Understanding Disclosures in Board Report Under Companies Act 2013

Sr. No.

As per the provisions of Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 as amended from time to time, the Annual Return of the Company shall be placed on the website of the Company, if any.

The web-link of such annual return shall be disclosed in the Board’s report.

Note: If company does not website then it is recommended to place draft annual return at registered office of the company and disclose the same in board report.

(If having website)

(If having website)

(If having website)

The board Shall disclose details w.r.t Number of Meetings of the Board and Committees held during the reporting period.

General Practice: Details of changes occurred in composition of Board/KMP/Committee during the reporting period shall be disclosed in Board report

Brief overview of Business operations and affairs conducted by the Company during the reporting period shall be disclosed in the Board Report.

For example:

• General information about the Business affairs of the Company.
• New operations commenced or new office set up during the reporting period.
• Any changes in nature of business etc.

It is a formal statement made by the Board of Directors in its board report which affirm or confirms the adequacy of principles and standards followed by the company in preparation and maintenance of the annual accounts by adhering to applicable Accounting Standards and other matters as provided under provisions of Act.

Detailed Explanation shall be provided by the Directors in this head, if there is material departures of standards in preparation of Annual accounts during the reporting period.

The Director Responsibility Statement in the Board Report Shall State the statement as prescribed in provisions of Section 134 (5) of the Act.

The Directors shall disclose the details of fraud, if any reported by auditor (other than which are reportable to the Central Government i.e., Amount involving less than INR 1 Crore) pertaining to reporting period in the Board report of Company.

Key Highlight:

The word used in the provisions of Companies Act, 2013 is “Auditor” which includes Statutory Auditor, Secretarial Auditor and Cost Auditor of the Company as duly appointed under provisions of the Act.

The Board shall disclose the Composition of Board/KMPs along with changes if any occurred during the financial year.

The Board of Directors shall give the statement and confirmation on the declarations, if any submitted by the independent directors which is of the opinion that they fulfil the conditions specified in the Act and the Listing Regulations and that they are independent of the management.

Not Applicable to following class of unlisted Public Company:

1. Wholly Owned Subsidiary

2. Dormant Company

3. Joint Venture Company

(If Company has independent Director on Board)

The Director’s report shall contain disclosure of company’s policy on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178.

Not Applicable to following class of unlisted Public Company:

1. Wholly Owned Subsidiary

2. Dormant Company

3. Joint Venture Company

Note: Government Company is exempted from complying with provisions of this clause.

(If Company is covered under provisions of sub-section (1) of Section 178.)

i. Auditor in his report

ii. Company Secretary in practice in his secretarial audit report;

The Directors shall disclose in the Board Report the detailed explanation and comments on every qualifications, reservation or adverse remark or disclaimer made by such Auditor/PCS in its Secretarial Audit Report.

The Board shall disclose details of loans or guarantees given or security provided or acquisition by way of subscription of securities of anybody corporate during the reporting period in the Board report.

(Not Applicable to NBFC registered with Reserve Bank of India)

The Board shall disclose the details of contracts or guarantee or investment with related parties referred to in sub-section (1) of section 188 in the form AOC-2 such as transactions executed not at arms length basis and including material transaction executed at arms length basis during the reporting period in the Board report.

The Board shall disclose the details of amounts, if any which is propose to carry to any reserves during the reporting period in the Board report.

The Board shall disclose the details of amount of dividend which is recommended to be paid in the Board report.

(If any dividend is Declared)

(If any dividend is Declared)

Any material Change and commitment affecting the financial position of the company which occurred between the end of the financial year of the company to which the financial statements relates and the date of the report shall be disclosed in the Board report of the Company.

The Board shall disclose details of conservation of energy, technology absorption, foreign exchange earnings and outgo shall be disclosed in board report in accordance with provisions of the Act.

**Provided that the requirement of furnishing information and details under this sub-rule shall not apply to a government company engaged in producing defence equipment.

The board shall disclose the 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 in the Board report of the reporting period.

The board shall disclose the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year in the Board report of reporting period;

(If CSR Provisions are Applicable)

(If CSR Provisions are Applicable)

*If Paid up Capital of Public Limited Company exceeds 25 crore at end of proceeding financial year.

Note: This clause shall not apply to government company in which directors are evaluated by government.

a) The change in the nature of business.

b) The statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year.

c) The names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

d) The details relating to deposits, covered under Chapter V of the Act w.r.t. Deposits Accepted, remained unpaid or unclaimed, Default committed in repayment of deposits or interests thereon, details of deposits which are in non-compliances etc.

e) he details in respect of adequacy of internal financial controls with reference to the Financial Statements

f) Disclosure of maintenance of cost records as specified by Central govt

g) a statement that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

h) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year

i) the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

Note: The Central Government has prescribed Abridged Board Report for One Person Company and Small Companies in Rule 8A of Companies (Accounts) Rules

a) 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.

b) the financial summary or highlights

c) The details of directors who were appointed or have resigned during the year;

a) Disclosure of details of Remuneration Paid to Employees as provided in Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

b) Disclose the details of equity shares with the differential rights issued during the year as to No. of shares allotted, dividend, voting rights, % of shares with differential rights, issue price, diluted EPS etc as provided in Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014.

c) Disclose the details of issue of sweat equity shares if any issued by Company as provided in Rule 8 (13) of Companies (Share Capital and Debentures) Rules, 2014.

d) Disclose the details of Employee Stock Option Scheme if any issued during the year and other things as provided in rules as provided in Section 62(1)(b) read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014.

e) Disclose details of voting rights not exercised directly by the employees as provided in Proviso to Section 67(3) read with Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014.

f) CSR Disclosure: The Board Report Shall Disclose the Composition of the Corporate Social Responsibility Committee and other details as provided in Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014.

(If applicable)

(If applicable)

(If applicable)

Sr. No.

a) Transfer to reserve fund: Every Non-Banking Financial Company (NBFC) shall create a reserve fund and transfer therein a sum not less than twenty percent of its net profit every year as disclosed in the profit and loss account and before any dividend is declared. As good governance practice the same shall be disclosed in Board Report.

b) Declaration of Dividends: Every NBFC shall declare dividends in Compliance with provisions of RBI, notifications and circulars issued thereto.

c) Scale-based regulations: The Reserve Bank of India (RBI) vide its circular dated 22 October 2021 has introduced Scaled Based Regulation (SBR) – a revised Regulatory Framework for NBFC. Therefore as good governance practice such Classification of NBFCs to be disclosed in Board report.

d) Corporate Governance (Reserve Bank) Directions, 2015: The NBFC shall comply with Corporate Governance (Reserve Bank) Directions, 2015.

e) Information Technology Framework for the NBFC sector: The NBFC shall consider and comply with the RBI master directions issued thereunder by RBI.

f) Statutory Auditor/ Statutory Central Auditor: The NBFC shall comply with directions issued by RBI w.r.t. appointment of joint auditor or such auditor as prescribed under RBI Directions or rules made thereunder. Details of Such compliance needs to be disclosed in Board report of the Company.

Additional Disclosure required in the Board Report of NBFC as per RBI Guidelines and general market practice adhered by the NBFCs:

g) Committee Constitution: Every NBFC shall disclose the Composition and meetings of various committees such as Audit Committee, Nomination Committee, Asset Liability Management Committee and Risk Management Committee, if any applicable as provided in RBI directions as a good governance practice.

h) Securitization: As good governance practice the details of Securitization shall be disclosed in board report of Company.

i) Credit Rating: As good governance practice the NBFC shall disclose credit rating if any for providing any loans facilities or instruments issued thereto.

j) Membership with CICs: As good governance practice the details of all CIC Membership obtained during the year shall be disclosed.