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.
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