Chapter-IX, Accounts of Companies
Section 134 (3): Financial Statement, Board’s Report etc.
Rule 8 of The Companies (Accounts) Rules, 2014
MATTERS TO BE INCLUDED IN BOARD’S REPORT
There shall be attached to statements laid before a company in general meeting a report by its Board of Directors which shall include:
Every company (mandatory for listed companies to have a official running website) 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;
Number of the meeting of the Board of Directors;
Directors Responsibility statement which shall contains the following:
- In the preparation of the annual accounts, the applicable accounting standards has been followed along with proper explanation relating to material departures;
- The directors has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give the true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
- 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;
- The directors had prepared the annual accounts on a going concern basis; and
- The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
- 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 sub- section 12 of section 143 other than those which are reportable to the central government;
A statement on declaration given by independent Director under sub section (6) of section 149;
Company’s policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178 (3);
Explanations or comments by the Board on every qualification, reservation or adverse remarks or disclaimer made by the auditor in his report and by the company secretary in practice in his secretarial audit report;
Particulars of loans, guarantees or investments under section 186;
Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188’
The state of company ‘s affairs;
The amount, if any, which it recommends should be paid by way of dividend;
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,
1. The conservation of energy, technology absorption, foreign exchange earnings and outgo as follow:
2. Conservation of energy:
3. The steps taken or impact on conservation of energy,
4. The steps taken by the company for utilizing alternate source of energy,
5. The capital investment on energy conservation equipments,
6. Technology absorption:
7. the efforts made towards technology absorption,
8. the benefits derived like product improvement, cost reduction, product development or import substitution,
-
- in case of imported technology(imported during the last three years reckoned from the beginning of the financial year)
- the details of technology imported
- the year of import
- whether the technology been fully absorbed
- if not fully absorbed , areas where areas has not taken place, and the reason thereof and
The expenditure incurred on research & Development
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.
1. The financial summary or highlights,
2. The change in the nature of business if any,
3. The details of directors and KMPs who were appointed or resigned during the year,
4. The names of companies which have become or ceased to be its subsidiaries, joint venture or associate companies during the year,
5. The details relating to deposits during the year such as:
- Accepted during the year,
- Remained unpaid or unclaimed as at the end of the year,
- Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:
- At the beginning of the year,
- maximum during the year,
- at the end of the year,
The details of deposits which are not in compliance with the requirements of chapter V of the act,
- 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,
- The details of in respect of adequacy of internal financial controls with reference to the financial statements;
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;
The details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year;
In case of listed company and every other public company having such paid-up capital as may be prescribed a statement indicating the manner in which formal (annual evaluation of the performance of the Board, its committee and of individual Directors has been made)
Other matters such as the Board’s report shall be prepared based on the stand alone financial statements of the company and shall report on the highlights of performance of the company during the period under report, 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.
Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year
Details of difference between the 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
Disclosure as to whether maintenance of cost records as specified by the central government u/s 148 (1) of the companies act, 2013, is required by the company and accordingly such accounts and records are made and maintained.
Other matters to be included in Board’s report
1. Acknowledgement
2. Particulars of Employees
3. Disclosure on confirmation with Secretarial Standards
4. Disclosure about ESOPs, Right Issues, sweat equity or preferential allotment or any other change in the share capital of the company
5. Disclosure about the comments on auditor’s report and statutory report by the respective auditors, whether these are positive or negative,
6. Disclosure about the change in the Registered office address of the company
7. Disclosure about the change in the address where books and accounts are kept of the company
8. Financial summary of the Company during the year
9. Disclosures about the amount transferred to reserves
10. Major things happened during the year which made the impact on the overall workings of the company & the major actions taken by the company in that respect, such as COVID-19 pandemic.
11. Details of the appointment and resignation of directors and auditors during the year.
Note: Rule 8 of The Companies (Accounts) Rules, 2014 shall not applicable to One Person Company and small company.
Disclaimer: The author is a company Secretary dealing in corporate, legal, taxation, IBC, RBI, FEMA & other laws. The information contained in this article is based on its own knowledge. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of provided article.
Author Bio
Reaction (Instant) (:Left clueless (!), rather puzzled (?):- is there any one or more item which could conceivably have ben left to be included, that so matters or must matter as to have a ‘material’ (?!?) impact on the quality of ‘GOVERNANCE’ ; in turn, of ‘audit’