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Board’s Report -Ready Reckoner (including amendment under Companies (Amendment) Act, 2017)

Mithun B. Shenoy 26 Jun 2018 10,818 Views 1 comment Print Company Law | Articles

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Article explains Board’s Report – Ready Reckoner (including amendment under Companies (Amendment) Act, 2017), Additional Compliance For Listed Companies Under SEBI (Listing Obligations And Disclosure Requirements) Reg, 2015 And Punishment For Non Compliance Of Section 134 Of Companies Act, 2013.

Sl. No.	Section under Companies Act, 2013 / its Rules	Particulars	Applicable to Company Type						Amendment through companies (Amendment) Act, 2017	Other Remarks
Sl. No.	Section under Companies Act, 2013 / its Rules	Particulars	Listed	Public	Pvt.	Sec 8	Small	OPC	Amendment through companies (Amendment) Act, 2017	Other Remarks
1	Sec 134 (3) (a)	[the extract of the annual return in Form MGT 9 as provided under section 92(3);] ¹	P	P	P	P	P		¹web address if any wherein annual return under Sec 92 (3) has been placed, shall mentioned in Annual report Effective date is yet to be notify
2	Sec 134 (3) (b)	number of meetings of the Board;	P	P	P	P	P
3	Sec 134 (3) (c)	Directors’ Responsibility Statement;	P	P	P	P	P			check Sec 134 (5)
4	Sec 134 (3) (ca)	details of frauds reported by auditors under section 143 (12) other than those which are reportable to the Central Government	P	P	P	P	P			inserted vide companies (Amendment) Act, 2015
5	Sec 134 (3) (d)	a statement on declaration given by independent directors under Section 149 (6)	P	P		P
6	Sec 134 (3) (e)	[in case of a company covered under Section 178 (1), company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178 (3);]¹	P	P		P			¹“policy shall be made available on company website and salient features including changes if any shall be specified in the Board Report and web address shall be indicated therein”. Effective date is yet to be notify	this provisions shall not be applicable in case of Government Companies through notification dated 05.06.2015 (check proviso to Section 178 (4))
7	Sec 134 (3) (f)	Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made — (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report;	P	P	P	P	P	P
8	Sec 134 (3) (g)	particulars of loans, guarantees or investments under section 186;	P	P	P	P	P			Sec 186 is not applicable in case of Govt Company subject to certain conditions.
9	Sec 134 (3) (h)	particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form	P	P	P	P	P			particulars in Format AoC-2 vide Rule 8 (2) of Companies (Accounts) rules, 2014
10	Sec 134 (3) (i)	the state of the company’s affairs;	P	P	P	P	P
11	Sec 134 (3) (j)	the amounts, if any, which it proposes to carry to any reserves;	P	P	P	P	P			As per Sec 123, it is now optional for companies to transfer of amount to reserve even if Company declares/ recommend the dividend
12	Sec 134 (3) (k)	the amount, if any, which it recommends should be paid by way of dividend;	P	P	P		P
13	Sec 134 (3) (l)	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 statements relate and the date of the report;	P	P	P	P	P
13	Sec 134 (3) (m)	the conservation of energy, technology absorption, foreign exchange earnings and outgo;	P	P	P	P	P			check the Sl. No. 20 – Rule 8 (3) Companies (Accounts) Rules, 2014
14	Sec 134 (3) (n)	a statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company;	P	P	P	P	P
15	Sec 134 (3) (o)	the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year;	P	P	P	P	P			Rule 9 of Companies (Accounts) Rules, 2014, disclosure of contents of CSR Policy in Board report and on the Companies website as per annexure to Companies (CSR policy) rules, 2014
16	Sec 134 (3) (p)	in case of a listed company and every other public company having such paid-up share capital as may be prescribed, a statement indicating the manner in which formal [annual evaluation has been made by the Board of its own performance and that of its committees and individual directors]¹	P	P					¹ “Annual Evaluation of the perfor-mance of the Board, its Committees and of individual directors has been made”. Effective date yet to be notified	This provision shall not be applied to Govt company wherein directors are evaluated based on their own mythology. Rule 8 (4) of Companies (accounts) rules, 2014, every listed company and other public companies having paid up capital of Rs. 25 Crores or more, shall include statement of formal evaluation of Board performance, its committees and individual directors
17	Sec 134 (3) (q)	such other matters as may be prescribed – check Rule 8 as below
18	Rule 8 (1) of Companies (Accounts) Rules, 2014	The Board Report shall be prepared on standalone financial statement of Company and shall report on highlights of performance of subsidiaries, associates and joint venture company and their contribution to the overall performance of the Company during the period under review	P	P	P	P	P
19	Rule 8 (3)	(A) Conservation of energy – (i) impact on conservation of energy; (ii) the steps taken by the company for utilizing alternate sources of energy; (iii) the capital investment on energy conservation equipments;(B) Technology absorption- (i) the efforts made towards technology absorption; (ii) the benefits derived like product improvement, cost reduction, product development or import substitution; (iii) in case of imported technology (imported during the last 3 years from the beginning of the financial year)- (a) the details of technology imported; (b) the year of import; (c) whether the technology been fully absorbed; (d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and (iv) the expenditure incurred on Research and Development. (C) Foreign exchange earnings and Outgo- The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.	P	P	P	P	P			Not Applicable to Government Company.
20	Rule 8 (4)	Every Listed Company and every other public company having paid up share capital of Rs. 25 Crores or more calculated at the end of preceding FY shall include, in the report by Board, a statement indicating the manner in which formal evaluation has been made by the Board of its own performance and that of its committee and individuals	P	P
21	Rule 8 (5)	(i) the financial summary or highlights; (ii) the change in the nature of business, if any; (iii) the details of directors or key managerial personnel who were appointed or have resigned during the year;(iv) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year; (v) the details relating to deposits, covered under Chapter V of the Act,- (a) accepted during the year; (b) remained unpaid or unclaimed as at the end of the year; (c) whether there has been any default in repayment of deposits or payment of interest thereon during the amount involved- (1) at the beginning of the year; (2) maximum during the year; (3) at the end of the year; (vi) the details of deposits which are not in compliance with the requirements of Chapter V of the Act; (vii) the details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future; (viii) the details in respect of adequacy of internal financial controls with reference to the Financial Statements.	P	P	P	P	P
22	(3A)	Central Government shall prescribe Abridged Board’s Report for compliance with this section by OPC and small Company					P	P	Date yet to be notified
23	134 (6)	The Board report and any annexures under Sub sec (3) shall be signed by the Chairperson of the Company if authorised by Board and where he is not authorised, shall be signed by atleast 2 Directors one of whom shall be MD/ Director where there is one	P	P	P	P	P	P
24	Section 149(10)	Company shall disclose the appointment or re-appointment of Independent Director.	P	P
25	Sec 43 (1) read with Rule 4 (4) of Companies (share capital and debenture) rules, 2014	The Board of Directors shall, inter alia, disclose, for the financial year in which the issue of equity shares with differential rights was completed	P	P		P				Sec 43 shall not apply to private companies where MoA and AoA so provides
26	Sec 67 read with Rule 16	Where the voting rights are not exercised directly by the employees in respect of shares to which the scheme relates, the Board of Directors shall, inter alia, disclose certain information for the relevant financial year	P	P		P
27	Sec 54 read with Rule 8	The Board’s Report for the year, wherein sweat equity shares are issued, shall contain requisite information.	P	P	P	P	P		Sec 54 (1) (c) omitted Effective from 07.05.2018	Listed Company shall additionally comply with SEBI (issue of sweat equity) Reg, 2002
28	Sec 62 (1) (b) read with Rule 12	The Board’s Report for the year, wherein ESOPs are issued, shall contain requisite information.	P	P	P	P	P			Listed Company has to additional comply with SEBI (share based employee benefit) reg, 2014
29	Section 177(8).	The composition of an Audit Committee and where the Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed in such report along with the reasons	P	P			P			Listed Companies has to comply with Reg 18 of SEBI (LoDR) Reg
30	Section 177(10)	Establishment of vigil mechanism	P	P	P					Listed Companies has to comply with Reg 22 of SEBI (LoDR) Reg
32	Sec 197 (14)	Any Managing or Whole-time director of the company, who is in receipt of any commission from the company and also receiving any remuneration or commission from any holding company or subsidiary company of such company, has to disclose the same.	P	P		P
33	Rule 5 (1) of Companies (appointment and remuneration of managerial personnel) Rules, 2014	Every listed company shall disclose in the Board report (i) the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the FY (ii) the percentage increase in remuneration of each director, CFO, CEO, Company Secretary or Managerial in the FY (iii) the percentage increase in the median remuneration of employees in the financial year (iv) the number of permanent employees on the rolls of Company (viii) average percentile increase already made in the salaries of employees other than the managerial personnel in the last FY and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration (xii) affirmation that the remuneration is as per the remuneration policy of the Company	P							(v) to (vii) and (ix) to (xi) of Rule 5 (1) of Companies (appointment and remuneration of managerial remuneration) Rules, 2014 omitted vide amendment rules dated 30.06.2016
34	Rule 5 (2)	The Board report shall include statement showing the name of the top ten employees in terms of remuneration drawn and the name of every employees who : (1) if employed through out the FY, was in receipt of remuneration for that year which, in the aggregate, was not less than Rs. 1.02 Crores; (ii) if employed for a part of the FY, was in receipt of remuneration for any part of that year, at a rate which in the aggregate, was not less than Rs. 8.5 lakhs per month; (iii) if employed throughout the FY or part thereof, was in receipt of remuneration in that year which in the aggregate or as the case may be, at a rate which in aggregate is in excess of that drawn by MD/ WTD/ manager and holds by himself or along with his spouse and dependent children, not less than 2% of equity shares of the Company.	P
35	Rule 5 (3)	The above mentioned statement shall also indicate the following particulars of the employees – (i) designation of the employee; (ii) remuneration received; (iii) nature of employment, whether contractual or otherwise; (iv) qualifications and experience of the employee; (v) date of commencement of employment; (vi) the age of such employee; (vii) the last employment held by such employee before joining the company; (viii) the percentage of equity shares held by the employee in the company; and (ix) whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager:	P
	1st proviso to Rule 5 (3)	the particulars of employees posted and working in a country outside India, not being directors or their relatives, drawing more than Rs.60,00,000 per FY or Rs.5,00,000 per month, as the case may be, as may be decided by the Board, shall not be circulated to the members in the Board’s report, but such particulars shall be filed with the Registrar of Companies while filing the financial statement and Board Reports.	P
36	3rd proviso to Sec 131	Where the financial statement or Board’s Report of the Company was revised in respect of any of the three preceding financial years after obtaining approval of the Tribunal, then, the detailed reasons for revision shall be disclosed, in the relevant FY in which such revision is being made.	P	P	P	P	P

“P” denotes Applicable

ADDITIONAL COMPLIANCE FOR LISTED COMPANIES UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REG, 2015

SCHEDULE V: (Regulation 34(3) and 53(f)])

A.Related Party Disclosure:

Disclosures in compliance with the Accounting Standard on “Related Party Disclosures.
The above disclosures shall be applicable to all listed entities except for listed banks.

B. Management Discussion and Analysis

C. Disclosure of Accounting Treatment:

Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the management’s explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.

D. Corporate Governance Report: The following are the disclosures to be included in annual report.

A brief statement on listed entity’s philosophy on code of governance;
Board of directors and its compositions & its related disclosure;
Audit committee and its compositions & its related disclosure;
Nomination and Remuneration Committee and its compositions & its related disclosure;
Remuneration of Directors;
Stakeholders’ grievance committee and its compositions & its related disclosure;
General body meetings and its related disclosure;
Means of communication of quarterly/ yearly results, website etc;
General shareholder information viz., AGM details, dividend payable date, name of stock exchanges in which shares of the Company is listed etc…;
Other Disclosures viz., disclosures on materially significant related party transactions including weblink of policy on material related party transaction & policy for determining material subsidiaries; details of non-compliance by the listed entity, penalties, strictures imposed by stock exchanges; details of vigil mechanism etc….;
Non-compliance of any requirement of corporate governance report as above along with reasons;
The corporate governance report on discretionary requirements as specified in Part E of Schedule II have been adopted;
The disclosures of the compliance with corporate governance requirements specified in regulation 17 to 27 and clauses (b) to (i) of regulation 46 (2).

E. Declaration signed by CEO stating that the members of board of directors and senior management personnel have affirmed compliance with the code of conduct of board of directors and senior management.

F. Compliance certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance shall be annexed with the directors’ report.

G. Disclosures with respect to demat suspense account/ unclaimed suspense account

PUNISHMENT FOR NON COMPLIANCE OF SEC 134

If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 25 Lakhs and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than Rs. 5000 but which may extend to Rs. 500,000, or with both.

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One Comment

Shikha Maloo says:

Disclosure of Compliance with applicable Secretarial Standard will also come under Board’s Report as per SS1- standard 9

Reply

June 29, 2018 at 6:39 pm

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Board’s Report -Ready Reckoner (including amendment under Companies (Amendment) Act, 2017)

Sl.

No.

Section under Companies Act, 2013 / its Rules

Particulars

Applicable to Company Type

Amendment through companies (Amendment) Act, 2017

Other Remarks

Listed

Public

Pvt.

Sec 8

Small

OPC

1

Sec 134 (3) (a)

[the extract of the annual return in Form MGT 9 as provided under section 92(3);] 1

P

P

P

P

P

1 web address if any wherein annual return under Sec 92 (3) has been placed, shall mentioned in Annual report

Effective date is yet to be notify

2

Sec 134 (3) (b)

number of meetings of the Board;

P

P

P

P

P

3

Sec 134 (3) (c)

Directors’ Responsibility Statement;

P

P

P

P

P

check Sec 134 (5)

4

Sec 134 (3) (ca)

details of frauds reported by auditors under section 143 (12) other than those which are reportable to the Central Government

P

P

P

P

P

inserted vide companies (Amendment) Act, 2015

5

Sec 134 (3) (d)

a statement on declaration given by independent directors under Section 149 (6)

P

P

P

6

Sec 134 (3) (e)

[in case of a company covered under Section 178 (1), company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178 (3);]1

P

P

P

1 “policy shall be made available on company website and salient features including changes if any shall be specified in the Board Report and web address shall be indicated therein”.

Effective date is yet to be notify

this provisions shall not be applicable in case of Government Companies through notification dated 05.06.2015

(check proviso to Section 178 (4))

7

Sec 134 (3) (f)

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made — (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report;

P

P

P

P

P

P

8

Sec 134 (3) (g)

particulars of loans, guarantees or investments under section 186;

P

P

[the extract of the annual return in Form MGT 9 as provided under section 92(3);] ¹

¹web address if any wherein annual return under Sec 92 (3) has been placed, shall mentioned in Annual report

[in case of a company covered under Section 178 (1), company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178 (3);]¹

¹“policy shall be made available on company website and salient features including changes if any shall be specified in the Board Report and web address shall be indicated therein”.