Directors' Report & Annual Return as per Companies Act, 2013

[Pranav Ganguli]

Directors’ Report as per Companies Act, 2013

In the Companies Act, 2013, a lot of sections make various mandates to disclose various facts in the Directors’ Report. A summary of such disclosure for an unlisted company is discussed herewith.

 

1­ SECTION 92 (3) ABSTRACT OF ANNUAL RETURN

 

Under subsection (3) of Section 92 of the Companies Act, 2013 (the Act), it is mandatory to enclose the extract of the Annual Return in Form MGT-9  with Directors’ Report.

 

Thereby until and unless annual return is completed or abstract of annual return is completed, the company cannot send notice for holding AGM.

 

2­ SECTION 131 VOLUNTARY REVISION OF FINANCIAL STATEMENT OR BOARDS’ REPORT

 

If it appears to the directors of a company that the financial statement of the company or  the report of the Board, do not comply with the provisions of section 129 or section 134 of the Act, they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made to this effect.

 

The fact that such revision has been done shall be disclosed in the directors’ report for the current year.

 

3­ SECTION 134 CONTENTS OF BOARD’S REPORT ETC.

 

As per section 134 of the Act, the following contents are mandatory to mention in the Directors' Report

 

i­ Number of meeting of Board of Directors;

 

Previously unlisted company were not required to provide any information regarding number of meeting of Board, but under the Companies Act, 2013 it is made mandatory. Company has to prepare and keep minutes in order and may not be able to play with dates of Board meetings.

ii­ Directors' Responsibility Statement;

 

iii- Explanations or comments by the Board on every qualification, reservation or

adverse remark or disclaimer made—

 

(a) by the auditor in his report; and

(b) by the company secretary in practice in his secretarial audit report;

 

iv­ Loans and Guarantees under section 186 of the Act;

 

The details of Loans, Guarantees and investments shall be mentioned in the Directors’ Report as per the provisions of Section 186 of the Act.

 

v­ Particulars of Contracts and arrangements with related parties as mentioned under section 188 of the Act;

 

vi­ state of the company affairs;

 

vii­ the amounts, if any, which it proposes to carry to any reserve;

 

viii­ the amount, if any, which it recommends should be paid by way of dividend;

 

ix­ 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 report ;

 

x­ conservation of Energy, technology absorption, foreign exchange earnings and outgo etc;

 

xi­ 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 company.

 

xii. Penalty

 

If a company contravenes the provisions of section 134 of the Act, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

Annual Return as per Companies Act, 2013

Preparation of Annual Return:

 

Every company shall prepare a return (hereinafter referred to as the annual return) in Form No. MGT-7  containing the particulars as they stood on the close of the financial year.

Particulars of Annual Return:

·          its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;

 

·          its shares, debentures and other securities and shareholding pattern;

 

·          its indebtedness;

 

·          its members and debenture-holders along with changes therein since the close of the previous financial year;

 

·          its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;

 

·          meetings of members or a class thereof, Board and its various committees along with attendance details;

 

·          remuneration of directors and key managerial personnel;

 

·          penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or                                 punishment;

  

·      matters relating to certification of compliances, disclosures as may be prescribed;

 

·   details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation,      registration and percentage of shareholding held by them; and

 

·      such other matters as may be prescribed.

 

 

Authentication of Annual Return:

 

1. Under Section 92(1) of the Act, the Annual Return of other than One Person Company and Small Company is to be signed both by a Director and a Company Secretary, or where there is no Company Secretary, by a Company Secretary in practice. 

                                                                                                         

2. Under proviso to Section 92(1) of the Act, the Annual Return of   a One Person Company and a Small Company shall be signed by the Company Secretary or where there is no Company Secretary, by a director of the company.            

                                                                                              

3. Under sub section (2) of Section 92 of the Act, the Annual Return of a listed company or by a company having such paid-up capital and turnover as may be prescribed shall also apart from signing be certified by a company secretary in practice in the prescribed manner.          

           

Extract of  Annual Return:

 

An extract of the annual return in Form No MGT-9 shall form part of the Board’s report.

Filing of Annual Return:

 

 Every company shall file a copy of the annual return with the Registrar.

If AGM is held-

 File AR within 60 days from the date on which the AGM is held or

If no AGM is held in any year-

File AR within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the AGM with such fees or additional fees as may be prescribed, within the time as specified, under section 403.

Preservation of annual return:

 

Copies of all annual returns and copies of all certificates and documents required to be annexed thereto shall be preserved for a period of 8 years from the date of filing with the Registrar.

 

 

Penalty for non-compliance:

 

Company	Fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/-
Officer	Imprisonment for a term which may extend to 6 months or Fine which shall not be less than Rs. 25,000/- but which may extend to Rs. 5,00,000/- or with both.
PCS	Fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/-

Regards

Pranav Ganguli

Bajaj Steel Industries Limited 

Mob: +919765861288