Disclosures in Director Report under Companies Act 2013

The Report will mention yearly total Sales Turnover and Income and Point out any problems faced by the company which have affected the profits and measures which have been taken to improve the working and reduce costs.-

• Number of Board Meeting held during the year

• Director appointed during the year.

• Director resigned during the year.

Post Balance Sheet Events

The term material included items, the knowledge of which might influence the decision of use of financial statement.

– Accounting Standard

– Accounting Policy

– Proper and efficient care for three things:

• Going concern Basis

• Adequate Internal Financial Control

• Compliances with all applicable law

The Report will mention yearly total Sales Turnover and Income and Point out any problems faced by the company which have affected the profits and measures which have been taken to improve the working and reduce costs.-

• Number of Board Meeting held during the year

• Date of Board Meetings held during the year

• Number and Date of Committee meeting held during the year

• No. of Board Meeting attended by the each Directors during the year

But the Board’s Report shall contain 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.

• Director/KMP appointed during the year.

• Director/KMP resigned during the year.

Post Balance Sheet Events

The term material included items, the knowledge of which might influence the decision of use of financial statement.

(A) Conservation of energy–

(i) the steps taken or 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 three years reckoned 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.

– Accounting Standard

– Accounting Policy

– Proper and efficient care for three things:

• Going concern Basis

• Adequate Internal Financial Control

• Compliances with all applicable law

Director report shall disclose following about Sweat Equity Shares: .[Rule 7 of Unlisted Companies (Issue of Sweat Equity Share] Rules, 2003

• Number of Share issued Condition of issue of shares.

• Pricing formula

• Total Sweat equity share issued.

• Money realized and benefit accrued

• Diluted EPS pursuant to issue of sweat equity shares.

If ESOP has been given, its details are to be disclosed.

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

Also a requirement in terms of Clause 49(vii)(H)(2) of Clause 49.

Applicable to the Companies which have borrowed money from banks & FIs in excess of Rs. 50 Crore.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operation in future.

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.

• 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

Composition of CSR Committee, the details about the policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year.

Details about:

• Policy;

• Its Implementation;

• Spending as per Format in CSR Rules.

This will go as a separate annexure to the Board Report in the formant prescribed in CSR Rules. The concept of CSR is based on the principle ‘comply or explain’.

Hence, if Company fails to spend, the Board shall in its report specify the reason for not spending the amount and in case it does not disclose the reason for not spending, the company shall be punishable with fine.

§ Name of retiring directors and whether or not they offer themselves for re-appointment.

§ Casual vacancies in the Board filled during the year.

§ Re-appointment.

§ Casual vacancy in the Board filed during the year

§ Changes in Board during the year, by change of nominees, appointment of additional directors, death, resignation or any other reason

§ Details, if anyone is contesting for election as director/ small shareholder director.

If a public company provide financial assistance for the purchase of, or subscription for, fully paid-up shares in the company or its holding company, if the purchase of, or the subscription for, the shares held by trustees for the benefit of the employees or such shares held by the employee of Company.

This is new and cumbersome requirement. The Act seeks disclosure on Statistics Calculations.

§ The ratio of remuneration of each director to the median remuneration of the employees;

§ % increase in remuneration of each Director, KMP and of %— increase in median remuneration of employees

§ Explanation of relationship between average increase in remuneration & Company performance

§ Comparison of remuneration of each KMP against performance of company

§ Variation in market cap/ net worth of company

§ Justification of increase in managerial remuneration with that of increase in remuneration of other employees

§ Key parameters for any variable remuneration of directors

§ Ratio of remuneration of highest paid director to other employees who get remuneration more than highest paid director.

§ Affirmation that remuneration is as per remuneration policy of the Company.

§ Listed Entities also need to comply with other requirements of Clause 49 of Listing Agreement.

This provision is applicable on Listed Company and selected public Companies.

Ø 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.

Explanation or comments by the Board on every qualification, reservation or adverse remark or disclaimer made in the Audit Report-

By Company Secretary in Practice in the Secretarial Audit Report;

Companies need to attend to this with utmost professionalism by hiring external agencies.

§ remuneration for the director, Key Managerial Personnel and other employees,

§ Including criteria for determining qualification, positive attributes, independence of a director and other matters provided u/s 178(3).

§ The report shall disclose the policy formulated by the said Nomination & Remuneration Committee.

This again is applicable to listed Companies and select public Companies under preview of Section-177 r/w Rules 6 of Meetings of Board & its Power Rules.

Ø Comparison between remuneration managerial personnel and remuneration to employees.

Ø Details of employees drawing salary of Rs. 500,000/- or more per month.

Ø Details of remuneration to person holding 2% or more equity shares

Ø Details of employees (who are not directors or relatives) posted outside India.