{"id":6136,"date":"2020-04-04T18:57:08","date_gmt":"2020-04-04T13:27:08","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=6136"},"modified":"2022-09-10T14:58:41","modified_gmt":"2022-09-10T09:28:41","slug":"directors-report-as-per-companies-act-2013","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/","title":{"rendered":"Director\u2019s Report \u2013 What is Director\u2019s Report as per Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Every company which is registered under the <strong><em>Companies Act, 2013<\/em><\/strong>, is required to attach director\u2019s report with financial statement and required to submit before members of the company during annual general meeting of the company. As per the provisions of <strong><em>section 134 of the companies act, 2013<\/em><\/strong> every company after getting the <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration<\/strong><\/a> done, needs to make certain disclosures about the financial status of the company, further, it is obligation of every listed company to comply with certain provisions to make a disclosure to SEBI under <strong><em>Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015<\/em>.<\/strong><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#What_is_the_directors_report_and_how_is_it_defined\" >What is the director&#8217;s report, and how is it defined?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#The_objective_of_Directors_report\" >The objective of Directors\u2019 report<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#What_does_directors_report_covers\" >What does directors\u2019 report covers?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#What_disclosure_needs_to_be_made_in_Directors_Report_for_private_limited_companies\" >What disclosure needs to be made in Director\u2019s Report for\nprivate limited companies?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#Is_it_mandatory_to_submit_directors_report\" >Is it mandatory to\nsubmit director&#8217;s report?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#Who_can_sign_directors_report\" >Who can sign director\u2019s\nreport?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/directors-report-as-per-companies-act-2013\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_directors_report_and_how_is_it_defined\"><\/span>What is the director&#8217;s report, and how is it defined?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Director\u2019s\nreport is a financial disclosure made by director to the shareholders of the\ncompany. It is envisaged to disclose financial status of the company by\ndisclosing company\u2019s affairs and scope of work along with its subsidiaries. It\nis basically financial summary of the company for the whole financial year and\nfuture vision too.<\/p>\n\n\n\n<p>In\nerstwhile companies act, 1956 provisions related to director report as defined\nunder section 217, but in new companies act, 2013, these terms have been\ndefined under many sections. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_objective_of_Directors_report\"><\/span>The objective of Directors\u2019 report<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A director of the company needs to prepare and submit a said report to shareholders of the company at every<a href=\"https:\/\/corpbiz.io\/learning\/annual-general-meeting\/\"><strong> <em>annual general meeting<\/em><\/strong><\/a> every year in order to maintain transparency in the company. It helps stakeholders of the company understand the current financial status of the company and future scope and understand:<\/p>\n\n\n\n<ul><li>The current financial health of the\ncompany<\/li><li>Company\u2019s capability to diversify and\ngrow<\/li><li>Company&#8217;s status and position in the\ncurrent market and future scope and growth<\/li><li>Whether company is following current\nregulations, standards, and social responsibility as required by various\nregulators like ROC, RBI, SEBI, etc.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_directors_report_covers\"><\/span>What does directors\u2019 report covers?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Company\u2019s description and details of current shareholders and other key managerial personnel\u2019s<\/li><li>Directors description submitting director\u2019s report<\/li><li>Description of companies trading activity<\/li><li>Future vision and prospectus of the company<\/li><li>Submission and description of financial records and statement of the company before members<\/li><li>Current Balance sheet, profit and loss, and cash flow description along with auditor&#8217;s report<\/li><li>Dividend recommendation for current financial year<\/li><li>Any financial incidence that may affect company&#8217;s financial position in the future<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/loan-to-directors\/\">\nLoan to Directors: A Complete Checklist<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_disclosure_needs_to_be_made_in_Directors_Report_for_private_limited_companies\"><\/span>What disclosure needs to be made in Director\u2019s Report for\nprivate limited companies?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>As per section 134(3) of the companies act, the 2013 Directors report shall include annual financial records of the company for current year. The report shall have mention of Profit and loss of the company, net turnover for sales, income, and expenses, and other important financial records of the company. Web records of such transactions also need to be enclosed with report<\/li><li>Description of board meeting of the company during financial year as per section 134(3) of the company\u2019s act, which mentions total board meetings conducted during the year along with mentioning about date and timing of the meeting. Further description of the presence of director in each board meeting.<\/li><li>Mentioning of compliance w.r.t. Inter-corporate loans and investments along with guarantees of the company as per section 186 of the companies act. <\/li><li>Description regarding transactions w.r.t related parties along with justification given for entering into such arrangement as per section 188 of companies act.<\/li><li>Statement about joint venture or cessation of any subsidiary or associate company during the year as per Rule 8(5)(IV).<\/li><li>Submission of report and statement of any subsidiary, joint venture, or any associate company about its performance and financial position.<\/li><li>Board report regarding appointment or resignation or termination of any director or member during the financial year<\/li><li>Auditor\u2019s qualification and appointment along with its description and recommendation w.r.t to dividend.<\/li><li>Any material changes which have affected financial position of the company and further statement that indicates implementation of any risk management policy in the company and identification of any elements of risks to the company as per section 134(3) of the companies act.<\/li><li>Report regarding the transfer of any reserves stating amount which proposes to carry out such transaction such as debenture redemption etc.<\/li><li>Highlight any changes in nature of business of financial summary of the company as per Rule 8(5) (1&amp;2).<\/li><li>Constitution of committees like Sexual Harassment at the workplace for women and other related employees benefit schemes in the report.<\/li><li>Statement of director responsibility W.r.t Company and description of accounting standards and policies of the company and other related duties of director in the company.<\/li><li>Description Of maintenance of financial records for the company and furnish details about the same.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_it_mandatory_to_submit_directors_report\"><\/span>Is it mandatory to\nsubmit director&#8217;s report?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A\ndirector of the company is liable to submit director report every financial\nyear before shareholders of the company. Companies act, 2013 has made it\nmandatory to file this report as per many sections embedded in the act whereas,\nin the erstwhile act, only section 217 talked about director\u2019s report.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_can_sign_directors_report\"><\/span>Who can sign director\u2019s\nreport?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the provisions of section 134(6) of the <strong>companies act, 2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/ebooks.html\"><strong>[1]<\/strong><\/a><\/sup><strong> <\/strong> chairperson of the company shall sign director\/board\u2019s report and in case of his absence or as authorized by board of directors by at least 2 directors. One of 2 directors shall be Managing director of the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies act, 2013 has made it mandatory provision to submit Director Report during annual general meeting, and several related provisions have been embedded in the new companies act. In order to make sure that every company shall follow this, penal provisions have also been made in this regard. As per section 134(8) of the companies&#8217; act, 2013, if any company fails to comply with the provisions as made under section 134 of the companies act, then fine amount of Rs. 50000- which may extend up to Rs. 25 lakh can be imposed on the company. Further, any officer in default can be imprisoned for a term which may extend to 3 yrs or a fine of Rs. 50,000 to Rs.5 lakh or both.&nbsp; <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/duties-of-directors-and-number-of-directorships\/\">\nDuties of Directors and Number of Directorships\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Every company which is registered under the Companies Act, 2013, is required to attach director\u2019s report with financial statement and required to submit before members of the company during annual general meeting of the company. As per the provisions of section 134 of the companies act, 2013 every company after getting the company registration done, [&hellip;]<\/p>\n","protected":false},"author":21,"featured_media":6137,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120,340],"tags":[458],"acf":{"service_id":"321"},"authorName":"Navdeep Kaur","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG_20190122_114933.jpg","authorDescription":"Navdeep is working as legal counsel in Enterslice group companies having more than 4 years of experience. She has expertise in legal, corporate and regulatory matters.","postViews":40827,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6136"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=6136"}],"version-history":[{"count":14,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6136\/revisions"}],"predecessor-version":[{"id":48608,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6136\/revisions\/48608"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/6137"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=6136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=6136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=6136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}