How to Draft DIRECTORS’ REPORT

About How to Draft DIRECTORS’ REPORT Division 1Contents of Board’s ReportChapter 1 Board’s Report — An Introduction Chapter 2 Disclosures pursuant to the Companies Act 20132.1. Disclosures under Section 134(3)2.1.(a). No need to give the extract of the annual return as provided under sub-section (3) of section 922.1.(b). Number of meetings of the Board2.1.(b).(i). Whether dates of Board meeting required to given2.1.(b).(ii). Frequency of meeting – meaning of “year” thereof2.1.(b).(iii). Practical Implications for Directors’ Report Disclosure2.1.(c). Directors' Responsibility Statement2.1.(c).(i). Author’s note – avoid boilerplate language2.1.(c).(ii). Author’s note – be careful for inconsistent accounting policies & unreasonable estimates2.1.(c).(iii). Author’s note – accounting records for safeguarding assets and preventing fraud and other irregularities2.1.(c).(iv). Author’s note – going concern2.1.(c).(v). Author’s note – adequate ‘internal financial controls’2.1.(c).(vi). Author’s note – “all” laws to be interpreted reasonably in context2.1.(ca). Details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government2.1.(d). A statement on declaration given by independent directors under sub-section (6) of section 1492.1.(e). In case of a company covered under sub-section (1) of section 178 company's policy on directors' appointment and remuneration including criteria for determining qualifications positive attributes independence of a director and other matters provided under sub-section (3) of section 1782.1.(f). Explanations or comments by the Board on every qualification reservation or adverse remark or disclaimer made— (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report 2.1.(f).(i) Author’s Note – meaning of Auditor2.1.(f).(ii) Author’s Note – meaning of explanation or comments2.1.(g). Particulars of loans guarantees or investments under section 1862.1.(g).(i). Author’s Note – consistency in disclosure of loans guarantees and investments2.1.(h). Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form2.1.(i). The state of the company's affairs2.1.(j). The amounts if any which it proposes to carry to any reserves2.1.(k). The amount if any which it recommends should be paid by way of dividend2.1.(l). 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 report2.1.(m). The conservation of energy technology absorption foreign exchange earnings and outgo in such manner as may be prescribed2.1.(m).(i). Author’s Note – missing disclosures on energy conservation R&D and foreign exchange when financial statements reveal what the Board’s report omits2.1.(n). 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 company2.1.(n).(i). Author’s Note – when the Board’s Report ignores the red flags in the financials2.1.(o). The details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year2.1.(o).(i) Author’s Note – CSR disclosures: interpreting “policy developed and implemented” in light of ongoing projects2.1.(p). In case of a listed company and every other public company having such paid-up share capital as may be prescribed a statement indicating the manner in which formal annual evaluation of the performance of the Board its Committees and of individual directors has been made2.1.(q). Such other matters as may be prescribed – other than One Person Company or Small Company2.1.(q).(i). Author’s Note – can a show cause notice be reported2.2. Disclosures related to Employees2.2.1 Calculation of remuneration2.2.2 Calculation of percentage of shareholding2.2.3 Employees' Particulars in loose Annexure2.3. Re-Appointment of Independent Director2.4. Change in the composition of the Board2.5. Disqualifications of Directors2.6. Audit Committee – disclosures for composition and reasons for not accepting Board’s recommendation2.7. Issue of Equity Shares with differential rights2.8. Sweat Equity2.9. Redemption of shares and/or debentures2.10. Investor Education and Protection Fund2.11. Disclosures pertaining to consolidated financial statements2.12. Vigil Mechanism2.13. Supplementing DisclosuresChapter 3 Matters to be included in Board's Report for One Person Company and Small Company 3.1. One Person Company and Small Company3.2. Contents of the Board Report(1) Abridged report for one person company and small company(2) Particulars of contracts or arrangements with related parties3.3. Qualification reservation or adverse remark or disclaimer made by the auditorChapter 4 Disclosure pursuant to the Listing Regulations 4.1. Report on projection made in offer document for public or right issue by a listed company4.2. Management Discussion and Analysis Report (MDAR)4.3. Report on Corporate GovernanceChapter 5 Disclosure pursuant to Employee Stock Option and Employee Stock Purchase Schemes 5.1. Under Companies Act 20135.2. Under SEBI Regulations5.3. Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employeesChapter 6 Disclosures by Producer Companies 6.1. Producer Company6.2. Mandatory contents of the Board’s Report for a Producer Company6.3. Application of provisions relating to private companies6.4. Interplay between Section 134 and Section 378ZR: reconciling general and special provisionsChapter 7 NBFCs – Disclosures Pursuant to Directions of Reserve Bank of India 7.1. Non-Banking Financial Companies7.2. Miscellaneous Non-Banking Companies7.3. Residuary Companies7.4. Systemically Important Non-Deposit taking Company and Deposit taking CompanyChapter 8 Disclosures pursuant to National Housing Bank Directions Chapter 9 Other Disclosures 9.1. Statement as to consolidated financial statements9.2. SWOT Analysis9.3. Projections and Estimates9.4. Disclosures as per Secretarial Standards9.5. Disclosure of commission to managing or whole-time director9.6. Additional information which may be given in the Board’s Report9.7. Dividend9.8. Major events occurred during the year9.9. General Information9.10. Investor Education and Protection Fund (IEPF)9.11. Details of Establishment of Vigil Mechanism9.12. Auditors9.13. Compliance with Secretarial StandardsChapter 10 Secretarial Audit Report Chapter 11 Cost Audit Report 11.1. Requirements of the Companies (Cost Records and Audit) Rules 201411.2. Explanations in the Board’s report in response to Cost Auditors’ qualification11.3. Reporting of fraudsChapter 12 Explanations in the Board’s Report in response to Auditors’ Qualification 12.1. Auditors’ remarks are not available to the Board at the time of its consideration and authentication of the balance sheet and profit and loss account12.2. Auditors’ report involves a debatable point12.3. Meaning of Auditor