Exposure Draft
SECRETARIAL STANDARD
ON
REPORT OF THE BOARD OF DIRECTORS
The following is the text of Secretarial Standard on “Report of the Board of Directors”, issued by the Council of the Institute of Company Secretaries of India.
Adherence by a company to this Secretarial Standard is recommendatory.
(In this Secretarial Standard, the Standard portions have been set in bold type. These shall be read in the context of the background material which has been set in normal. Both the Standard portions and the background material have equal authority)
INTRODUCTION
The Companies Act, 2013 requires the Board of Directors of every company to present Financial Statements to the shareholders alongwith their Report known as the “Report of the Board of Directors” or “Board’s Report”.
The Board’s Report is the most important means of communication by the Board of Directors of a company with its stakeholders. The Board’s Report should, so far as it is material for the appreciation of the state of the company’s affairs by its shareholders, deal with any changes which have occurred during the financial year. The Board’s Report should cover such information that would assist the stakeholders in understanding the business operations, prospects of the company’s business and quality of management. This Report serves to provide the stakeholders with both financial and nonfinancial information, including the performance and prospects of the company, relevant changes in the management, capital structure, major policies, recommendations as to the distribution of profits, future and ongoing programmes of expansion, modernization and diversification, capitalization of reserves, further issue of capital and other relevant information.
The Companies Act, 2013 (“the Act”) mandates certain disclosures in the Board’s Report. Further, certain additional disclosures, as applicable, are also required to be made in the Board’s Report under various other enactments viz. SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), SEBI (Share Based Employee Benefits) Regulations, 2014, Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 etc.
However, companies which are governed by/registered under a separate enactment shall be required to make additional disclosures in their Board’s Report as stated in the respective enactments. For companies whose securities are listed on an overseas stock exchange, they shall be required to comply with additional requirements as may be specified by such stock exchanges.