Understanding the Importance and Contents of Board Report

The board's report is a comprehensive document prepared by a company's board of directors to provide shareholders and stakeholders with an overview of the company's performance, activities, and financial health over a specific period, usually annually. It is the most important means of communication by the Board of Directors of a company with its shareholders. This document serves as a bridge between the board of directors and the shareholders, offering a comprehensive overview of the company's performance, strategies, and future direction. Its significance lies in its ability to communicate key information that shareholders and stakeholders require to make informed decisions about their investment in the company.

The Board’s Report enables not only the shareholders but also the lenders, bankers, government, and the public to make an appraisal of the company’s performance and provides an insight into the future growth and profitability of the company.

The Board's Report typically encompasses financial data, operational highlights, corporate governance practices, risk management strategies, and future plans. It provides a snapshot of the company's financial health, governance framework, and its long-term vision. Moreover, by disclosing major policies, management changes, and expansion/diversification plans, it helps shareholders understand the company's trajectory and potential growth.

The Companies Act, 2013 is based on enhanced disclosures and transparency. It necessitates a comprehensive understanding of various subjects by the board members and those responsible for preparing the report. The Act outlines specific parameters that must be disclosed in the Board's Report for ensuring transparency and accountability to stakeholders.

Key Disclosures in Board’s Report under the Companies Act, 2013:

• Disclosures under Section 134(3)

• Details of Issue of Equity Shares with differential rights

• Details Issue of Sweat Equity Shares

• Details of Employees Stock Option Scheme- section 62(1)(b)

• Restrictions on purchase by company or giving of loans by it for purchase of its.

• Disclosures pertaining to Consolidated Financial Statements

• Reason for Voluntary revision of Financial Statements or Board’s Report- Section 131(1)

• Corporate Social Responsibility- Section 135

• Re-Appointments of an Independent Director- Section 149(10)

• Resignation of Director- Section 168(1)

• Composition of Audit Committee- Section 177(8)

• Details of Vigil Mechanism- Section 177(10)

• Policy relating to the remuneration for the directors, KMP, and other employees-Section 178(4)

• Related party transactions- Section 188(2)

• Disclosures pertaining to remuneration of directors and employees- Section 197(12)

• Remuneration received by MD and WTD from holding or subsidiary companies- Section 197(14)

• Secretarial Audit Report- Section 204(1)

The presentation of financial statements along with the Board's Report is a mandatory requirement at every annual general meeting (AGM) of a company. The Board's Report, goes beyond just financial performance and provides a comprehensive review of the company's activities and performance during the reporting period. It includes not only a review of the financial performance but also highlights material changes that have occurred until the date of the report. This could encompass significant events, developments, or changes in the company's structure, policies, or operations that have taken place after the financial year-end but before the report's issuance.

Additionally, the Board's Report often addresses the broader business landscape, considering national and international developments that could impact the company. This might involve regulatory changes, economic trends, technological advancements, or shifts in consumer behaviour that could affect the company's operations or strategies. Furthermore, the report typically outlines the future strategies and plans of the company. It discusses the direction the company intends to take, potential expansions, investments, innovations, or changes in business models, providing shareholders with insights into the company's vision and direction for the upcoming period.

By presenting a holistic view that goes beyond financial numbers, the Board's Report aims to provide shareholders and stakeholders with a comprehensive understanding of the company's performance, its position in the market, and its strategic outlook. This communication is vital for fostering trust, transparency, and informed decision-making among stakeholders.