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BOARD'S REPORT
https://www.infosys.com/content/dam/infosys-web/en/investors/reports-filings/annual-report/annual/Documents/AR-2018/boards-report.html
Infosys Report
ABOUT!
The Board’s Report is an important means of communication by the Board of Directors of a company with its stakeholders. The Board’s Report provides the stakeholders with both financial and non-financial information, including the performance and prospects of the company, relevant changes in the management and capital structure, recommendations as to the distribution of profits, future and on-going programmes of expansion, modernization and diversification, capitalization of reserves, further issue of capital and other relevant information.
Voluntary revision
of Financial
Statements or
Board’s Report –
Section 131(1)
Remuneration received by MD and WTD from holding or subsidiary companies – Section 197(14)
Disclosures pertaining to remuneration of directors and employees – Section 197(12)
Disclosure under section 134(3)
Corporate Social Responsibility – Section 135
composition of Audit Committee - section 177(8)
Re-Appointments of an Independent Director – Section 149(10)
Policy relating to the remuneration for the director, key managerial personnel and other employee - Section 178(4)
Detail of vigil mechanism - section 177(10)
DISCLOSURE
DISCLOSURE IN BOARD REPORT
Related party transaction - section 188(2)
Secretarial Audit Report - Section 204(1)
Voluntary revision of Financial Statements or Board’s Report – Section 131(1)
Disclosures under Section 134(3)
Disclosures under Section 134(3)
Section 134 of the Act enjoins upon the Board a responsibility to make out its report to the shareholders and attach the said report to financial statements laid before the shareholders at the annual general meeting, in pursuance of Section 129 of the Act.
Disclosures under Section 134(3) In terms of Sub-section (3) of Section 134, the Board’s Report shall include:
(a) The web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed
(b) Number of meetings of the Board: Board Report should contain total number of Board Meetings held in respective financial year
(c) Directors’ Responsibility Statement: Section 134(5) of the Act specifically provides that the Directors’ Responsibility Statement shall set out the following affirmations:
(i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(iv) The directors had prepared the annual accounts on a going concern basis; and
(v) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
(ca) Details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government:
The Board’s Report shall contain a disclosure regarding the following details of frauds is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Central Government involving an amount of Rupees One Crore or above
• Nature of Fraud with description;
• Approximate Amount involved;
• Parties involved, if remedial action not taken; and
• Remedial action taken.
Title
(d) A statement on declaration given by independent directors under sub-section (6) of section 149: Every Independent Director shall give a declaration that he meets the criteria of independence laid down in sub-section (6) of section 149, which is to be given by him at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances which may affect his status as an independent director. The Board’s Report should contain a statement to the effect that the independent directors have given such a declaration.
(e) Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made—
- By the auditor in his report; and
- By the Secretarial Auditor in his secretarial audit report;
- By the Cost Auditor in his cost audit report
(f) Particulars of loans, guarantees or investments under section 186: The particulars of loans given, guarantees provided or investments in securities and acquisition made during the year under section 186 of the Act should be attached to the Board’s Report.
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(g) Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form; The Report of the Board shall contain the details of contracts or arrangements entered with Related Parties as referred to in Section 188 (1) in Form AOC-2 pursuant to Rule 8(2) of Companies (Accounts) Rules, 2014.
(h) The state of the company’s affairs: Information and data which are usually considered pertinent and necessary for the purpose of a proper appreciation of the state of affairs of a company relating to the period for which the financial statements have been prepared must be disclosed in the report
The figures of the previous year relating to achievement of targets of production and sales should also be given in the Board’s Report to facilitate comparison and the reasons for any substantial deviation there from should be explained in brief.
(i) The amounts, if any, which it proposes to carry to any reserves: The first proviso to the section 123(1) of the Act provides that a company may, before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial year as it may consider appropriate to the reserves of the company.
(j) The amount, if any, which it recommends should be paid by way of dividend: The Board’s Report shall disclose the amount per share and the percentage which the Board recommends to be paid as dividend under section 123 of the Act.
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(k) 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
(l) Such other matters as may be prescribed: - Rule 8(5) of the Companies (Accounts) Rules, 2014, prescribes that the Board’s Report shall also include following matters -
(i) The financial summary or highlights;
(ii) The change in the nature of business, if any;
(iii) The details of directors or key managerial personnel who were appointed or have resigned during the year;
(iv) the names of companies
Voluntary revision of Financial Statements or Board’s Report – Section 131(1)
Section 131(1) of the Act provides that revised financial statements or a revised report may be prepared in respect of any of the three preceding financial years where it appears to the directors of a company that the financial statements or the report of the Board, do not comply with the provisions of section 129 or section 134 and the detailed reasons for revision of such financial statements or report should be disclosed in the Board’s report in the relevant financial year in which such revision is being made.
Composition of Audit Committee - Section 177(8)
The Board’s report shall disclose the following:
• Composition of an Audit Committee
• Where the Board had not accepted any recommendation of the Audit Committee, the same shall be disclosed in the report along with the reasons therefor.
Details of Vigil Mechanism - Section 177(10)
Details of Vigil Mechanism - Section 177(10)
Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 provides that every listed company and the following class or classes of companies shall establish a vigil mechanism for their directors and employees to report their genuine concerns or grievances-
(a) Companies which accept deposits from the public;
(b) Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees.
Related party transactions – Section 188(2)
Related party transactions – Section 188(2)
Every contract or arrangement entered into under Section 188(1) shall be referred to in the Board’s report to the shareholders along with the justification for entering into such contract or arrangement in the prescribed form i.e., Form no. AOC-2 (pursuant to Section 134(3)(h) and Section 188(2)).
Disclosures pertaining to Corporate Social Responsibility – Section 135
Disclosures pertaining to Corporate Social Responsibility – Section 135
• The Board's report shall disclose the composition of the Corporate Social Responsibility Committee - Section 135(2).
• Contents of CSR policy as recommended by CSR Committee and approved by the Board - Section 135(4)(a).
• Section 135(5) provides that the Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. If the company fails to spend such amount, the Board shall, in its report, specify the reasons for not spending the amount.
• The Companies (Corporate Social Responsibility Policy) Rules, 2014 requires that the Board’s Report shall include an annual report on CSR containing particulars specified in Annexure to the rules. The disclosure of contents of Corporate Social Responsibility Policy in the Board’s Report and on the company’s website, if any, shall be as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Re-Appointment of an Independent Director - Section 149(10)
Re-Appointment of an Independent Director - Section 149(10)
Subject to the provisions of Section 152, an independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of a special resolution by the company and disclosure of such appointment in the Board’s report. Thus, if an independent director is appointed by passing a special resolution after completing a term of five years, the Board’s report should contain a disclosure of such appointment.
Policy relating to the remuneration for the directors, key managerial personnel and other
employees – Section 178(4)
Policy relating to the remuneration for the directors, key managerial personnel and other employees – Section 178(4)
Section 178(3) and (4) provides that the Nomination and Remuneration Committee shall formulate and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. Such policy shall ensure that—
(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;
(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
Disclosure Requirement as per Listing Agreement
Disclosure Requirement as per Listing Agreement
1. The details of establishment of vigil mechanism.
2.Management Discussion and Analysis Report that should include the following:
- Industry Structure and Developments
- Opportunities and Threats
- Segment wise or Product wise performance
- Outlook
- Risk and concerns
- Internal control system
- Financial performance with respect of operational performance
- Human resource development/ Industrial relation front
- Certificate from Auditors or CS regarding compliance of corporate governance.
APPROVAL OF THE BOARD’S REPORT
The Board’s Report should be considered, approved and signed at a meeting of the Board, convened in accordance with the provisions of the Act and shall not be dealt with in any meeting held through video conferencing or other audio visual means (Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014).
APPROVAL OF THE BOARD’S REPORT
Signing of Board’s Report [Section 134(6)]
Signing of Board’s Report [Section 134(6)]
Further, as a good practice, the companies should get the annexure to the Board’s report also separately signed by the Chairman.
The Annual Report on CSR may be signed by the Chairman of the CSR Committee
If Chairperson is authorised by the Board-
Chairperson of the Company
Where Chairperson is not authorised by the Board-
At least two directors, one of whom shall be a Managing Director, or by the director where there is one director
Filling of the Board Report
Filling of the Board Report
Filling of the Board Report
Section 137(1) of the Act provides that copies of financial statement along with all documents required to be annexed should be filed with the Registrar of Companies within 30 days along with the prescribed fees, after the financial statements, including consolidated financial statements have been adopted at the annual general meeting. The Board’s Report has to be attached to the financial statements
Procedure and Preparation of Board Report
1. Section 136(1) of the Companies Act, 2013 provides that every company, public or private shall forward to its member along with its annual financial statements, the Board’s report. The Board’s report is an important document in which the Board gives a complete review of the performance of the company during the year under review and other information as explained below.
2. The Board’s report shall be prepared based on the stand alone financial statements of the company and the report shall contain a separate section wherein report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented.
3. Board’s Report and the financial statement shall be approved in Board Meeting only. These matters shall not be dealt with in any meeting held through video conferencing or other audio visual means.