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If you are a director or a promoter of a company registered in India, you must have heard about the Director’s report. In this article, we shall discuss the meaning, legal requirements, contents and format of a valid Director’s report.

MEANING OF A DIRECTORS’ REPORT:

Directors’ report is a document which includes the details about the operations of a company, state of affairs and financial performance of the company during the last financial year. It is prepared to present the insights of the business of the company to the shareholders of the company. It is prepared on an annual basis and duly approved by the Board of Directors of the company.

In other words, with the help of the board report, directors of a company communicate to the stakeholder the details of the company’s performance on an annual basis

LEGAL REQUIREMENTS:

Section 134 of the Companies Act, 2013 contains the provisions related to Directors’ report.

• The report must be approved by the Board of Directors and shall be signed by the chairperson of the company if he/she is authorised by the Board and where the chairperson is not authorised, the report shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director.
• The report of the Board of Director should be annexed /attached to the financial statements laid before the members of the company in the Annual General Meeting
• The report shall be approved by the Board of Directors in duly convened Board meeting. Approval of the Board report shall not be done by passing a circular resolution as per section 179 (3) of the Companies Act, 2013. Also, the meeting of the Board of Directors cannot be done by video conferencing for approving the Board Report.
• The Board report shall be filed with the Registrar of Companies in e-form AOC-4. In case of a public limited company, the same shall also be filed in form MGT-14 within 30 days from the date of the board meeting in the report was approved.

BASIS OF BOARD REPORT:

• The Board’s report shall be prepared based on “STAND ALONE FINANCIAL STATEMENT OF THE COMPANY”
• But the Board’s Report shall contain a separate section wherein a report on the performance and financial position of each:
  • Subsidiary
  • Associate
  • Joint venture companies, including in the consolidated financial statement is presented.

The contents of the Directors report are mentioned under section 134 (3) of the Companies Act, 2013 and Secretarial Standards issued in this regard. we have covered the contents and format of the Directors’ report under a separate Article.