Procedure For Preparation of Directors Report

     

Procedure For Preparation of Directors Report

  1.  At the close of the financial year, obtain particulars and information required to be stated in the Directors’ Report, in addition to noting the material events and their impact on the working results of the company such as union budget, change in Government policies, strike /lock out in the industrial undertaking etc.

  2.   Financial data for the current year and previous year (in case of existing company) are to be stated in a summarised form with the details of the appropriation of the credit balance (including the balance brought forward from the previous year). It should also contain tax provisions, provision for proposed dividend and dividend tax and balance (credit/debit) to be carried to balance sheet.

3. A statement of recommended dividend specifying rate of dividend on different classes of shares and shares allotted during the year is to be given. If no dividend is recommended, a statement of reasons is to be given.

4.   Brief description of the company’s working during the year. If there is more than one division, division wise working details are required to be given. Besides, working details of current years and future prospects of the company’s working have also to be given. A statement justifying the reasons for improvement/depressed results in comparison of the previous year is also required to be given.

5.  A statement regarding matters specified in the Directors’ Report of the previous year is to be given about the progress/actions taken thereabout.

6.   A statement is to be given about the projects undertaken during the year and the current year and progress made therein.

7.    A statement about strategic agreement entered into by the company during the year and the current year having effect on the working of the company.

8.  A statement in respect of changes made in the financial structure particularly relating to share and debenture capital by way of issue, redemption, conversion or otherwise.

9. Material changes occurred subsequent to the close of the financial year of the company to which the balance sheet relates and the date of the report like settlement of tax liabilities, operation of patent rights, depression in market value of investments, institution of cases by or against the company, sale or purchase of capital assets or destruction of any assets etc.

10.   A statement of public deposits invited accepted, renewed, repaid and not repaid on maturity (No. of depositors and amount as on the close of the year) and subsequently repaid till the date of the report along with the reasons for non-repayment of the due deposits.

11.    A statement about subsidiary company(ies) is to be given.

12.   A statement about the changes in the managerial personnel, in particular, about the directors of the company by way of appointment, redesignation, resignation, cessation on resignation, death or disqualification, variation made or withdrawn etc. In the case of a public company, the name of the director who is/are liable to retire by rotation and also whether he/they offers/offer for reappointment.

13.  Similar statement about the statutory auditors of the company, any change made during the year, whether existing auditor(s) is/are eligible for reappointment etc.

14.  A statement about the actions taken by the company towards its obligation to the social responsibility for upliftment of the society in which it is operating.

15. An acknowledgement to all with whose help, cooperation and hard work the company is able to achieve the results.

16.      Statements as required by the law.

17.  In the case of listed companies, the annual report of the company should also disclose–

(i)   the fact of delisting together with a statement of reasons, and in case of voluntary delisting, justification therefor, likewise disclosure about suspension of trading in the securities;

(ii)  The name(s) and address(es) of the stock exchange(s) at which the company’s securities are listed and whether the company has paid the annual listing fee to each such stock exchange; and

(iii) Compliance certificate from the auditors or practicing company secretaries regarding compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing agreement, is to be annexed with the Directors’ Report.

18.  The Board’s report and any annexures thereto shall be signed by its chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director. [Section 134(6)]

(For Board resolution regarding approval of the Directors’ Report and for approval of Board’s Report containing Board’s response to Auditor’s Comments and qualifications, please see Annexure at the end of the Study).

19. The Directors’ Report should be signed on receipt of the Auditors Report duly signed. Hence, it can bear the same or subsequent date which the Auditors’ Report bears.

Related Post :

Draft Board Resolution for Approval of Board’s Report

Draft Board's Report as per Section 134 of Companies Act, 2013

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