BRIEF ON BOARD REPORT AND ANNUAL RETURN
BOARD’S REPORT (SECTION 134)
BOARD REPORT FOR COMPANIES OTHER THAN OPC AND SMALL COMPANY
At the end of the financial year, one must prepare the Board’s Report. Boards report may include various points as per the industries requirement. This is a detailed report which explains about the company’s structure in terms of financial impact, Companies Affairs, Board of Directors, Audit structure etc.
Following points are covered under the Board’s Report:
- Annual Return: Extract of Annual Return needs to be provided.
Web-link of Annual Return needs to be specified if the company is having website. And if does not have a website then no need to specify the web link detail. - Financial Results: The Company’s financial performances for the year under review along with previous year’s figures need to be presented in a tabular form.
- Dividend: If any dividend proposed by the directors for the financial year under review need be mentioned.
- Material changes and commitments affecting the financial position: The details of the changes if any, that has affected the financial position of the company during such particular year.
- Internal Financial Control System: The Company’s internal control systems are adequate and commensurate with the nature and size of the Company.
- Financial Performance and State of the Company’s Affairs: The details of the company, nature of the business and particular of its income/loss for the financial year under review.
- Capital Structure: The details of the Authorised and paid-up share capital of the company along with Equity & Preference Shares details for the financial year under review need to be specified.
- Change in nature of Business: The details of the change of the nature of business if any in such particular financial year.
- Directors and Key Managerial Personnel: The details of the change in directors and KMP during the financial year need to be taken into consideration.
- Corporate Governance: This is applicable in case of Listing Company. If applicable, then Report on Corporate Governance along with the certificate from a Practicing Company Secretary certifying compliance with conditions of Corporate Governance is part to this Report.
- Meetings of the Board: The details of how many times the board of directors of the company has duly met during the financial year need to be specified.
- Committees of the Board: There are various committees in the company i.e., Audit Committee, Risk Management Committee, Stakeholders Committee, Remuneration Committee, etc. The details of the committees applicable to the company need to be mentioned in the report.
- Disclosure of Appointment and Remuneration of KMP: The details of the KMP appointment and their remuneration need to be disclosed for such financial year. If provisions of KMP is applicable to the Company.
- Audit: There are various Audits in the company i.e., Statutory Audit, Secretarial Audit, Branch Audit, Cost Audit etc. The details of the Audits applicable to the company need to be mentioned in the report.
- Details of Subsidiaries, Joint Ventures, or Associate Company: If the company is having any Subsidiary, Joint Venture or any Associate Company then details for such entities need to be specified in the report along with its Annexure.
- Vigil Mechanism: The provisions regarding vigil mechanism as provided in Section 177(9) of the Companies Act, 2013 need to be disclosed, if applicable on the Company.
- Directors Responsibility Statement: The details pursuant to the Section 134 (5) of the companies Act, 2013 need to be disclosed in the report for such particular financial year.
- Human Resources and Industrial Relation: The Company need to specify that during the year under reporting, how was the industrial relations.
- Particular of Contract or Arrangement with Related Parties: The Company need to disclose if any contract entered with related parties under Section 188 of the Companies Act, 2013 along with Annexure.
- Deposits from Public: The detail of the deposits accepted from public if any, during the financial year need to be disclosed in the report.
- Particulars of Loans, Guarantees or Investments: The particulars of Loans, guarantees or investments made under the provisions of Section 186 have already been disclosed in the financial statements.
- Foreign Exchanges Earnings and Outgo: The details of the Foreign Exchange earnings, value of imports, expenditure in foreign currency etc. if any should be disclosed in the report.
- Board Evaluation: The annual evaluation process of the Board of Directors, Individual Directors and Committees was conducted in accordance with the provisions of the Act and the SEBI Listing Regulations if applicable. The detailed evaluation performance needs to be disclosed.
- Transfer to Reserve: The details of the profit if any, proposed to be carried to the Balance Sheet need to be disclosed.
- Consolidated Financial Statements: The details of the company’s and its subsidiaries financials if applicable to the company need to be disclosed.
- Acknowledgement: This is basically the detail where director’s wishes to places on record its sincere thanks to all their customers, clients, suppliers, bankers etc.
This is not an exhaustive list, there may be other points as well depending upon nature of industry.
Signing of Board’s Report: The chairman of the company shall sign the board’s report and its annexures, if authorised by Board. If the board does not authorise the chairman to sign the report, then at least two directors, one of whom must be a managing director, may sign the report. A signed copy of the Board’s Report should be posted on the company’s website.
Penalties for not filing Board’s Report: When a company fails to prepare the board’s report, the company must pay a penalty of Rs.3 lakh, and each officer in default must pay a penalty of 50,000.
BOARD REPORT OF OPC AND SMALL COMPANY
Following matters to be included in board’s report of OPC and SMALL COMPANY Rule 8A of Companies Account Rules, 2014
- Web address where annual return is placed (if any).
- Number of meetings of board.
- Director responsibility statement.
- Details of fraud reported by auditor.
- Comment of board on auditor’s report.
- State of company’s affairs.
- Financial summary.
- Material changes in nature of business and their effects on financial position of company during the year.
- Details of directors who were appointed or have resigned during the year.
- Details of material order passed by regulators or courts which is impacting company’s status and operations.
- Contract or arrangement with related parties.
ANNUAL RETURN (SECTION 92)
ANNUAL RETURN OF COMPANIES OTHER THAN OPC AND SMALL COMPANIES
Annual return is important document for the stakeholders of the company as it provides very detailed information about various aspects of company. It gives disclosures and greater insight into the non-financial matters of the company and the people behind the management of the company. It requires to be filled by every company with ROC.
- Content of Annual Return (MGT-7):
(a) Registered Office of the Company.
(b)Principal Business Activities of the Company.
(c) Particulars of Holding, Subsidiary and Associate Companies.
(d) Details of Directors, Promoters, KMP, Members and Debenture holders.
(e) Remuneration of Directors and KMP.
(f) Penalties/ Punishment/ Compounding of offences.
(g) Indebtedness of the Company.
(h) Shareholding Pattern.
(i) Details of general, Board and Committee Meetings. - Who Will Sign it: Director AND CS (PCS if There is no CS). In Case Of OPC, Small Company and a startup Private Company: CS OR Director (if there is no CS)
- The Annual Return of the following companies would be certified by PCS in Form No MGT-8:
(a) Listed Company
(b) Company having paid up share capital of ₹ 10 Crores or more
(c) Company having turnover of ₹ 50 Crores or more. - Filling of Annual Return with ROC: Within 60 days from the date on which AGM is held or should have been held.
- Non- Compliance By the company will attract Fine:
(a) 10,000 to 2 lakhs. - Officer in Default shall be punishable with fine:
(a) 10,000 to 50,000 (Quantum of Fine) - Non-Compliance by PCS will attract fine: 2 Lakhs.
ANNUAL RETURN OF OPC AND SMALL COMPANY
- Form of annual return: MGT-7A
- Details not to be given in annual return:
(a). Date of AGM, only in case of OPC.
(b). Particulars of Associate companies like holding or subsidiary (including joint ventures). - Details of unclassified share capital.
- Break-up of share capital.
- Details of Shares or Debenture transfer.
- Shareholding pattern.
- Shareholder’s/other meeting details.
- Details of board meeting.
- Certificate of CS is not required in this case it can be filled with just DSC of director.
- Due date for filing is 60 days from date of AGM.
