Director Report- Companies Act, 2013

By | March 10, 2015
Report of Board of Directors should be ‘ATTACHED’ to the Balance Sheet laid before
the AGM.

A Directors’ report is intended to explain to shareholders, the company’s affairs,
including its subsidiaries and the nature and scope of company’s business. The report is
a summation of activities of the company in the relevant financial year and an idea
about possible future developments.

In previous law there was a separate section 217 of the Companies Act, 1956. The
whole section was related to the Report of Directors.
But in the Companies Act, 2013, a lot of sections make mandate to disclose the facts in
the Director Report.

Provisions Relating to Director’s Report:- Provisions Relating to Director’s Report:-
A. 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.

B. Signing of Director’s Report:
As per Section 134(6) Board Report and annexure thereto shall be signed by
SERIES

• 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.
C. Basis of Board Report:
The Board’s Report shall be prepared based on “STAND ALONE FINANCIAL STATEMENT ALONE FINANCIAL STATEMENT
OF THE COMPANY” OF THE COMPANY”
But the Board’s Report shall contain a Separate sec 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.
D. Approval of Board Report:

• Approval of Board’s Report shall be done in Meeting of the Board of Director
Only. {179(3)}

• Approval of Board’s Report shall not be done by “Circulation Resolution”, or “by
Committee”. {179(3)}

• Meeting of Board of directors can’t be done by “Video Conferencing”.
E. E-filling of Resolution for approving Board report:
The Board resolution for approval of Board Report required being file with ROC in form
“MGT-14” within 30 days of passing of Board Resolution.

CONTENT OF BOARD REPORT:
As per Section 134(3) of Companies Act, 2013 Director Report shall include:

I. Extract of Annual Return: [As per Section 32(3)]: Board’s Report required to attach
extract of Annual Return of company in form MGT-9.

II. No. of Board Meeting: There is required to mention No. of Board’s Meeting in Director
Report

III. Comment on Auditor Report Comment on Auditor Report: Explanations or comments by the Board on every
qualification, reservation or adverse remark or disclaimer made by auditors in auditor
report.

IV. Comment on Secretarial Audit Report: Explanations or comments by the Board on every
qualification, reservation or adverse remark or disclaimer made Company Secretary in
Practice in Secretarial Audit Report.

V. Particular of Loan & Investment: Directors There is required to disclose by director in
Board’s Report that, the company have 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.

VI. Disclosure of Related Disclosure of Related Party Transaction : Party Transaction : There is required to disclose by director in
Board’s Report all the related party transaction entered by the company during
financial year.
For this disclosure Related Party Transactions means following transactions (Section
188(1): Such disclosure in form AOC- form AOC-2

NATURE OF RELATED PARTY TRANSACTION NATURE OF RELATED PARTY TRANSACTION
For Every Transaction For Every Transaction
Sale, purchase or supply of any goods or materials directly or through appointment of
agents (or)

Selling or otherwise disposing of, or buying, property of any kind directly or through
appointment of agents (or)
Leasing of property of any kind (or)
Availing or rendering of any services directly or through appointment of agents (or)
Appointment to any office or place of profit in the company, its subsidiary company or
associate company (or)
Remuneration for underwriting the subscription of any securities or derivative
Appointment to any office or place of profit in the company, its subsidiary company or its
associate company

VII. Dividend Recommended: If any dividend was declared by the company during the
financial year the financial year. Directors required disclosing in Board Report
regarding status payment of same.

VIII. Post Balance Sheet Events: Material changes and commitments, if any, affecting the
financial position of the company which have occurred between the end of the
financial year of the company to which the financial statement relate and the date of
report. Generally there is gap of 4 to 5 month between financial year ending and
preparation of report of Board of Director’s. If the yearend is 31st March, report of
board of Directors commitments affecting the financial position of company between
this period.

IX. Risk Management Policy: 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.

X. Corporate Social Responsibility (CSR): Corporate Social Responsibility (CSR): Directors required to disclose in the Board
Report the details about the policy developed and implemented by the company on
Corporate Social Responsibility initiatives taken during the year.

XI. Report on performance of subsidiaries, associates c Report on performance of subsidiaries, associates companies and joint ventures: Companies and joint ventures:
The Board’s Report shall be prepared based on “STAND ALONE FINANCIAL STATEMENT ALONE FINANCIAL STATEMENT
OF THE COMPANY” OF THE COMPANY”
But the Board’s Report shall contain a Separate sec 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.

XII. Secretarial Audit Report:
Every listed company and a company belonging to other class of companies as may
be prescribed shall annex with its Board’s Report, a Secretarial audit report.
The Board of Directors, in their report shall explain in full any qualification or
observation or other remarks made by the Company Secretary in practice in his
secretarial audit report.

The following class of companies shall be required to Annex Secretarial Audit Report with
Director Report, namely:-
a) All Listed Companies
b) Every Public Company having a Paid-Up Share Capital Up Share Capital of Rs. 50 Crore (fifty
crore rupees) or more
c) Every Public Company having a Turnover of Rs. 250 Crore (two hundred fifty Rs. 250 Crore (two hundred fifty
crore rupees) or more

XIII. Disclosure about cost Audit:
Full particular of cost auditor, along with due date and actual filling of cost audit report
by the cost auditor.

XIV. Disclosure of Board Report: Disclosure of Board Report: As per Secretarial Standard of ICSI
SS-I- The Annual report of company should disclose the number of meetings of Board
and Committees held during the year, indicating number of meetings attended by each
director.
SS-II-An- nual return should disclose particulars of General meeting held during last
three year.

XV. Disclosure where company is required to constitute Nomination and Remuneration
committee: committee: The director will disclose in Director Report followings:
• The policy of qualification
• The remuneration of directors as, formulated under section 178(3)

XVI. Disclosure if MD/WTD is receiving remuneration or commission from a MD/WTD or
subsidiary Company: subsidiary Company: As per Section 197(14) of the Act, 2013
A MD/WTD of company can receive remuneration or commission from any holding
company or subsidiary company of such company. This should be disclosed by the
company in Board’s Report.

XVII. Disclosure of Vigil Mechanism in board Report: Disclosure of Vigil Mechanism in board Report: If provisions of vigil Mechanism apply
on company, then directors required to disclose in Board’s report establishment of Vigil
Mechanism.

XVIII. Disclosure of composition of Audit committee and their recommendations not accepted:
Section- Section-117(8)
• Composition of Audit Committee shall be disclosed in Board’s Report of the
Company.
• If the board doesn’t recommendation of Audit Committees, it shall be disclosed
along with reason in Board’s report.
XIX. Declaration by Independent Director:
Director will disclose the statement on declaration given by Independent Director.
XX. Details Relating to Deposit:
• Details of deposits which are not in compliance with the requirement of chapter
V of the Act.
• Deposit Accepted during the year.
• Unpaid and unclaimed deposit at the end of the year.
• If there is any default in repayment of deposit or payment of interest thereon
during the year then; Number of such cases and total amount involved
– At the beginning of the year
– Maximum during the year
– At the end of the year
XXI. Details of Director and KMP: Details of Director and KMP: There should be disclosure in the Director’s Report about:
Directors & KMP appointed during the Year.
Directors & KMP appointed Resigned the Year
XXII. General Disclosures:
 Name of retiring directors and whether or not they offer themselves for reappointment.
 Casual vacancies in the Board filled during the year.
 Re-appointment.
 Casual vacancy in the Board filed during the year.

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