Private Limited Company

Director’s Report Format Sample under Companies Act, 2013

calendar04 May, 2023
timeReading Time: 4 Minutes
Director’s Report Format Sample under Companies Act, 2013

A director’s report is a formal document that provides an overview of a company’s performance, financial position, and other important aspects of its operations. It is prepared by the board of directors and presented to shareholders as part of the annual report. The Companies Act 2013 provides a specific format for the director’s report, which must be followed by all companies. In this article, we shall discuss the format of the director’s report and its purpose in a company.

What Is Included in the Format of the Director’s Report?

The format for the director’s report under the Companies Act 2013 includes as follows:

  • Financial Highlights: This section should provide a brief summary of the company’s financial performance during the year, including key financial indicators such as revenue, profit, and cash flow.
  • Business Overview: This section should provide an overview of the company’s business, including its products and services, markets, and competitors.
  • Board of Directors: This section should provide information about the composition of the board of directors, including the number of directors, their names, and their qualifications.
  • Management Discussion and Analysis: This section should provide an analysis of the company’s performance during the year, including any significant trends or developments that may affect its future prospects.
  • Corporate Governance: This section should provide information about the company’s corporate governance practices, including the composition of the audit committee, the nomination & remuneration committee, and the stakeholder relationship committee.
  • Directors’ Responsibility Statement: This section should include a statement from the board of directors acknowledging its responsibility for the preparation of the financial statements, as well as its responsibility for ensuring that the company’s affairs are conducted as per applicable laws and regulations.
  • Auditors’ Report: This section should include the auditors’ report on the company’s financial statements.
  • Other Information: This section should include any other information that the board of directors deems necessary or appropriate to include in the report, such as information about the company’s social and environmental performance.
  • Disclosure of Sexual Harassment: This section should include a statement on the status of the implementation of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013[1].
  • Extract of The Annual Return: This section should include an extract of the company’s annual return, as required under the Companies Act 2013.
  • Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo: This section should include information about the steps taken by the company to conserve energy and technology absorption, as well as information about foreign exchange earnings and outgo during the year.
  • Particulars of Loans, Guarantees or Investments: This section should include information about any loans, guarantees, or investments made by the company during the year, as required under the Companies Act, 2013.
  • Related Party Transactions: This section should include information about any related party transactions that took place during the year, as required under the Companies Act 2013.
  • Corporate Social Responsibility: This section should include information about the company’s corporate social responsibility activities during the year, as required under the Companies Act 2013.
  • Risk Management Policy: This section should include information about the company’s risk management policy and practices.

The director’s report is an important document that provides shareholders with valuable information about the company’s performance and prospects. By following the format prescribed by the Companies Act 2013, companies can ensure that their director’s report is comprehensive and informative.

Format of the draft for the Director’s Report

A director’s report is a formal document that provides an overview of a company’s performance and financial position over a specific period. Here is a format you can use for a director’s report:

[Letterhead of the Company (ABC Private Limited]

[Date (DD/MM/YYYY)]

[Name and address of the Shareholders/Board of Directors]

Dear [Shareholders/Board of Directors],

I am pleased to present the Director’s Report on behalf of the Board of Directors of [Company Name] for the financial year ended [Date].

  • Introduction

Provide an overview of the company’s business activities and key highlights from the year, such as new products or services, major contracts, or significant milestones.

  • Financial Performance

Summarize the company’s financial performance during the year, including revenue, profit margins, and any significant changes in financial position or liquidity.    

Particulars Year-end on 31st March, 20XX Year End on 31st March, 20XX
Total income
Profit/Loss before Depreciation, Interest and Tax
Financial charges
Depreciation
Income tax provision
Profit/Loss after Loss
Assign to General Reserve
Closing balance
  • Operational Performance

Describe the company’s operational performance during the year, including key metrics such as production volumes, sales growth, and customer satisfaction.

  1. The nature of business of the company is ___________, and no changes have been made in the company’s business during the fiscal year-end on 31st March, 20XX.
  2. The main elements to determine the company’s performance are as follows:
    • Revenue earned by the company from operations has been increased by_________; from Rs. ______ Lakhs to Rs. ________ lakhs.
    • Net profit earned by the company from operations has been increased by_________; from Rs. ______ Lakhs to Rs. ________ lakhs.
    • Per share earnings of the company has been increased by_________; from Rs. ______ Lakhs to Rs. ________ lakhs.
  • Dividend Declaration:

The directors are pleased to recommend that the company has earned a dividend of Rs. XXX per share for the current fiscal year, in case dividends were declared.

If dividends are not declared, then it is mentioned that no dividends were declared for the current financial year due to repeated investment in the growth of the company.

  • Corporate Governance

Provide an overview of the company’s corporate governance practices and any significant changes or improvements made during the year.

  • Risk Management

Summarize the company’s risk management practices and any significant risks or challenges faced during the year.

  • Future Outlook

Provide an outlook for the company’s future prospects, including plans for growth, expansion, or product development.

Sincerely,

[Director’s Name]

[Title]

Conclusion

Summarize the key points from the report and express appreciation to shareholders or the board for their continued support.

Read Our Article: Directors Under Companies Act, 2013

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