year ended March 31, 2016. You will find required figures on the FACE of Statement of Profit & Loss Account. Particulars Year ended 31 st March 2016 Year ended 31 st March 2014 Turnover Profit Before Tax Less: Current Tax Deferred Tax Income Tax earlier years Profit For The Year Add: Balance in Turnover: Turnover: Turnover: Turnover: Section- 2(91)- Aggregate value of the realization of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year Deferred tax Deferred tax Deferred tax Deferred tax: As per Accounting Standard (AS) 22, deferred tax is the tax effect of timing differences. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 2 Profit and Loss Account Sub Total Less: Appropriation Closing Balance III. STATE OF AFFAIRS: Section 134(3)(i) Purpose Purpose Purpose Purpose Language: Language: Language: Language: How to Check the Affairs of the How to Check the Affairs of the How to Check the Affairs of the How to Check the Affairs of the Company Company Company Company 134(3)(I) The State of The Company’s Affairs ; The Company is engaged in the business of ___________________________. There has been no change in the business of the Company during the financial year ended 31st March, 2016. Or there is _________________________ Changes in the business of the Company during the financial year ended 31st March, 2016. The highlights of the Company’s performance are as under:- o Revenue from operations increased by ______% from Rs. _______ lacs to Rs. _____ lacs. o Net Profit for the year increased by _______% from Rs. _________ lacs to Rs. _____ lacs. o Earnings per share have increased by _______% from Rs. ______ to Rs. _______. o Company can find the Affairs of the Company from the Notes to Accounts (attached as part of Balance Sheet). o Company can find if there is any Change in the affairs of the Company by comparing the Notes to Account of Last financial year TO current financial year. How to analyze the Companies How to analyze the Companies How to analyze the Companies How to analyze the Companies Performance: Performance: Performance: Performance: Check the Statement of Profit & Loss Account for the year ended March 31, 2016. All the adjacent required figures are available on the FACE of Statement of Profit & Loss Account. Compare the figures of Last financial year TO current financial year and calculate the increase/Decrease in Revenue from Operation/ Net Profit/ Earning per share. Formula for calculating Percentage Formula for calculating Percentage Formula for calculating Percentage Formula for calculating Percentage Change: Change: Change: Change: (Turnover of Current Financial Year- DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 3 The increase in revenue, net profit and EPS as mentioned above is accredited to increase in turnover in comparison to the last financial year. OR The decrease in revenue, net loss and EPS as mentioned above is debited to decrease in turnover in comparison to the last financial year. Turnover of Last Financial Year/ Turnover of Last Financial Year)*100 If value comes in Positive (+) that will be result of___________% increase in Revenue If value comes in Negative (-) that will be result of___________% decrease in Revenue SAME FORMULA FOR NET PROFIT AND EPS. IV. DIVIDEND: Section 134(3)(k) Purpose Purpose Purpose Purpose Language Language Language Language: :: : From where to Check From where to Check From where to Check From where to Check The amount, if any, which it recommends should be paid by way of dividend; In view of the sustained working results during the year under review, the Board of Directors are pleased to recommend a dividend of Rs ___/- per equity share OR In view of the planned business growth, your Directors deem it proper to preserve the resources of the Company for its activities and therefore, do not propose any dividend for the Financial Year ended March 31, 2016. First: First: First: First: Check the Face of Statement of Profit and Loss Account; Amount of Dividend will be mention there. Second: Second: Second: Second: Check the Copy of General Meeting resolution in case of final Dividend and check the Board Meeting resolution in case of interim Dividend. V. DETAILS OF SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES: Purpose Purpose Purpose Purpose Language Language Language Language: :: : How to find out Subsidiary, How to find out Subsidiary, How to find out Subsidiary, How to find out Subsidiary, JV and Associates JV and Associates JV and Associates JV and Associates Rule 8(5)(iv) The name of companies which have become or The Company does not have any Subsidiary, Joint Venture or Associate Company. OR The names of companies which have First Check: Check the Investment of the Company from Non Current Investment in the Balance Sheet, check the relevant DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 4 ceased to be its Subsidiaries, joint ventures or associate companies during the year; become or ceased to be the Company’s subsidiaries, joint ventures or associate companies during the year under review is provided below: S.N Name of the Compa ny Subsidia ry /JV /Associa te Becom e/Ceas ed Effective Date Note and analyze about Subsidiary, Associate and Joint Venture as per definition given u/s 2(87) and 2(6) of the Companies Act, 2013. Second: Second: Second: Second: Check from the (Accounting Standard) AS-18. VI. INTERNAL FINANCIAL CONTROL: Language Language Language Language: :: : How to Check? How to Check? How to Check? How to Check? Rule 8(5)(vii) ICAI guidance note on adequacy of internal financial controls with reference to financial statements can be referred for this Purpose. The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed Most listed companies are reading requirements related to IFC as those referring to IFC for financial reporting along with limited focus on the operational controls aspect. Auditors are required to certify that the IFC are designed and operate effectively. VII. PARTICULAR OF LOAN AND INVESTMENT: Purpose Purpose Purpose Purpose Language Language Language Language: :: : How to Check? How to Check? How to Check? How to Check? Section 134(3)(g) particulars of loans, guarantees or investments under section 186; Particular of Loans given, investments made, guarantee given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statement (please refer Note _______ to the standalone Check the Loan and Investment from the Assets side of Balance sheet and relevant Notes. Check the Guarantee from the Contingent Liabilities and schedule. Also check from the Notes to Financial Accounts. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 5 balance sheet). VIII. CHANGE IN NATURE OF BUSINESS, IF ANY: Purpose Purpose Purpose Purpose Language Language Language Language: :: : How to check? How to check? How to check? How to check? Rules 8(5)(i) There is no change in the business of Company and its Subsidiary Company. The Board may provide details relating to change in the business carried on by the company or its subsidiaries. This shall also contain details pertaining to classes of business in which the company has an interest. Check the Followings: - Main object of the Company - Notes of the Financial Statement IX. AMOUNTS TRANSFERRED TO RESERVES, IF ANY: Provision Provision Provision Provision Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section- 134(3)(J) The Board of the company has decided/ proposed to carry Rs____ to its reserves No amount was transferred to the reserves during the financial year ended 31 st March, 2016. The Board of the company has decided/proposed to carry Rs____ to its reserves. Check the Assets side of Balance sheet, if there is increase in reserve other than the balance of profit and loss account. X. CHANGES IN SHARE CAPITAL, IF ANY: Language Language Language Language: :: : How to check? How to check? How to check? How to check? During the Financial Year 2014-15, the share capital of the Company has been increased from ____ to ____, pursuant to allotment of____ equity shares of Rs ____ each under Private Placement/Preferential allotment/Rights issue /Employee Stock Option Scheme of the Company Check the Followings: - Whether any PAS-3 filed - Check from the Minutes of the Meeting - Difference b/w amount of Capital in the Balance sheet (2016-2014). XI. EXTRACT OF ANNUAL RETURN: DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 6 Provisions: Provisions: Provisions: Provisions: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section 134(3)(a) the extract of the annual return as provided under sub-section (3) of section 92; The extract of Annual Return, in format MGT -9, for the Financial Year 2014-15 has been enclosed with this report Format of MGT-9 given in Companies Act, 2013. For preparation of MGT-9 first prepare the MGT-7. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 7 XII. NUMBER OF BOARD MEETING: Purpose Purpose Purpose Purpose Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section 134(3)(a) number of meetings of the Board; held during the financial year 2014- 15 During the Financial Year 2014-15, [**] meetings of the Board of Directors of the company were held. [Preferable to state the dates of meetings] Check the Minutes of the Board Meeting. Get the Index of Board Meetings from the Company. XIII. PARTICULARS OF CONTRACT AND ARRANGMENT WITH RELATED PARTIES: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section- 134(3)(h) The Particulars of contracts or arrangement s with related party referred to in Section 188(1) of the Companies Act, 2013 for the Financial Year 2014-15 in the prescribed format AOC-2, has been enclosed with the report. All related party transactions that were entered into during the financial year ended 31st March, 2016 were on an arm’s length basis and were in the ordinary course of business. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, or other designated persons which may have a potential conflict with the interest of the Company at large. Details of the transactions are given in AOC-2 Check the following : - AS-18 - Minutes of Board Meeting & General Meeting (If any Resolution passed) XIV. EX PLANATION TO AUDITOR’S REMARKS: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section 134(3)(f) Explanation or comment by the Board on every qualification, reservation, The observations of the Statutory Auditors, when read together with the relevant notes to the accounts and accounting policies Check the Auditor Report DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 8 adverse remark or disclaimer made by the statutory auditor in his report and/or by the secretarial auditor in the secretarial Audit Report. are self explanatory and does not call for any further comment. XV. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? 134(3)(L) Details regarding any material changes / events, if any, occurring after balance sheet date till the date of the report to be stated No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statement relates and the date of this report. Check the following - Trial Balance - Financial Position - Market Condition XVI. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN EXCHANGE EA RNINGS AND OUTGO: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? 134(3)(M) The details of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo are as under: a) Conservation of Energy: b) Technology Absorption: c) Foreign Exchange Earnings/ Outgo: The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 in respect of conservation of energy and technology absorption have been furnished considering the nature of activities undertaken by the company during the year under review. Check the following - Financial of the Company. - Check with directors. XVII. RISK MANAGEMENT POLICY: DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 9 Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? 134(3)(N) Statement indicating the development and implementation of the risk management policy of the company Moreover, in case the Company has constituted a risk management committee, then the constitution and the terms of reference of the same to be disclosed. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. Check the policy prepared by the Company. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Rule 8(5)(iii) Details of Directors and KMP appointed or resigned during the year. Details of directors retiring by rotation in the ensuing Annual General Meeting There has been no change in the constitution of Board during the year under review i.e. the structure of the Board remains the same Check the Following: - DIR-12 - MCA - Comparison from last annual return - Register of Director XVIII. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Details of the order passed by the authorities which impacts the going concern status and company’s operations in future No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future Get the information from the Management of the Company. XIX. VOLUNTARY REVISION OF FINANCIAL STATEMENTS OR BOARD’S REPORT: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? This section is notified w.e.f. DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 10 01.06.2016 XX. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? Section 22 of Sexual Harassment of Women at Workplace. The employer shall include in its report the number of cases filed, if any, and their disposal under this Act in the annual report of his organization or where no such report is required to be prepared, intimate such number of cases, if any, to the District Officer. The Company is committed to provide a safe and conducive work environment to its employees. During the year under review. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Get the information from the Management of the Company. XXI. CONSOLIDATED FINANCIAL STATEMENTS: Provision: Provision: Provision: Provision: Language Language Language Language: :: : How to check? How to check? How to check? How to check? The Board’s Report shall contain a Separate section wherein a report on the performance and financial position of each: • Subsidiary • Associate • Joint venture companies, including in the consolidated financial statement is presented Company doesn’t have any subsidiaries so there is no need to prepare consolidated financial statement for the F. Y. 2014-15. OR Consolidated financial statement is prepared and attached with financials. Check the followings: - Financial Statement - Whether company have subsidiary or not DIVESH GOYAL Mob: +918130757966 Practicing Company Secretary csdiveshgoyal@gmail.com GOYAL DIVESH& ASSOCIATES Twitter: @DiveshGoyal04 Whatsapp: 8130757966 FB: csdiveshgoyal@gmail.com Blog: www.csdiveshgoyal.info Gmail Id: csdiveshgoyal@gmail.com This blog post is not a professional advice but just a knowledge sharing initiative for mutual discuss ion. 11 (Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATE S Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com) Disclaimer: The entire contents of this document have been prepa red on the basis of relevant provisions and as per the information existing at the time of the preparation . Although care has been taken to ensure the accura cy, completeness and reliability of the information provided, I assume n o responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume n o responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPE CIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION. This is only a knowledge sharing initiative and author do not intend to solicit any business or profession.