Board Report – Means of Communication

Introduction

The Board Report is a means of communication about the performance of the Company. It not only enables the shareholders/members but also other stakeholders like lenders, government, public to make an appraisal of the Company’s performance, future growth and profitability of the company.

This article is an attempt an attempt to provide the summary of the things which are to be included in the Board Report of the Company whether it is listed, unlisted, private or public.

I. Index of Board’s Report

Let us first understand the index of the Board’s Report so that we can have fair idea about the whole structure of the Board’s Report. This index will be very helpful in taking the reference while preparing the Board’s Report.

II. Summary on the index pointers:

1. Disclosures pursuant to the Companies Act, 2013: Section 134 of the Act enjoins upon the Board a responsibility to towards disclosures on the following and make out its report to the shareholders at the annual general meeting.

• Disclosures related to employees;
• Re-appointment of Independent Director;
• Change in the Composition of the Board;
• Disqualifications of Directors;
• Audit Committee;
• Change in Capital Structure of the Company;
• Investor Education and Protection Fund
• Vigil Mechanism;
• Additional disclosures.

2. Credit Rating of Securities: According to SS-4, Board’s Report shall include disclosure on credit rating as a good governance practice. Further, listed Entities are required to are required to disclose in the Corporate Governance Report, a list of all credit ratings obtained by the company along with any revisions thereto and also to place on its website.

3. Disclosure Pursuant to the SEBI (Listing Obligations 49 and Disclosure Requirements) Regulations, 2015 shall include the following:

• Regulation 32 – Statement of deviation(s) or variation(s);
• Management Discussion and Analysis (MDA);
• Certificate on Compliance of conditions of Corporate Governance;
• Suspension of Trading;
• Functional Website;
• Report on Corporate Governance.

4. Disclosures Pertaining to the Sexual Harassment of Women at The Workplace (Prevention, Prohibition and Redressal) Act, 2013 shall include constitution of Internal Complaints Committee, the details of number of cases filed and disposed as required under the ACT.

5. Additional Disclosures by Producer Company: In terms of Section 465(1) of Companies Act, 2013 read with section 581ZA of Companies Act,1956, a Producer Company should additionally disclose in its Board Report the amounts to be paid as limited return on share capital and if any, proposed to be disbursed as patronage bonus.

6. Disclosures Pursuant to Directions of Reserve Bank of India vide its Master Direction shall be taken into consideration while preparing Board Report.

7. Secretarial Audit Report: Every Listed Company, Public Company or other Companies coming under the purview of Section 204(1) of Companies Act, 2013 e shall annex with its Board’s report, a Secretarial audit report, given by a company secretary in practice in Form No. MR-3. Every listed entity shall ensure the compliance of Regulation 24A and get the Secretarial Audit done in respect of material unlisted subsidiary incorporated in India.

8. Explanations in the Board’s report in response to Auditors’ Qualification(s): According to SS-4, the Report shall include explanations or comments on every qualification, reservation or adverse remark or disclaimer made in the Auditor’s Report and the Secretarial Auditor’s Report. The Report may disclose any information which is required to be given in the accounts.

9. Approval, signing and filing of the Board’s Report:

The Board’s Report should be considered, approved and signed at a meeting of the Board, convened in accordance with the provisions of the Act and shall not be dealt – by means of a resolution passed by circulation. Board of Directors of a company shall approve the financial statement and the Report on behalf of the company by means of resolutions passed at meetings of the Board. Board’s report and any annexures thereto should be signed by its chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director. The Board Report along with the Financials and other related documents shall be filed within 30 days of the date of AGM along with the prescribed fees.

10. Signing of Report in case of a Company under 61 Insolvency Laws: Since the powers of the Board lies with IRP/ RP, it appears that IRP/RP should approve and sign the Report. The IRP/RP may also direct the Directors/Officials of the Corporate Debtor to sign the Report and take all necessary actions for compliance of applicable laws.

11. Collective Responsibility of the Board and Consistency: The Board’s Report should be the collective responsibility of all the directors though the report may have been approved only by a majority of the directors. The dissent, if any, of any director(s) on any item in the Board’s Report may be reflected in the minutes of the meeting but not in the report. The Board should ensure consistency of information given in the Board’s Report, the Management Discussion & Analysis Report, Report on Corporate Governance and the explanatory statements to Resolutions.

12. Liability for Mis-Statement: The Board shall be liable under section 447 & 448 of the Companies Act, 2013 for any statement made in any material particulars, knowing it to be false which omits any material fact or knowing it to be material.

Conclusion

A copy of the Board Report annexed to financial statements, including consolidated financial statements, if any, auditor’s report and every other document required by law which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture- holder of any debentures issued and to all persons other than such member or trustee, being entitled, before twenty-one days before the date of the meeting.

Disclaimer: The entire contents have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, we assume no responsibility. Therefore, users of this information are expected to refer to the relevant existing provisions of applicable Laws. Consequently, we take no responsibility for the consequences of the use of such information. In no event we shall be liable for any direct, indirect, special, or incidental damage resulting from, arising out of or in connection with the use of the information. This is only a knowledge-sharing initiative. The author does not intend to solicit any business or profession.

Bibliography: https://www.icsi.edu/media/webmodules/ReferenceronBoardReports.pdf