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Board s Report

SS - Old - 10 - Companies Law - SS - Old - 10 - SS-10 Secretarial Standard on Board s Report Issued by the Council of the Institute of Company Secretaries of India In the initial years, adherence by a company to this Secretarial Standard will be recommendatory. Introduction The Companies Act, 1956 requires the Board of Directors of every company to present annual accounts to the shareholders along with its report, known as the Board s Report . Disclosures in the Board s Report are specified unde .....

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of the company s business and the quality of the management. Generally, information relating to finances raised during the year, utilization of funds for the purpose for which it was raised, repayment of public deposits, liability for unclaimed deposits and long term agreements including with employees which have substantial financial impact are included in the Board s Report. The Report should also contain the information and explanations on every reservation, qualification or adverse remarks c .....

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d in this standard with the meaning specified: Act means the Companies Act, 1956 (1 of 1956), or any statutory modification or re-enactment thereof. Board means the Board of Directors of a company. Company means a company as defined in section 3 of the Act. Financial year means the period in respect of which the profit and loss account of the company laid before it in an annual general meeting is made up, whether that period is a year or not. Financial Statement means and includes a balance shee .....

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ousing Finance Company means a company as defined under the Housing Finance Companies (NHB) Directions, 2001 Listed company means a public company which has any of its securities listed on any recognized stock exchange. Member means any person who agrees, either by subscribing to the Memorandum of Association of the company or by applying in writing, to become a Member of the company and whose name is entered either in the Register of Members of the company or in the records of the depository as .....

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such other non-banking institution or class of such institutions, as the Reserve Bank of India may specify. Preference Shareholder means a holder of such shares as carry a preferential right, in respect of dividend, to a fixed amount or an amount at a fixed rate and, in respect of capital, to repayment of capital. Producer Company means a body corporate having objects or activity as specified in the Act. Report means Board s report. Residuary Non-Banking Company means a non-banking institution a .....

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n writing for its repayment by a creditor or creditors of such company. Unless the context otherwise requires, words and expressions used herein and not defined shall have the meaning respectively assigned to them under the Act. Secretarial Standards Under the Act it is the Board s responsibility to make out its report to the Shareholders with reference to matters set out in the Act and attach the said report to every balance sheet laid before the company at its annual general meeting. 1. Disclo .....

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of the financial year of the company to which the balance sheet relates and the date of report. Adjustment to assets and liabilities are required for events occurring after the balance sheet date that provide additional information materially affecting the determination of amounts relating to conditions existing at the balance sheet date in accordance with the accounting principles. However, those events which do not affect the assets and liabilities as they do not relate to conditions existing .....

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causes for such material events and the remedial measures in the Report. 1.1-3 The report should state the amount if any, which the board proposes to carry to any reserves. The Report should disclose the amount proposed to be transferred to reserves. 1.1-4 The report should state the amount, if any, which the board recommends by way of dividend per share. The total amount to be appropriated should be disclosed, stating separately the proposed outgo on account of dividend and the tax payable ther .....

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in: - the nature of company s business; - the company s subsidiaries; - the nature of the business carried on by subsidiaries; - the class of business in which the company has an interest. In the case of an unlisted subsidiary, the report of the holding company should include an affirmation by the Board that it has reviewed the affairs of the subsidiary company. Even when no material changes in the company s subsidiaries or in the nature of business carried on by them has taken place during the .....

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include the particulars of specified employees of the company who were in receipt of remuneration beyond prescribed limits. The particulars should be furnished either in the body of the report or by way of an annexure thereto in the format as prescribed in Companies (Particulars of Employees Rules), 1975. 1.3-1 The Report should include a statement showing the name of every employee who was in receipt of remuneration at a rate in excess of that drawn by the managing director or whole time direc .....

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he name of such director. 1.4 The report should include a Directors Responsibility Statement. The Directors Responsibility Statement should indicate that: u applicable accounting standards have been followed in the preparation of annual accounts along with explanation for material departures from accounting standards; u accounting policies are selected and applied consistently, and judgments and estimates are made that are reasonable and prudent so as to give a true and fair view of the state of .....

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ort should include a statement by the Board that the company has devised proper systems to ensure compliance of all laws applicable to the company. 1.6 In the event of sickness of the company, the Report should provide the factors leading to such sickness and the steps proposed to be taken. 1.7 The Report should disclose specified details of issue of sweat equity shares. The details that should be disclosed include: (a) number of shares issued or proposed to be issued to the employees or the dir .....

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ies within the time prescribed under the Act. 1.9 The Report should specify the reasons for the failure to implement any proposal relating to preferential allotment. 1.10 The Report should specify the reasons for the failure to pay interest or redeem debentures or preference shares on due date(s) and remedial measures taken. If failure continues it should be disclosed in the subsequent Reports. 1.11 The Report should specify changes in the composition of Board. The Report should also specify cha .....

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es proposed. 1.14 The Report should, in case of payment of managerial remuneration in excess of prescribed limits, disclose the particulars specified under the Act. The disclosures pertaining to this can be made in the Report under the heading corporate governance. 1.15 The Report should disclose composition of audit committee. The Report should also disclose particulars of other committees of directors constituted by the Board. 1.16 The Report should specify the reasons for not accepting the re .....

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sion and analysis report should include a brief analysis of the company s strengths, weaknesses, opportunities and threats as envisaged by the Board. The following elements should be covered in the management discussion and analysis report: - Industry Structure and Developments - Opportunities and threats - Segment-wise or Product-wise performance - Outlook - Risks and concerns - Internal Control Systems and their adequacy - Discussions on financial performance vis-a-vis operational performance .....

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stock option and employee stock purchase schemes 3.1 The Board should disclose in the Report the details of the Employee Stock Option Scheme (ESOS). The Report should contain the following disclosures: (a) options granted; (b) the pricing formula; (c) options vested; (d) options exercised; (e) the total number of shares arising as a result of exercise of Options; (f) options lapsed; (g) variation of terms of Options; (h) money realised by exercise of Options; (i) total number of Options in force .....

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res on exercise of Option calculated in accordance with AS-20 relating to EPS. (l) where the Company has calculated the Employee Compensation cost using the intrinsic value of the Options, the difference between the Employee Compensation Cost so computed and the Employee Compensation Cost that shall have been recognized if it had used the fair value of the Options, shall be disclosed. The impact of this difference on profits and on EPS of the Company shall also be disclosed. (m) weighted-average .....

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derlying share in market at the time of option grant. The disclosure could also be made in an annexure to the Report. 3.2 The Board should disclose in the Report the details of the Employee Stock Purchase Scheme (ESPS). The Report should contain the following disclosures: (a) the details of the number of shares issued in ESPS; (b) the price at which such shares are issued; (c) employee-wise details of the shares issued to : (i) senior managerial personnel; (ii) any other employee who is issued s .....

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4. In the case of Producer Company, Member means a person or Producer institution, whether incorporated or not, admitted as a Member of such company and who retains the qualifications necessary for continuance as such. 4.1 The Report should disclose the amounts to be paid as limited return on share capital. 4.2 The Report should disclose the amounts, if any, proposed to be disbursed as patronage bonus. 5. Disclosures pursuant to directions of Reserve Bank of India 5.1 Non-Banking Financial Compa .....

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ar to which the report relates and if the amounts remaining unclaimed or undisbursed as referred to in clause (ii) of the preceding sub-paragraph exceed in the aggregate a sum of rupees five lakhs, there shall also be included in the report a statement on the steps taken or proposed to be taken by the Board for the repayment of the amounts due to the depositors remaining unclaimed or undisbursed. 5.2 Miscellaneous Non-Banking Companies 5.2-1 The Report should include information on: (i) the tota .....

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o the position as on the last date of the financial year to which the report relates. If the amounts remaining unclaimed or undisbursed exceed in the aggregate the sum of rupees five lakhs, the Report should also include a statement on the steps taken or proposed to be taken by the Board for the repayment of the amounts due to the depositors and remaining unclaimed or undisbursed. 5.3Residuary Companies 5.3-1 The Report should include information on: (i) compliance with the Residuary Non-Banking .....

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said information should be furnished with reference to the position as on the last date of the financial year to which the report relates. If the amounts remaining unclaimed or unpaid exceed in the aggregate the sum of rupees five lakhs, the Report should also include a statement on the steps taken or proposed to be taken by the Board for the repayment of the amounts due to the depositors and remaining unclaimed or unpaid. 6. Disclosures Pursuant to National Housing Bank Directions 6.1 The Repo .....

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which the report relates. If the amounts remaining unclaimed or undisbursed exceed in the aggregate the sum of rupees five lakhs, the Report should also include a statement on the steps taken or proposed to be taken by the Board for the repayment of the amounts due to the depositors or group of joint depositors and remaining unclaimed or undisbursed. 7. Other disclosures 7.1 The report should state that the consolidated financial statements are also presented in addition to the individual finan .....

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ional information which may be given in the Report is placed at Annexure-I. 8. Explanations in the board s report in response to auditors qualifications 8.1 The report should contain the information and explanations on every reservation, qualification or adverse remarks contained in the auditor s report. The report should also specify any point in auditor s report on the annual financial statements on which a difference of opinion has arisen. The report should also provide an explanation for eac .....

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to the said remarks as an addendum to the report. 9. Explanations in the board s report in response to qualifications of secretary in whole-time practice 9.1 The Board should specify information and explanations in its report on every reservation, qualification or adverse remark contained in the compliance certificate issued by the Secretary in whole-time practice. 9.2 The report should indicate status regarding compliance of secretarial standards issued by the Institute of Company Secretaries o .....

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horized in that behalf by the Board, or, by not less than two directors of the company, one of whom shall be a managing director, where there is one. If the Auditor s Report is available for consideration at the time of approving the Board s Report, the Board s Report may bear the same date as that of the Auditor s Report. However, if the Auditor s Report is dated subsequent to the date of Board s Report, then the Addendum to the Board s Report may bear the same date or a date after the date of .....

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of a material fact, knowing it to be material. 14. Filing of the board s report 14.1 The report along with audited annual accounts should be filed with the Registrar of Companies within the prescribed time limit. 15. Consistency 15.1 The Board should ensure consistency of information given in the report, the report on Corporate Governance and the explanatory statements to resolutions. 16. Right of members to copies of report 16.1 A copy of the report along with balance sheet and profit and loss .....

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