In this article we shall discuss about Board’s Report. Board’s Report is a mandatory filling under Companies Act, 2013. The Section which relates to the Board’s Report is Section 134 of the Companies Act, 2013. This is required to be filed as an attachment in Form AOC-4 with Ministry of Corporate Affairs (MCA).
At the end of the financial year, we need to prepare the Board’s Report. Various points need to be incorporated in the Board’s Report according to the particular companies. This is a full-fledged report which explains about the company’s structure in terms of financial impact, Companies Affairs, Board of Directors, Audit structure etc. The article will brief with various bullet points which are required to be incorporated in the Board’s Report.
Hope this article would help you in gaining some knowledge.
Let’s go through some bullet points: –
1. Financial Results: –
The Company’s financial performances for the year under review along with previous year’s figures need to be presented in a tabular form.
If any dividend proposed by the directors for the financial year under review need be mentioned.
3. Transfer to Reserve:
The details of the profit if any, proposed to be carried to the Balance Sheet need to be disclosed.
4. Financial Performance and State of the Company’s Affairs: –
The details of the type of the company, nature of the business and particular of its income/loss for the financial year under review.
5. Capital Structure: –
The details of the Authorised and paid-up share capital of the company along with Equity & Preference Shares details for the financial year under review need to be specified.
6. Change in the Nature of Business: –
The details of the change of the nature of business if any in such particular financial year.
7. Material changes and commitments affecting the financial position: –
The details of the changes if any, that has affected the financial position of the company during such particular year.
Example- COVID-19 Pandemic
8. Directors and Key Managerial Personnel: –
The details of the change in directors and KMP during the financial year need to be taken into consideration.
9. Corporate Governance: –
This is applicable in case of Listing Company. If applicable then Report on Corporate Governance along with the certificate from a Practicing Company Secretary certifying compliance with conditions of Corporate Governance is part to this Report.
10. Meetings of the Board: –
The details of how many times the board of directors of the company has duly met during the financial year need to be specified.
Note: – Kindly mention about the MCA Circular for the extension of the intervening gap between two board meetings for FY 2020-21 for better understanding.
11. Committees of the Board: –
There are various committees in the company i.e., Audit Committee, Risk Management Committee, Stakeholders Committee, Remuneration Committee, etc. The details of the committees applicable to the company need to be mentioned in the report.
12. Board Evaluation: –
The annual evaluation process of the Board of Directors, Individual Directors and Committees was conducted in accordance with the provisions of the Act and the SEBI Listing Regulations if applicable. The detailed evaluation performance needs to be disclosed.
13. Disclosure of Appointment and Remuneration of KMP: –
The details of the KMP appointment and their remuneration need to be disclosed for such financial year. If provisions of KMP is applicable to the Company.
14. Details of Subsidiaries, Joint Ventures or Associate Company: –
If the company is having any Subsidiary, Joint Venture or any Associate Company then details for such entities need to be specified in the report along with its Annexure.
15. Vigil Mechanism: –
The provisions regarding vigil mechanism as provided in Section 177(9) of the Companies Act, 2013 need to be disclosed, if applicable on the Company.
16. Corporate Social Responsibility: –
As per the provisions of Section 135 of Companies Act, 2013 read with rules framed thereunder, every Company including its holding or subsidiary and a foreign Company, which fulfils the criteria specified in sub-section (1) of Section 135 of the Act shall comply with provisions of Section 135 of the Act and its Rules.
17. Internal Financial Control System: –
The Company’s internal control systems are adequate and commensurate with the nature and size of the Company and it ensures:
(i) timely and accurate financial reporting in accordance with applicable accounting standards.
(ii) optimum utilization, efficient monitoring, timely maintenance and safety of its assets.
(iii) compliance with applicable laws, regulations and management policies.
18. Human Resources and Industrial Relation: –
The Company need to specify that during the year under reporting, how was the industrial relations.
19. Particular of Contract or Arrangement with Related Parties: –
The company need to disclose if any contract entered with related parties under Section 188 of the Companies Act, 2013 along with Annexure.
20. Audit: –
There are various Audits in the company i.e., Statutory Audit, Secretarial Audit, Branch Audit, Cost Audit etc. The details of the Audits applicable to the company need to be mentioned in the report.
21. Deposits from Public: –
The detail of the deposits accepted from public if any, during the financial year need to be disclosed in the report.
22. Particulars of Loans, Guarantees or Investments: –
The particulars of Loans, guarantees or investments made under the provisions of Section 186 have already been disclosed in the financial statements.
23. Conservation of Energy, Technology Absorption: –
Information in accordance with the provisions of Section 134 read with the Companies (Accounts) Rules, 2014 regarding conservation of energy, and technology absorption if applicable to the Company need to be disclosed.
24. Foreign Exchanges Earnings and Outgo: –
The details of the Foreign Exchange earnings, value of imports, expenditure in foreign currency etc. if any should be disclosed in the report.
25. Directors Responsibility Statement: –
The details pursuant to the Section 134 (5) of the companies Act, 2013 need to be disclosed in the report for such particular financial year.
26. Secretarial Standards: –
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
27. Consolidated Financial Statements: –
The details of the company’s and its subsidiaries financials if applicable to the company need to be disclosed.
28. Disclosure under Sexual Harassment of Women at Workplace: –
The details of the implementation of secure workplace policy and its Internal Complaints Committee in accordance with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.
The detail of the complaints received if any during the year need to be disclosed.
29. Annual Return: –
The web link of the Annual Return needs to be specified, if the company is having website. And if no website then no need to specify the web link detail.
30. Acknowledgement: –
This is basically the detail where director’s wishes to places on record its sincere thanks to all their customers, clients, suppliers, bankers etc.
The bullet points mentioned above are not exhaustive. These are the standard points which can be applicable to all types of companies. There can be slight various other points too depending upon the industry and applicability to the company.
The point if not applicable to any type of the company can be simply written as “NOT APPLICABLE” to our company.
Author has tried their level best to cover the possible relevant points related to the Board’s Report. This article has been drafted keeping in mind every possible professional (New or Fresher or Experienced etc.) or Trainees or Intern etc. whosoever required clarity on this topic. Hope you find this article helpful & related.
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