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Chapter 9 - Transparency and Disclosure Company Law: Annual Report

The document discusses transparency and disclosure requirements for companies in India. It outlines the key documents that must be prepared and disclosed annually, including the annual report, board's report, and annual return. The annual report provides operating and financial highlights of the past year to shareholders. The board's report informs shareholders about company performance and policies. It must be presented along with financial statements at the annual general meeting. The annual return contains particulars of the company at the close of the financial year and must be filed with the registrar. Websites disclosure is also required for listed companies.

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346 views2 pages

Chapter 9 - Transparency and Disclosure Company Law: Annual Report

The document discusses transparency and disclosure requirements for companies in India. It outlines the key documents that must be prepared and disclosed annually, including the annual report, board's report, and annual return. The annual report provides operating and financial highlights of the past year to shareholders. The board's report informs shareholders about company performance and policies. It must be presented along with financial statements at the annual general meeting. The annual return contains particulars of the company at the close of the financial year and must be filed with the registrar. Websites disclosure is also required for listed companies.

Uploaded by

anubhaw sinha
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Chapter 9 – Transparency and Disclosure Company Law

Annual Report:
The annual report is a comprehensive report provided by most public companies to disclose their corporate activities
over the past year. The report is typically issued to shareholders and other stakeholder who use it to evaluate the firm’s
performance including both operating and financial highlights.

Such annual report shall contain the following:


(a) Audit financial statement i.e., balance sheet, profit and loss account etc. and statement on impact of Audit
Qualification, if applicable;
(b) Consolidated financial statements audited by its statutory auditors;
(c) Cash flow statement presented only under the indirect method as prescribed in Accounting Standard-3 or
Indian Accounting Standard 7 as applicable, specified in section 133 of the Companies Act, 2013;
(d) Directors report;
(e) Management discussion and analysis report – either as part of directors report or addition thereto;
(f) For the top five hundred listed entities based on market capitalization.

Board’s Report:
The Board’s Report is the most important means of communication by the Board of Directors of a company with its
shareholders. It is a comprehensive document which serves to inform the shareholders about the performance and
various other aspects of the company, its major policies, relevant changes in management, future programmes of
expansion, modernization and diversification, capitalization or reserves, etc.

It is mandatory for the Board of Directors of every company to present financial statement to the shareholders along
with its report, known as the “Board’s Report” at every annual general meeting.

Disclosure in Board’s Report pursuant to the Companies Act, 2013


(i) Disclosures under Section 134(3)
(ii) Details of Employees Stock Option Scheme – section 62(1)(b)
(iii) Voluntary revision of Financial Statement or Board’s Report – Section 131(1)
(iv) Resignation of Director – Section 168(1)
(v) Issue of Equally Shares with differential rights
(vi) Restriction on purchase by company or giving of loans by it for
(vii) Corporate social responsibility – Section 135
(viii) Composition of Audit Committee – Section 177(B)
(ix) Issue of Sweat Equity Shares
(x) Disclosure pertaining to Consolidate Financial Statements
(xi) Re-Appointments of an Independent Director – Section 149(10)
(xii) Details of Vigil Mechanism – Section 177(10)
(xiii) Disclosure pertaining to remuneration of directors and employees – Section 197(12)
(xiv) Policy relating to the remuneration for the directors, key managerial personnel and other employees –
Section 178(4)
(xv) Remuneration Received by MD and WTD from holding or subsidiary companies – Section 197(14)
(xvi) Related party transactions – Section 188(2)

CS Executive – Company Law CS Pooja Anand


Commerce Insights, Kanchan Palace, East Boring Canal Road, In front of Panchmukhi Hanuman Mandir | Contact: +91 8340274459
r
Contact No.: +91 919968892

(xvii) Secretarial Audit Report – Section 204(1)


(xviii) Additional Disclosure by Producer Company

Signing of Board’s Report [Section 134(6)]


(i) If chairperson authorised by the Where Chairperson is not authorised by Further, as a good practice, the
Board Board companies should get the annexure
to the Board’s report also
separately signed by the chairman.
(ii) Chairperson of the company At least two directors, one of whom The annual report on CSR may be
shall be a Mana-ging Director, or by signed by the chairman of the CSR
the director where there is one director. committee.

Annual Return:
As per section 92 of the Companies Act, 2013 every company is required to prepare the Annual Return in Form no.
MGT-7 containing the particulars as they stood on the close of the financial year. Annual return is to be filed with the
Registrar within 60 days from the date on which Annual General Meeting (AGM) is actually held or from the last day
on which AGN should have been held.
• As provided in sub section 384, the provision of Section 92 regarding filing of annual return apply to a foreign
company subjected to such exceptions, modification and adoptions as may be provided for in the Rules.
• Rule 7 of the Companies (Registration of Foreign Companies) Rules, 2014 provides that every foreign
company shall prepare and file, within a period of sixty days from the last day of its financial year, to the
registrar annual return in From FC-4 along with fee, containing the particulars as they stook on the close of
the financial year.

Signing of Annual Return


Under section 92(1) of the Act, the Annual Return is required to be signed both by a director and the Company
Secretary, or where there is no Company Secretary, by a Company Secretary is Practice.

The Annual Return of One Person Company and Small Company shall be signed by the Company Secretary or where
there is no company secretary, by the director of the company. The Act authorised the Central Government.

Websites Disclosure
Companies Act, 2013 does not mandates companies to have an active website, but SEBI (LODR), 2015 requires all
the listed entities shall maintain a functional website containing the following information about the listed entity:
(a) Details of its business
(b) Financial information including complete copy of the annual report including balance sheet, profit and loss
account, directors report etc;
(c) Email address for grievance redressal and other relevant details;
(d) Name of debenture trustees with full contact details
(e) The information, report, notices, call letters, circulars, proceedings, etc. concerning non-convertible
redeemable preference shares or non-convertible debt securities;
(f) All information and reports including compliance reports filed by the listed entity;

CS Executive – Company Law CS Pooja Anand

Commerce Insights, Kanchan Palace, East Boring Canal Road, In front of Panchmukhi Hanuman Mandir | Contact: +91 91996 88892

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