How to Draft DIRECTORS’ REPORT

Edition: 2nd edn., 2025

ISBN: 978-81-1956-541-2

Pages: 368

Author: CA. Kamal Garg

Division 1

Contents of Board’s Report

Chapter 1      Board’s Report — An Introduction                                  

Chapter 2      Disclosures pursuant to the Companies Act, 2013

2.1.     Disclosures under Section 134(3)

2.1.(a).   No need to give the extract of the annual return as provided under sub-section (3) of section 92 

2.1.(b).   Number of meetings of the Board 

2.1.(b).(i).   Whether dates of Board meeting required to given 

2.1.(b).(ii).  Frequency of meeting – meaning of “year” thereof 

2.1.(b).(iii). Practical Implications for Directors’ Report Disclosure 

2.1.(c).    Directors' Responsibility Statement

2.1.(c).(i).    Author’s note – avoid boilerplate language 

2.1.(c).(ii).  Author’s note – be careful for inconsistent accounting policies & unreasonable estimates 

2.1.(c).(iii). Author’s note – accounting records for safeguarding assets and preventing fraud and other irregularities 

2.1.(c).(iv).  Author’s note – going concern 

2.1.(c).(v).   Author’s note – adequate ‘internal financial controls’

2.1.(c).(vi).  Author’s note – “all” laws to be interpreted reasonably in context

2.1.(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

2.1.(d).   A statement on declaration given by independent directors under sub-section (6) of section 149 

2.1.(e).    In case of a company covered under sub-section (1) of section 178, company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 

2.1.(f).    Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made—   

                                                            (i)        by the auditor in his report; and                              

                                                           (ii)        by the company secretary in practice in his secretarial audit report 

2.1.(f).(i)     Author’s Note – meaning of Auditor

2.1.(f).(ii)    Author’s Note – meaning of explanation or comments 

2.1.(g).   Particulars of loans, guarantees or investments under section 186 

2.1.(g).(i).   Author’s Note – consistency in disclosure of loans, guarantees, and investments 

2.1.(h).   Particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form   

2.1.(i).    The state of the company's affairs 

2.1.(j).    The amounts, if any, which it proposes to carry to any reserves 

2.1.(k).    The amount, if any, which it recommends should be paid by way of dividend 

2.1.(l).    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

2.1.(m).   The conservation of energy, technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed 

2.1.(m).(i).   Author’s Note – missing disclosures on energy conservation, R&D, and foreign exchange when financial statements reveal what the Board’s report omits 

2.1.(n).   A statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company 

2.1.(n).(i).   Author’s Not