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Specimen of Directors’ Report – Companies Act,2013

Specimen of Directors’ Report

To,

The Members,

Your Directors have pleasure in presenting their ………….Annual Report on the business and operations of the Company and the accounts for the financial year ended March 31st, 2015.

  1. Financial summary or highlights/Performance of the Company(Standalone)

The Board’s Report shall be prepared based on the stand alone financial statements of the company.

The 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.

  1. 2Dividend

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.

  1. 3Reserves

The amounts, if any, which the Board proposes to carry to any reserves is to be given.

  1. Brief description of the Company’s working during the year/State of Company’s affair

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.

  1. Change in the nature of business, if any

No Change in the nature of the business of the Company done during the year.

  1. 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.

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.

  1. 7Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future
  2. 8Details in respect of adequacy of internal financial controls with reference to the Financial Statements. (Applicable to Listed Company)
  3. Details of Subsidiary/Joint Ventures/Associate Companies

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

The names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year.

  1. Performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement.

The Board’s report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented.

  1. Deposits

The details relating to deposits, covered under Chapter V of the Act,-

(a) accepted during the year;

(b) remained unpaid or unclaimed as at the end of the year;

(c) 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-

(i) at the beginning of the year;

(ii) maximum during the year;

(iii) at the end of the year;

The details of deposits which are not in compliance with the requirements of Chapter V of the Act;

  1. Statutory Auditors

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

  1. Auditors’ Report

The explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report shall be given.

  1. Share Capital
  2. A) Issue of equity shares with differential rights

The Board of Directors shall, inter alia, disclose in the Board’s Report for the financial year in which the issue of equity shares with differential rights was completed, the details as provided in rule 4 (4) of Companies (Share Capital and Debentures) Rules, 2014.

  1. B)Issue of sweat equity shares

The Board of Directors shall, inter alia, disclose in the Directors’ Report for the year in which such shares are issued, the details as provided in rule 8 (13) of Companies (Share Capital and Debentures) Rules, 2014.

  1. C)Issue of employee stock options

The Board of directors, shall, inter alia, disclose in the Directors’ Report for the year, the details as provided in rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014.

  1. D)Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees

Where the voting rights are not exercised directly by the employees in respect of shares to which the scheme relates, the Board of Directors shall, inter alia, disclose in the Board’s report for the relevant financial year the details as provided in rule 16 (4) of Companies (Share Capital and Debentures) Rules, 2014

  1. Extract of the annual return

The extract of the annual return in Form No. MGT – 9 shall form part of the Board’s report

 

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

  1. A)Conservation of energy:

(i) the steps taken or impact on conservation of energy;

(ii) the steps taken by the company for utilising alternate sources of energy;

(iii) the capital investment on energy conservation equipments;

(B) Technology absorption:

(i) the efforts made towards technology absorption;

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and

(iv) the expenditure incurred on Research and Development.

(C) 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. Corporate Social Responsibility (CSR) 

(applicable to every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year)

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 shall be made. (Format enclosed)

  1. Directors:
  2. A) Changes in Directors and Key Managerial Personnel

The details about the changes in the directors or key managerial personnel by way of appointment, re – designation, 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.

  1. B)Declaration by an Independent Director(s) and re- appointment, if any 

(Applicable to every listed companies and any class of public companies as may be prescribed)

A declaration by an Independent Director(s) that he/they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 shall be enclosed.

An independent director shall hold office for a term up to five consecutive years on the Board of a Company, but shall be eligible for reappointment for next five years on passing of a special resolution by the Company and disclosure of such appointment in the Board’s report.

  1. C) Formal Annual Evaluation

(applicable to listed company and every other public company having a paid up share capital of twenty five crore rupees or more calculated at the end of the preceding financial year)

The Board shall include a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.

  1. Number of meetings of the Board of Directors
  2. Audit Committee

(Applicable to every listed company and such other class or classes of companies, as may be prescribed)

The composition of an Audit Committee to be disclosed and where the Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed along with the reasons therefor.

  1. Details of establishment of vigil mechanism for directors and employees

(Applicable to every listed company or such class or classes of companies, as may be prescribed)

The details of establishment of vigil mechanism for directors and employees to report genuine concerns to be disclosed.

  1. Nomination and Remuneration Committee

(Applicable to listed companies and such other class or classes of companies, as may be prescribed)

The policy formulated by nomination and remuneration committee to be disclosed.

  1. Particulars of loans, guarantees or investments under section 186
  2. Particulars of contracts or arrangements with related parties:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto shall be disclosed in Form No. AOC -2. (Format enclosed)

 

 

  1. Managerial Remuneration:
  2. A) Details of the ratio of the remuneration of each director to the median employee’s remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. (Applicable to listed Company)
  3. B) Details of the every employee of the Company as required pursuant to 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
  4. C) Any director who is in receipt of any commission from the company and who is a Managing Director or Whole-time Director of the Company shall receive any remuneration or commission from any Holding Company or Subsidiary Company of such Company subject to its disclosure by the Company in the Board’s Report.
  5. D) The following disclosures shall be mentioned in the Board of Director’s report under the heading  “Corporate Governance”, if any, attached to the financial statement:—

(i) all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors;

(ii) details of fixed component and performance linked incentives along with the performance criteria;

(iii) service contracts, notice period, severance fees;

(iv) stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable.

  1. Secretarial Audit Report

 (Applicable to Listed Company and every public company having a paid-up share capital of fifty crore rupees or more or every public company having a turnover of two hundred fifty crore rupees or more)

A Secretarial Audit Report given by __________________________, a company secretary in practice shall be annexed with the report.

The Board of Directors shall provide explanations or comments on every qualification, reservation or adverse remark or disclaimer made by the company secretary in practice in the secretarial audit report.

  1. Corporate Governance Certificate 

(Applicable to Listed Companies)

The 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 shall be annexed with the report.

  1. Risk management policy

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.

  1. Directors’ Responsibility Statement

The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a 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;

(c) 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;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) 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.

(f) 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.

  1. Acknowledgements

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

For and on behalf of the Board of Directors

 

 

Place:

Date:                                                                                                     Signing as per Board resolution passed

 

 

Corporate Social Responsibility (CSR)

[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014]

  1. A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs.
  2. The Composition of the CSR Committee.
  3. Average net profit of the company for last three financial years
  4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above)
  5. Details of CSR spent during the financial year.

(a) Total amount to be spent for the financial year;

(b) Amount unspent, if any;

(c) Manner in which the amount spent during the financial year is detailed below.

(1)(2)(3)(4)(5)(6)(7)(8)
S. NoCSR project or activity identifiedSector

in

which

the

Project

is covered

Projects or programs

(1) Local area or other

(2) Specify the State and district where projects or programs was undertaken

Amount outlay (budget) project or programs wiseAmount spent on the projects or programs

Sub – heads:

(1) Direct expenditure on projects or programs

(2) Overheads

Cumulative expenditure upto to the reporting periodAmount spent : Direct or through

implementing agency*

1
2
3
TOTAL

*Give details of implementing agency.

  1. In case the Company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report.
  2. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company
Sd/-

(Chief Executive Officer or Managing Director or Director)

Sd/-

(Chairman CSR Committee)

Sd/-

[Person specified under clause (d) of sub-section (1) of section 380 of the Act]

 

(wherever applicable)

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Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto.

  1. Details of contracts or arrangements or transactions not at arm’s length basis

(a) Name(s) of the related party and nature of relationship

(b) Nature of contracts/arrangements/transactions

(c) Duration of the contracts / arrangements/transactions

(d) Salient terms of the contracts or arrangements or transactions including the value, if any

(e) Justification for entering into such contracts or arrangements or transactions

(f) date(s) of approval by the Board

(g) Amount paid as advances, if any:

(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188

  1. Details of material contracts or arrangement or transactions at arm’s length basis

(a) Name(s) of the related party and nature of relationship

(b) Nature of contracts/arrangements/transactions

(c) Duration of the contracts / arrangements/transactions

(d) Salient terms of the contracts or arrangements or transactions including the value, if any:

(e) Date(s) of approval by the Board, if any:

(f) Amount paid as advances, if any:

Note: Form shall be signed by the persons who have signed the Board’s report.

 

Thanks & Regards

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