With lot of amendments come day by day in the Companies Act & Rules, an attempt has been made from my side to share my knowledge regarding Board’s Report for One Person Companies (OPC) and Small Companies under the Companies Act, 2013 in the form of an Article. This Article contains the introduction, clarification, amended provisions and format and other important points included in Board’s Report for OPC and Small Companies under Companies Act, 2013. I hope this article would be given some help to our professional working.

INTRODUCTION:

The Ministry of Corporate Affairs vide its notification dated 31st July, 2018 has come with following rules named as Companies (Accounts) Amendment Rules, 2018in order to amend the Companies (Accounts) Rules, 2014, prescribed the new format of Board’s Report for One Person Company (OPC) and Small Company. The Board’s Report of One Person Company (OPC) and Small Company shall be prepared based on the stand alone financial statement of the company, which shall be in abridged form and contains the points as mentioned under Rule 8A of the Companies (Accounts) Rules, 2014.

APPLICABLE SECTIONS AND RULES:

Section 92 of the Companies Act, 2013 read with Rule 8A of the Companies (Accounts) Rules, 2014, Section 134 of the Companies Act, 2013.

Note: -Section 92 and Section 134 of the Companies Act 2013 read with the Companies (Amendment) Act, 2017, effective from 03rd January 2018.

-Rule 8A of Companies (Accounts) Rules, 2014 shall come into force from 31st July 2018.

MATTERS/POINTS TO BE INCLUDED IN BOARD’S REPORT FOR OPC AND SMALL COMPANY:

8A:- Matters to be included in Board’s Report for One Person Company and Small Company.

(1) The Board’s Report of One Person Company and Small Company shall be prepared based on the stand alone financial statement of the company, which shall be in abridged form and contain the following:-

(a) the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed;

(b) number of meetings of the Board;

(c) Directors’ Responsibility Statement as referred to in sub-section (5) of section 134;

(d) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government;

(e) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report;

(f) the state of the company’s affairs;

(g) the financial summary or highlights;

(h) material changes from the date of closure of the financial year in the nature of business and their effect on the financial position of the company;

(i) the details of directors who were appointed or have resigned during the year;

(j) the details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

(2) The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2.”

SIGNING OF BOARD’S REPORT:

Small Company: Two directors of the Company;

One Person Company: One Director of the Company.

NOTE: as mentioned in Section 134 (6) of the Companies Act 2013, the Board’s Report shall 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.

DISCUSSION FOR REQUIRMENT OF MGT-9 (AN EXTRACT OF ANNUAL RETURN) UNDER SECTION-92 FOR ANNUAL RETURN:

The Companies (Amendment) Act 2017 give effect to section-92 (3) of the Act that defined MGT-9 which forms a part of Board Report, this amendment are as under:

Pre amendment- Section 92(3) Post amendment- Section 92(3)
An extract of the annual return in such form MGT-9 shall form part of the Board’s report Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board’s report.

NOTE:

> As per amended provisions under the Companies (Amendment) Act 2017, MGT-9 is not required to prepare. Now the Section 92(3) of the Companies Act 2013, MGT-9 is not mentioned under any Section and the companies are neither required to prepare the extract of Annual Report (MGT-9) nor required attach the same with Board’s Report of the Company.

> The Company would be required to prepare Annual Return in term of section 92 (1) of the Companies Act 2013 and placed the same on website by mentioning the link on its Board’s Report.

> If Company has no website there is no need to mention web-link on its Board’s Report or place the same on website.

FORMAT OF BOARD’S REPORT AS PER RULE-8A FOR SMALL COMPANIES (NOT HAVING WEBSITE):

DIRECTORS’ REPORT

To
The Members
M/S ABC PRIVATE LIMITED

The Directors of your company have pleasure in presenting their (_NO.) Board’s Report in a abridge form for the year ended on 31st March, 2018.

NUMBER OF MEETINGS OF THE BOARD:

During the year under review, the Board met ___ times on the following dates:

1) Date

DIRECTORS’ RESPONSIBILITY STATEMENT:

As required u/s 134(5) of the Companies Act 2013, the Directors state that:

(i) in the preparation of the annual accounts for the financial year ended 31st March 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year covered under this Report and of the profit and loss of the company for that period;

(iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) the directors had prepared the annual accounts on a going concern basis and

(v) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143 (12) OTHER THAT THOSE WHICH ARE REPORTABLE TO CENTRAL GOVERNMENTS:

There is no report and fraud reported by auditor of the Company.

EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY AUDITOR IN HIS REPORT:

The observations of the Statutory Auditors, when read together with the relevant notes to the accounts and accounting policies are self explanatory and do not call for any further comment.

THE STATEMENTS OF THE COMPANY AFFAIRS:

Assets and liabilities, share capital of the company.

The Company is engaged in the business of:

  • Business Activity 1
  • Business Activity 2

There has been no change in the business of the Company during the financial year ended 31st March, 2018.

THE FINANCIAL SUMMERY OR HIGHLIGHTS:

The operating financial results for the year are summarized below:

Particulars Year ended 31st March 2018 (amount in Rupees) Year ended 31st March 2017 (amount in Rupees)
Total Income
Profit before Depreciation & Tax
Less : Depreciation
Profit before Tax
Less : Taxation
Profit after Tax
Total Reserves & Surplus
Transfer to Reserve during the year
Earnings per share (In Rupees)

Dividend:

No dividend was declared for the current financial year due to conservation of profits and continued investment in the business.

Company’s performance & operations:

Your Company has made an income amounting to Rs. _______/- income during the year under report against Rs._________/- during the previous year. The company has a profit of Rs. __________/- which has been transferred to Reserves & Surplus in the Balance Sheet of the company. The Company tries to extend the business of the Company and make efforts to achieve a good turnover in future.

Transfer to any reserves:

The company has transferred amount of Rs. ________/- which has been transferred to Reserves & Surplus in the Balance Sheet during the year under the review.

MATERIAL CHANGE FROM THE DATE OF CLOSURE OF THE FINANCIAL YEAR IN NATURE OF BUSINESS AND THERE EFFECT ON THE FINANCIAL POSITION OF THE COMPANY:

There is no change in the nature of the business of the company.

THE DETAILS OF DIRECTORS WHO ARE APPOINTED OR HAVE RESIGNED DURING THE YEAR:

In the Financial Year 2017-2018: there is change in directorship of the Company.

Name of directors Designation Appointment/ resignation Date of appointment/ resignation

THE REPORT OF THE BOARD SHALL CONTAIN THE PARTICULARS OF CONTRACTS OR AGGANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF THE SECTION 188 IN THE FROM AOC-2:

The disclosure is given in form AOC-2 attached with this report as Annexure-I.

ACKNOWLEDGEMENT:

Your Directors place on record their deep appreciation and gratitude for the cooperation and assistance extended to the company by Banks, Government Agencies, Suppliers, Customers, Consultants and company staff at all levels. Your Directors also wish to place on record their appreciation of the wholehearted and continuous support by the shareholders who have always been a source of strength for the company.

FOR AND ON THE BEHALF OF THE BOARD

ABC PRIVATE LIMITED

Date: __/__/2018 NAME NAME
Place: New Delhi Director Director
DIN: DIN:
Address Address

All Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above or not. Author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up.

I hope that this article would be helpful to our professional working and provide smooth working platform and endeavors under Companies Act, 2013. Thank you to visit and read this article. Kindly share your opinion.

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3 responses to “Board’s Report For One Person Company (OPC) and Small Company”

  1. ca h m johari says:

    is Related party transaction and auditor appointment clause ??

  2. Padmanabh Ranchhoddas Merchant says:

    In the Directors’ Report of Small Company, an abstract of Annual Return in Form MGT 9 is not required to be attached, provided Web address, if any, of the small company could be stated in the Directors’ Report. Most of the small companies may not have web address of its own. If the Small Company does not have web address, MGT -9 form will be required to be attached to its Directors’ Report

    • CS Jyoti Arya says:

      No, MGT-9 is not required to prepare or attach with Board’s Report in both cases a company is having or not having its website. In case having Website it means only to provide web-link of the Annual Return of the Company in the Board’s Report. As per amended provisions under the Companies (Amendment) Act 2017, MGT-9 is not mentioned in any section and now no need to prepare or attach.

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