The Board’s Report or Directors’ Report is where the Directors state their views on a Company. While any information which is materially important is expected to be stated in the Board’s Report, applicable laws put forth requirements as to what the Report should contain.
With the inception of Companies Act, 2013 (“the Act”), Director’s Report has become a pivot point wherefrom the overall compliance status of a company under most of the relevant parameters can be measured.
Primarily it is section 134 of the Act and Rule 8 of the Companies (Accounts) Rules, 2014 that defines the length, depth and coverage of a Board Report. Additionally, several Sections (depending on applicability) accompanied by Rules require disclosure of concerned matters dealt with in the respective sections, which may often overlap, including but not limited to –
For listed companies, disclosures required under the Listing Agreement become applicable. Primarily it is the Clause 49.VIII that deals with disclosures to be made in the Board report. Additionally, various clauses require disclosure about matters dealt with in the respective clauses – which are usually inserted as Annexure to the Board Report forming part of the Annual Report.
Standard disclosure requirement from Listing Agreement include –
Apart from the above, various laws of various Regulators as well as the Accounting Standards require disclosures depending on applicability. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Rehabilitation) Act, 2013, for example requires disclosure of complaints and redressal, if any, during the year.
Needless to mention, penalty for contravention involves imprisonment and fine. Worth mentioning, omission or misstatement in Board Report, apart from resulting in violation of respective sections, may as well attract section 447 and 448 relating to fraud.
Note: This Article tries to outline the overall coverage a Board’s Report. For details of disclosure, please refer to bare provisions.
About the Author
Abhishek Seth is a Kolkata based Company Secretary with working experience in financial services, health care, steel and real estate. He holds a Masters degree in Economics from the University of Calcutta and is an Associate Member of the Institute of Company Secretaries of India, New Delhi. Email: email@example.com.