DIRECTOR’S REPORT: REFLECTING MIRROR IMAGE OF COMPANY

Director’s Report has been an integral part of the financial statement of the Company. With the implementation of Companies Act, 2013, the Director’s Report has become synonymous to disclosing every activity that a Company indulges in thus providing mirror image of the Company’s actions during the financial year.

In Companies Act, 2013, lot of sections specify certain mandatory disclosures to be made in Director’s Report. This has resulted the Director’s Report to disclose not only financial position of the Company but also disclose legal and operational activities of the Company.

A Director’s Report is intended to explain its Stakeholders, overall financial position of the Company, its operations & business practices. In fact, Director’s Report also provides the performance and financial position of its group companies, like Subsidiary, Associates and Joint Venture Companies.

Responsibility of preparing Director’s Report:

Although, the Management of the Company is required to bind together Director’s Report in the financials, but the primary responsibility of preparing Directors Report rests with Secretarial Department of the Company. Based on the information collected from various departments and unit locations of the Company, the Compliance Officer prepares the draft Director’s Report, to be finalized by Directors for their signatures.

Signing of Director’s Report:        

As per Section 134(6) of the Companies Act, 2013 and rules made thereunder, the Director’s Report shall be signed by Chairperson of the Company, provided the person is authorized by the Board. In case no Chairperson is appointed  or available for signatures, then, Director’s Report shall be signed by atleast two Directors, one of whom shall be a Managing Director. In case of One Person Company having single Director, it shall be signed by such one Director only.


 

Mandatory Content of Director’s Report:

This is the most critical part of the Director’s Report, in addition to general disclosures, the following mandatory disclosures shall be required to be made in Director’s Report (below list is not exhaustive, the Company may add more details as per their requirement):

  1. Information related to Financials:
  2. Financial highlights of the Company
  3. Particulars of Loans, Investments and Guarantees given/ accepted by the Company
  4. Particulars of Contracts and Arrangement with Related Parties and transactions thereof in Form AOC-2
  5. Dividend recommendations and declarations, if any
  6. Amount transferred to Reserves and Surplus
  7. Details of Deposits accepted and repaid during the year
  8. Financial performance of Subsidiary, Joint Venture and Associate Company
  9. Information related to Legal Affairs:
  10. Director’s Responsibility Statement
  11. Extract of Annual Return in Form MGT-9
  12. Total Board Meetings held during the year
  13. Criteria for appointment, remuneration and evaluation of Board including Independent Directors
  14. Details about the change in Directors and Key Managerial Personnel during the year
  15. Disclosures about the Statutory/ Secretarial/ Cost Auditor appointment and changes thereof
  16. Explanations to each qualifications made by Auditors of the Company
  17. Issue of Equity Shares with differential voting rights, issue of Sweat Equity Shares, or Employees Stock Option Schemes
  18. Provisions made by the Company to buy back its own share capital from employees of the Company
  19. Disclosures about appointment and re-appointment of Independent Directors
  20. Disclosures about Managerial Remuneration
  21. Disclosures about implementation of adequate systems to ensure compliance of all applicable laws
  22. Changes made by the Directors in their Disclosures during the year
  23. Details regarding Extra Ordinary General Meeting of the Company
  24. Changes in the name of the Company during the year
  25. Changes in the Financial Year of the Company
  26. Disclosures about the steps taken by the company to mitigate fraud
  27. Fraud Reporting mechanism
  28. Disclosures about the various policies adopted by the Company, like CSR Policy, Risk Management Policy, Whisle Blower Policy, etc
  29. Disclosures regarding adoption and implementation of Policy on Prevention of Sexual Harassment of Women at Workplace
  30. Measures adopted for implementation of Risk Management Policy, for mitigating risks
  31. Implementation of CSR Policy and initiatives taken by the Company
  32. Disclosures about non-expenditure of desired amount on CSR activities
  33. Formal Evaluation Criteria for performance evaluation of Board, Committees and Individual Directors
  34. Disclosures regarding constitution of various committees of the Board
  35. Any orders passed by the Court
  36. Details of employees drawing salary above prescribed limits
  37. Secretarial Audit Report shall be annexed with Board Report

 

  1. Information related to Business Operations:
  2. Brief description about the working of the Company during the past year
  3. Disclosures about change in nature or objectives of the Business
  4. Material changes affecting financial position of the Company
  5. Disclosures about conservation of energy, technology absorption and foreign exchange earnings and outgo
  6. Director’s overall perception for future outlook of the Company
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