Directors report as per new companies act 2013

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Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2015 Sir

can any one suggest me the format of directors report as per new companies act 2013 applicable for F.Y:2014-15.

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
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30 January 2015 A. Contents of Directors Report
The following contents are mandatory to mention in the Director Report
1-Extract under section 92 We have already discussed above, the extract shall be prescribed.
2-Number of meeting of Board of Directors It is important information demanded by the Government, previously unlisted company need not to require make any information regarding it, but under the Companies Act, 2013 it is favorable, and it is mandatory for companies to put information about the Board Meeting. In that case, an unlisted company cannot play with the dates of meetings at least.
3- Directors Responsibility Statement Some modification has been made since previously, the detailed is below mentioned.
4- Under section 149 Who may be an independent Director, the Section 149 (6) is clarified the following:- An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee director,— (a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience; (b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company; (ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company; (c) who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year; (d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. Or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year; (e) who, neither himself nor any of his relatives— (i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed; (ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of— (A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent. or more of the gross turnover of such firm; (iii) holds together with his relatives two per cent. or more of the total voting power of the company; or (iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of the company; or (f) who possesses such other qualifications as may be prescribed. Considering the above points, it is a duty of an Independent Director to disclose every point in their statement which shall be annexed with the director Report.
5- Disclosure in the Board Report u/s 149 (10), Independent Director shall be appointed for a term of 5 years but it shall be re-appointed by passing of Special Resolution. In this regard, the company must disclose the appointment or re-appointment of Independent Director in the Board Report.
6- Matters as per section 178 of the act, if applicable The company shall disclose regarding the committee of Nomination, Remuneration and stakeholders relationship committee in the Board Report. 7- Reservation and qualification on Auditor Report and Secretarial Report The directors Report is also contained any reservation and qualification as marked by the Statuary Auditor of the Company in its Auditor Report and by the Company Secretary in whole time practice in its Secretarial Report.
8- Loans and Guarantee under section 186 The details of Loans, Guarantee and investment shall be mentioned in the Director Report as per provisions of Section 186 of the Act
9- Particular of Contract and arrangement under section 188 The company shall disclose in its report regarding all transaction which is related to related party. Comment: – In previous laws, there is no requirement to disclose the above point no. 8 and 9, now it is mandatory to disclose. The sense of Director Report that the Directors disclose all loan, guarantee, investment, related party transaction themselves.
10- state of company affairs
11- reserve
12- dividend
13- material changes
14- conservation, technology etc
15- foreign exchange Comment:- the aforesaid disclosures from 10 to 15 are remain same.
16- Risk Management In its Directors Report, a statement must be enclosed which shows the development and implementation of risk management policy of the company. Under new Act, there is no meaning and definition of Risk Management. Hence, the statement which is enclosed the director report, may be following elements: – (the following points are just opinion) 1-Introduction 2-Meaning and definitions Risk Management 3-Types of Risks 4- Risk Management 5-Risk Assessment 6-Risk Identification Activities 7-Risk Handling 8-Monitoring and Reporting 9-Conclusion
17- CSR The director report shall be contained the policy, development and implementation of CSR project. What initiations have been taken by the Company? It shall also be disclosed in the Director Report.
18- Formal Annual evaluation A statement shall be attached with the Board Report which shall be indicated the performance of the Board and its committee and its individual directors. This clause shall be applicable only listed company or prescribed public limited company.
19- other matter In case, company has intention to disclose other matter, it may so.

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