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BOARD’S REPORT
BHAYANDER CHAPTER
MAY 5, 2019
S.SUDHAKAR
VICE-PRESIDENT (CORPORATE SECRETARIAL)
RELIANCE INDUSTRIES LIMITED
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Disclaimer
Views expressed are of my own and not of the organisation in which I am
employed
Board’s Report
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Board’s Report
Board’s Report is a report by its Board of Directors addressed to its
members on various issues, that shall be attached to the Financial
Statements of a company to be laid before the members at the AGM of
the Company

Board Report is a legal document

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IMPORTANCE OF THE BOARD’S REPORT
• Board’s report is an important means of communication with the stakeholders of the
company
• Board’s report provides the stakeholders with both financial and non-financial information,
including the following
• Performance and prospects of the company
• Relevant changes in the management and capital structure of the company
• Recommendations as to the distribution of profits
• Future and on-going expansion, modernization and diversification plans
• Capitalization of reserves
• Further issue of capital and other relevant information
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MANDATORY DISCLOSURES
• Information that is to be furnished
• under the Companies Act, 2013
• under the Listing Regulations (for listed companies)
• under the overseas listing regulations (for overseas listed companies)
• special regulatory requirements such as Banking companies, NBFC companies, Insurance
companies
• under Secretarial Standard - 1
• under Secretarial Standard – 4, effective October 1, 2018
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BASIS OF THE BOARD’S REPORT
• Board’s report should be based on the company’s standalone financial statement and not
on the consolidated financial statement
• It should relate to the financial year for which such financial statement is reported
• Board’s report should avoid repetition of information, if the same is mentioned elsewhere
in the financial statement and a reference thereof should be given
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SCOPE OF SECRETARIAL STANDARD - 4
• Adherence to this standard as of now is recommendatory
• The standard prescribes a set of principles for making the disclosures
• In case any disclosures are not applicable to any company the same need not be
disclosed
• In case of one person companies and small companies, the Board report may be in
abridged form as prescribed by the Central Government
Disclosures
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DISCLOSURES UNDER COMPANIES ACT, 2013
• The information to be furnished in the Board’s Reports is scattered and is prescribed in different sections as
under
• Section 134 (3) – matters to be included
• Section 135 (2) – Composition of the CSR Committee,
• Section 135 (4) – disclosure of contents of CSR Policy
• Section 135 (5) - CSR amount not spent and reasons there of
• Rule 8 of the Companies (CSR Policy) Rules, 2014 – annual report on CSR
• Section 197(12) and Rule 5 of the Companies (Appointment and remuneration of Managerial Personnel) Rules,
2014 – disclosure of remuneration particulars
• Section 149 (10) – appointment of Independent Director for second term
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DISCLOSURES UNDER COMPANIES ACT, 2013
• Section 168 (1) – resignation of a Director
• Section 177(8) – composition of audit committee
• Section 204(1) and Rule 9 of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 relating to Secretarial Audit
• Schedule V – section II of part II – disclosure in regard to managerial remuneration
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DISCLOSURES UNDER COMPANIES ACT, 2013 - RULES

• Companies (Accounts) Rules, 2014 – particulars of contracts in AOC-2

• Companies (Share Capital and Debentures) Rules, 2014 in regard to
• details of employee stock options
• issue of equity shares with differential rights
• issue of sweat equity shares
• issue of bonds, debentures or any non-convertible securities
• issue of warrants
Information to be furnished under
Section 134
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INFORMATION TO BE FURNISHED UNDER SECTION 134
• Web address, if any, to upload the annual return
• Number of meetings of the Board
• Directors’ Responsibility Statement
• Details in respects of frauds reported by the auditors, other than those which are reportable
to the Central Government – 143(12)
• Statement of declaration given by Independent Directors under Section 149(6)
• Policy on directors appointment and remuneration including criteria for determining
qualifications, positive attributes and independence of a director – where section 178 is
applicable – this is not applicable to a Government company
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WEB-LINK OF ANNUAL RETURN
• Under section 134(3)(a) the web address, if any, where annual return referred to in section
92(3) has been placed. This amendment of 2017 was notified on July 31, 2018
• Prior to the amendment act it was - “the extract of the annual return as provided under sub-
section 92 (3)
• Under section 92(3) a copy of the annual return shall be placed on the web site of the
company, if any. This is not notified
• Prior to the amendment act it was – “an extract of the annual return in such form as may be
prescribed shall form part of the Board’s report
• Web-link of such annual return shall be disclosed. If there is no web site of the company no
need to create a web site only for this purpose
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DIRECTORS’ RESPONSIBILITY STATEMENT
• Directors’ Responsibility Statement shall include some affirmations in regard to:
• Compliance with applicable Accounting Standards
• Compliance with Accounting Policies that give true and fair view of state of affairs and of the P&L
account
• Maintenance of adequate accounting records for preventing and detecting fraud and other
irregularities
• Preparation of accounts on a ‘going concern basis’
• Systems in regard to compliance with all applicable laws and the adequacy of such systems
• In case of a listed company ‘internal financial controls’ followed by the company and efficiency and
adequacy of the same
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FRAUDS REPORTED BY AUDITORS
• Frauds reported by auditors (statutory, secretarial and cost) to the audit committee and
to the Central Government shall be disclosed
• Nature of fraud with description and amount involved
• Remedial action taken to prevent such occurrences
• If no fraud is reported a statement to that effect shall be made
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INFORMATION TO BE FURNISHED UNDER SECTION 134

• Board explanations on every qualification, reservation or adverse remark or disclaimer by

statutory and secretarial auditor
• Particulars of loans, guarantees or investments under section 186
• Particulars of contracts or arrangements with RPTs
• The state of company affairs
• Amounts proposed to carry to any Reserves
• Amount recommended by way of Dividend
• Material changes and commitments, if any, effecting the financial position
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AUDIT QUALIFICATIONS
• Details relating to names of the statutory, secretarial and cost auditors appointments,
resignations, removals, completion of terms and casual vacancies shall be given
• Report shall include explanations or comments on every qualification, reservations or
adverse remark or disclaimers made by the auditors
• If no such qualifications or comments are there, a statement to that effect shall be made
• In case of qualifications, the financial impact and the cohesive measures proposed to be
taken shall also be disclosed
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PARTICULARS OF INVESTMENTS, LOANS & GUARANTEES

• Particulars of the loans given, investments made, guarantees given or securities provided
during the year
• Purpose for which the loans, guarantees or securities are proposed to be utilized by the
recipient
• Such details may be given in the financial statements and give reference there of in the
Board’s report
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CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

• Contracts / arrangements / transactions with related parties

• Which are not on arm’s length basis
• Which are on arm’s length basis
• Which are not in the ordinary course of business and justification for entering such
contract (required under SS-4)
• Such disclosure shall be annexed in form AOC-2
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STATE OF COMPANY AFFAIRS
• Following information shall be furnished
• Segment-wise position of business and its operations
• Change in status of the company
• Key business developments
• Change in financial year
• Capex programmes
• Status of acquisition, merger, expansion and diversification
• Acquisition and assignment of intellectual property rights
• Any other material event having an impact on the affairs of the company
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RESERVES & DIVIDEND
• Reserves
• If no amount is proposed to be transferred to Reserves, a statement to that effect shall be included
• Dividend
• Amount of dividend per share and percentage recommended by the board and the Dividend
distribution tax there on
• The amount and percentage of interim dividend declared and the dividend distribution tax there on
• Total amount of dividend for the year
• If any dividend paid from Reserves
• If no dividend is recommended a statement to that effect shall be made
• In case of any deviation from dividend distribution policy the rational for the same
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MATERIAL CHANGES & COMMITMENTS
• Effect of such changes and commitments and its financial impact
• If evaluation of financial impact can’t be made a statement to that effect shall be made
• Causes for such changes and commitments and remedial measures taken
• Shall also disclose information pertaining to changes in external and internal environment
including technical, financial, legal, strikes, lock outs and breakdowns affecting the business
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INFORMATION TO BE FURNISHED UNDER SECTION 134

• Conservations of energy, technology, absorption, foreign exchange earnings and out go

• Statement indicating development and implementation of a risk management policy
• Policy on development and implementation on CSR initiatives taken
• Statement indicating the manner in which annual evaluation of the performance of the
Board, its Committees and of individual directors has been made
• Such other matters as may be prescribed
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RISK MANAGEMENT
• A statement indicating the development and implementation of a risk management
committee policy
• Such statement shall include various elements of risk which may threaten the existence
of the company
• Strategy to mitigate such risks
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VIGIL MECHANISM
• Listed companies and specified class of companies shall disclose in Board’s report on
establishment of vigil mechanism
• The disclosure in the report inter-alia shall include the mechanism for
• The directors and employees to report their genuine concerns about unethical behavior,
actual or suspected fraud or violation of the company’s code of conduct
• Provide adequate safeguard against victimization
• Provide direct access to chairman of the audit committee in exceptional cases
• Web-link of the aforesaid mechanism
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CSR INITIATIVES
• The report shall disclose the CSR policy and the initiatives taken during the year
• Weblink at which complete policy is available and salient features of such policy
• Annual report on CSR shall be attached
• Composition of the CSR committee
• In case CSR amount is not spent reasons for not spending such amount shall be given
• Responsibility statement from CSR committee in regard to implementation and
monitoring of CSR policy in line with CSR objectives
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BOARD EVALUATION
• Every listed company and every other public company with a paid up capital of Rs 25
crore or more to give a statement
• indicating the manner in which formal annual evaluation of the performance of the Board and
its committees and of individual directors has been made
• Prior to the Companies (Amendment) Act 2017 the statement was to state that
• Annual evaluation has been made by the Board of its own performance and of its committees
and individual directors
• In case of Government companies this requirement is not applicable in case the
Directors are evaluated by the concerned Ministry
 Contents of the Board’s Report
Rule 8 of Companies (Accounts) rules
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CONTENTS OF BOARD’S REPORT UNDER RULES 8
• Board’s report shall be prepared on standalone financial statement only
• Highlights of the performance of subsidiaries, associates and joint ventures and their
contribution to the overall performance of the company
• Particulars of contracts or arrangements with Related Parties referred to in section 188
shall be reported in form AOC-2
• The transactions to be reported in AOC-2 shall be
• contracts, or arrangements or transactions not at arms length basis
• material contracts, or arrangements or transactions at arms length basis
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OTHER MATTERS TO BE INCLUDED
• Financial summary or highlights
• Change in the nature of business, if any
• Details of Directors or KMPs who were appointed or have resigned during the year
• Companies which have become or ceased to be its subsidiaries, associates or joint
ventures during the year
• Disclosure in regard to maintenance of cost records – specified by the Central
Government and maintained by the company
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OTHER MATTERS TO BE INCLUDED
• Details of Deposits – accepted during the year, deposits remained unpaid or unclaimed
• In case of default in repayment of deposits or the interest there on, number of such cases
and the amount involved
• Details of deposits which are not in compliance with the requirements of Chapter V
• Details of significant and material orders passed by the regulators or courts or tribunals
impacting the going concern status
• Details in respect of internal financial controls with reference to financial statements
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STATEMENT RELATING TO SEXUAL HARASSMENT OF WOMAN

• Statement in regard to compliance with the provisions relating to the constitution of

internal complaints committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
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ABRIDGED FORM OF BOARD’S REPORT
• Rule 8 is not applicable to one person company and small company
• Rule 8A prescribes the matters that shall be included in Board’s report for one person
company and small company in abridged form
Contents of the Board’s Report
Under various sections
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CORPORATE SOCIAL RESPONSIBILITY – SECTION 135

• Board’s Report shall disclose the composition of the CSR Committee -section 135(2)
• Where the company fails to spend such amount which the Board is required to be spend,
the Board has to specify the reasons for not spending such amount
• The Board’s report shall include an annual report on CSR as prescribed under Rule 8 of
CSR Rules
• Such report shall contain the amount spent, manner in which the amount was spent
• Such report is to be signed by the Chairman of CSR Committee and the CEO or MD or
Director of the company
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POLICIES OF THE COMPANY
• The following two policies are to be attached to the Board’s Report
• Policy on directors’ appointment and remuneration including criteria for determining qualifications and positive
attributes for independent directors
• Policy on CSR

• As amended under the Companies (Amendment) Act, 2017 the aforesaid policies need not be attached
to the Board’s report
• provided the same are made available on the company’s website, if any and web-address is provided in the Board’s
report and
• changes if any to the policy are specified in brief in the Report

• Salient features of the policies and changes therein, if any, are specified briefly in the Board’s report
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COST RECORDS
• Disclosure, as to whether cost records were maintained as specified by the Central
Government under sub section ( 1 ) 0f section 148 of the Companies Act 2013
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RE-APPOINTMENT OF INDEPENDENT DIRECTOR
• Re-appointment of an independent director after the expiry of first term of up to five
consecutive years, by way of passing of a special resolution shall be disclosed in the
Board's report – section 149 (10)
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AUDIT COMMITTEE
• Composition of the audit committee shall be disclosed in the Board’s Report
• In case Board has not accepted any of the recommendation of the audit committee, the
same shall be disclosed in the Board’s report, along with the reasons there for
• Details of establishment of vigil mechanism shall be disclosed
• Establishment of vigil mechanism is applicable to all listed companies,
• companies which accept deposits from the public and companies which have borrowed money
from banks and public financial institutions in excess of Rs. 50 crore
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SECRETARIAL AUDIT REPORT
• Every listed company and public companies having paid-up share capital of Rs. 50 crore
or more or turnover of Rs. 250 crore or more shall annex with its Board’s Report, the
secretarial audit report in Form No. MR-3.
Contents of the Board’s Report
Section 197 and the Rules
44 DISCLOSURE IN BOARD’S REPORT – SECTION
197(12)
• These provisions are applicable to the Listed companies only
• Listed company may be equity listed or debt listed
• Listed company may be a public company or private company
• Every listed company shall disclose in the Board’s report
• the ratio of the remuneration of each director to the median employee’s remuneration and
such other details as may be prescribed
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DISCLOSURE IN BOARD’S REPORT – RULE 5
• Every listed company shall disclose the following in the Board’s Report
• All information to be given is in respect of financial year
• Ratio of the remuneration of each director to the median remuneration of the employees
• Percentage increase in remuneration of each director, CEO, CFO, CS or Manager
• Percentage increase in the median remuneration of employees
• ‘median’ means the numerical value separating the higher of a population from the lower half
• If there is an even number, the average of the two middle values
• Number of permanent employees on the rolls of the company
• Affirmation that the remuneration is as per the remuneration policy of the company
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EMPLOYEE REMUNERATION DETAILS
• Board’s report shall include a statement showing the names of the top ten employees in
terms of remuneration
• Name of the employee employed through out the financial year and was in receipt of
remuneration of not less than rupees one crore and two lakh
• Name of the employee employed for part of the financial year and was in receipt of
remuneration of not less than rupees eight lakh and fifty thousand
• Name of the employee who was in receipt of remuneration in excess of MD or Whole-time
Director and holds by himself or along with his spouse and dependent children not less than
two percent of the equity shares of the company
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DISCLOSURE UNDER SCHEDULE V
• In part II of section II of Schedule V the following disclosures shall be given in the Board’s
Report
• all elements of remuneration package of Directors including stock options
• details of fixed component and performance linked incentives
• service contracts, notice period and severance fee
• stock option details, whether the same have been issued at discount, the period over which
accrued and exercisable
Contents of the Board’s Report – SS1
49 INFORMATION TO BE FURNISHED UNDER SS-1

• The Report of the Board of Directors shall include a statement on compliances of

applicable Secretarial Standards
• The above statement may be given as under:
• the Directors state that applicable secretarial standards relating to Meetings of the Board of
Directors and General Meetings, respectively have been duly followed by the company

• As mentioned in the Guidance note the statement may also be given as under:
• “the Directors have devised proper systems to ensure compliance with the provisions of all
applicable Secretarial Standards and that such systems are adequate and operating effectively”.
Signing of Board’s Report
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SIGNING OF BOARD’S REPORT
• Board’s report and any annexures thereto shall be signed by the Chairperson of the
company, if he is authorized by the Board
• where the chairperson is not so authorized the Report shall be signed by at least two
directors, one of whom shall be MD or
• by the Director where there is one director
Revision of Board’s Report
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VOLUNTARY REVISION OF BOARD’S REPORT
• When it appears to the Directors that the Board’s report was not in compliance with
section 134, in respect of any of the three preceding financial years
• after obtaining the approval of the Tribunal, the report may be revised

• Such revision can’t take place more than once in a financial year
• Detailed reasons for the revision shall be disclosed in the Board’s report in the relevant
financial year in which such revision is being made
• The revision must be confined only to the extent of the corrections required to comply
with the provisions of section 134
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VOLUNTARY REVISION OF FINANCIAL STATEMENTS
• Financial statements can be revised in respect of any of the three preceding financial
years
• The revision may be voluntarily or pursuant to the order of a judicial authority
• Details reasons of revision shall be reported in the Board’s report
• The reasons shall also be included the financial impact, if any, due to such revision
Penal Provisions
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PENAL PROVISIONS
• If a company contravenes any provisions of section 134,
• the company shall be punishable with fine which shall not be less than rupees fifty thousand,
which may extend to rupees twenty five lakhs and
• every other officer of the company who is in default shall be punishable with imprisonment
for a term which may extend to three years or with fine which shall not be less than fifty
thousand rupees but which may extend to rupees five lakhs or with both
 Value additions in
Secretarial Standard - 4
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REVISION OF FINANCIAL STATEMENT
• Any revision in the financial statement or Board’s Report in respect of any of the three
preceding financial years either voluntarily or pursuant to the order of a judicial authority
the detailed reasons for such revision shall be disclosed
• in the report of the year and
• in the report of the relevant financial year in which such revision is made
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ADDITIONAL DISCLOSURES
• Reserves - when no amount is proposed to be transferred to Reserves, a statement to that
effect shall be made
• Dividend - to be declared on per share basis and the amount of dividend distribution tax
• Interim dividend - Amount of interim dividend declared and the dividend distribution tax paid
thereon
• Total amount of dividend declared and dividend distribution tax paid thereon
• Dividend declared and paid out of free reserves shall be disclosed
• Section 134(3) requires a company to disclose the state of company’s affairs. SS-4 clarifies the
aspects on which disclosures shall be made
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ADDITIONAL DISCLOSURES
• Changes in the nature of business – standard prescribes aspects on which disclosures shall be
made, such as, commencing new business, discontinuation, sale, having off a division etc
• Material changes and commitments 134(3) – in case the financial impact evaluation is not
possible a statement to that effect shall be made
• Changes in the capital structure shall be disclosed
• Disclosures in respect of issue of debentures, bonds, warrants or any other non-convertible
securities
• Disclosure in regard to credit rating and revision, if any
• Disclosures in respect of various amounts transferred to IEPF
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ADDITIONAL DISCLOSURES
• Under 149 (6) independent director declaration shall be disclosed – standard requires
disclosure of compliance with prescribed code under schedule IV. Also a statement on
compliance of code of conduct for directors and senior management personnel
formulated by the company
• Section 134 requires number of board meetings – standard requires dates of meetings
also shall be disclosed
• Committees – as against the statutory requirement of audit committee composition,
standard requires disclosure of composition of all committees and changes there in. also
shall disclose the dates of committee meetings
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ADDITIONAL DISCLOSURES
• State of the company affairs – standard provides clarity by prescribing the aspects on
which the disclosure shall be made
• Change in the nature of business – standard provides the aspects on which the disclosure
should be made such as new business, sale or disposal of any business or segment
• Material changes & commitments – financial impact , causes for such material changes and
the remedial measures taken shall also be disclosed
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ADDITIONAL DISCLOSURES
• Under General Information the following shall be given
• Overview of the industry and important change during the last year
• External environment and economic outlook
• Induction of strategic and financial partners during the year
• Particulars of delisting activities, if any
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ADDITIONAL DISCLOSURES
• Any changes in the capital structure of the company during the year including
• Change in authorized, issued, subscribed and paid-up share capital
• Re-classification or sub-division of the authorized share capital
• Reduction of share capital or buy-back of shares
• Change in capital structure resulting from restructuring and
• Change in voting rights
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ADDITIONAL DISCLOSURES
• Frauds – 143(12) prescribes disclosure of frauds reported to the audit committees and not to Central
Government shall be reported in the board’s report
• Standard requires the frauds reported to Central Government shall also be disclosed in the board’s report

• Cessation of subsidiaries – standard also require the disclosure of manner of cessation i.e. sale of shares,
mergers / amalgamation etc
• Deposits – wherever NCLT or NCLAT passed any order in regard to extension of time for repayment
or penalty imposed, if any, such details shall also be furnished
• Loans & Investments – section 134(3)(g) requires that the particulars of loans, guarantees or investments
under section 186 shall be disclosed in the board’s report. Standard requires to report on securities
provided also
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ADDITIONAL DISCLOSURES
• Risk Management – standard provides that ‘strategy to mitigate risks’ shall also be
disclosed
• Material orders – material orders of quasi judicial bodies shall also be disclosed
• Auditors – details of change and the reasons there of shall also be disclosed. Such as
resignation, removal, casual vacancy or completion of term
• Audit qualifications – if there are no qualifications, reservations or adverse remarks or
disclaimers a statement to that effect shall be made. If they are there then the financial
impact of the same and corrective measures shall be disclosed
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ADDITIONAL DISCLOSURES
• Secretarial standards – SS-1 requires a statement on compliance of applicable standards.
Where as SS-4 also requires to comment on voluntary adoption of non-mandatory
secretarial standards
• Insolvency resolution process – application filed before NCLT, status of such application
and the status of corporate insolvency resolution process shall be disclosed in the report
• Corporate actions – in case a company failed to complete or implement any corporate
action the report shall disclose the same. For example buy-back or interim dividend
THANK YOU