Insightful Governance:

The Board of Directors’ report serves as a crucial reflection of the company’s performance, strategy and governance. It encapsulates a comprehensive overview of the company’s achievements, challenges and future outlook. From financial highlights to operational milestones, it provides stakeholders with a clear understanding of the company’s trajectory. Through transparent communication and strategic insights, the report underscores the Board’s commitment to accountability and long-term value creation.

Let’s dive deeper into the statutory inclusions required to be given in the Board’s report, in pursuance of the provisions of Companies Act, 2013, SEBI (LODR) Regulations, RBI/ FEMA laws, etc., as the case may be:

*Note:

1. Annexure II - Format for disclosure of financial information in the Board’s Report.
2. As a good corporate practice, company should make a disclosure in the Board’s report, even if:
   • no amount is proposed to be transferred to the reserves
   • no dividend is recommended by the Board.
3. A weblink in respect of the Dividend Distribution Policy and rationale for changes, if any in the same, is to be given in the annual report of the top 1000 listed entities based on market capitalization (calculated as on March 31 of every financial year). Other listed entities may voluntarily make such disclosure in the Board’s report.
4. Schedule IV of the Companies Act, 2013, is a ready reckoner of the Code of Conduct to be adhered to by Independent Directors.
5. As per Rule 13(3) of the Companies (Audit and Auditors) Rules, 2014, companies, whose Auditors have reported frauds involving amount less than rupees one crore (Rs. 1 crore) or as may be prescribed to the audit committee or the Board but not reported to the Central Government, the company shall disclose the details about such frauds in the Report in such manner as may be prescribed.
6. Producer company shall additionally disclose about the amounts to be paid as limited return on share capital and amounts, if any proposed to be disbursed as patronage bonus. (Section 465(1))
7. Board’s Report should be considered approved and signed at a meeting of the Board, convened in accordance with the provisions of the Act, by its chairperson, if he is authorized by the Board and where he is not so authorized, then by at least two directors, one of whom shall be a Managing Director, or by the director where there is one director.
8. Copy of financial statements, including consolidated financial statement, if any, along with all documents required to be attached to such financial statements under the Act, duly adopted at the AGM, should be filed with the Registrar of Companies within 30 days of the date of AGM.
9. Such report of the Board of Directors’ to be placed on the website of the company, if any.
10. Board shall be collectively responsible for any statement in its Report which is false in any material particular, or for any omission of a material fact, knowing it to be material.
11. Every listed company shall submit to the stock exchanges on which its securities are listed, its financial statement together with a copy of the Report within 21 working days of it being approved and adopted in the annual general meeting.
12. Section 448 of the Act provides that if in any return, report, certificate, financial statement, prospectus, statement or other document required by the Act or the rules made thereunder, any person makes a statement:
    • which is false in any material particulars, knowing it to be false or
    • which omits any material fact, knowing it to be material,
      then he shall be punishable liable under Section 447.
13. References:
    • https://www.icsi.edu/media/webmodules/ReferenceronBoardReports.pdf
    • https://www.icsi.edu/media/webmodules/Guidance%20Note%20on%20Board's%20Report.pdf
    • https://www.icsi.edu/media/portals/2/Ramakanth_DisclosuresInBoardsReport.pdf

Disclaimer

The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.