Disclosures to be made in Directors Report / Annual Report Companies Act,

2013 and Revised Clause 49 of the Listing Agreement

Section 134 in the Companies Act, 2013 supersedes the provisions of Section 217 of the
Companies Act, 1956 in regard to the disclosures in the Boards Report. The disclosures to
be given in the Boards Report have been provided under various sections of the
Companies Act, 2013 and also in the revised Clause 49 of the Listing Agreement.
The Companies Act, 2013 and the revised Clause 49 of the Listing Agreement have
mandated some additional disclosures to the shareholders including Extract of Annual
Return, Statement of Declaration by the Independent Directors, Policy on Related Party
Transactions, provisions related to disclosure of remuneration of directors and key
managerial personnel.
The gist of the disclosures required to be made in the Boards Report under Companies
Act, 2013 and Clause 49 of the Listing Agreement are given under:

Companies Act, 2013 and Rules thereupon

1. ESOP related [Section 67(3)]
2. Reasons for voluntary revision, if any, in the financial statements [Proviso to Sec
131(1)]
3. Section 134 (3) There shall be attached to statements laid before a company in general
meeting, a report by its Board of Directors, which shall include
a.
b.
c.
d.
e.

f.

g.
h.
i.
j.
k.
l.

m.

the extract of the annual return [Section 92 (3)];

number of meetings of the Board;
Directors Responsibility Statement; [Section 134 (5)]
a statement on declaration given by independent directors [section 149 (6)];
companys policy on directors appointment and remuneration including criteria
for determining qualifications, positive attributes, independence of a director
[section 178 (1) & 178 (3)]
Explanations or comments to adverse qualifications, reservation or adverse remark
or disclaimer made by the statutory auditor in his report and by the company
secretary in practice in his Secretarial audit report [Section 204(3)]
particulars of loans, guarantees or investments [section 186]
particulars of contracts or arrangements with related parties [section 188 (1)] in
Form AOC-2 [Chapter IX - Rule 8.4].
the state of the companys affairs;
the amounts, if any, which it proposes to carry to any reserves;
the amount, if any, which it recommends should be paid by way of dividend;
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;
the conservation of energy, technology absorption, foreign exchange earnings and
outgo, in such manner as may be prescribed;

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;
o. the details about the policy developed and implemented by the company on
corporate social responsibility initiatives taken during the year;
p. statement indicating the manner in which formal annual evaluation has been made
by the Board of its own performance and that of its committees and individual
directors;
q. such other matters as may be prescribed
4. The Board's report shall disclose the composition of the Corporate Social Responsibility
Committee [Section 135 (2)]
5. If the company fails to spend CSR amount, the Board shall, in its report specify the
reasons for not spending the amount [Section 135 (5)]
6. Disclosure of contents of CSR Policy as per Annexure to the CSR Rules, 2014
7. Statement containing salient features of financial statements (in case of Abridged
financial statements)
8. Disclosure in case of reappointment of independent directors [Section 149(10)],
9. Composition of Audit Committee and where the Board had not accepted any
recommendation of the Audit Committee, the same shall be disclosed in such report
along with the reasons therefor [Section 177(8)]
10. Details of establishment of vigil mechanism shall be disclosed by the company on its
website and in the Boards report. [Section 177(10)]
11. Nomination and Remuneration Policy [Section 178(4)]
12. Every contract or arrangement entered into under related party Transaction along
with the justification for entering into such contract or arrangement. [Section
188(2)]
13. the ratio of the remuneration of each director to the median employees
remuneration [Section 197(12)]
14. Disclosure of receipt of commission by director who is in receipt of any commission
from the company from holding or subsidiary company [Section 197(14)]
15. Secretarial audit report to be annexed to Board Report [Section 204(1)]
16. Rules Chapter IX
16.1 The report of the Board shall contain the following information and details
(Chapter IX - Rule 8.3):
A. Conservation of energyi. the steps taken or impact on conservation of energy;
ii. the steps taken by the company for utilising alternate sources of energy;
iii. the capital investment on energy conservation equipments;

B. Technology absorptioni. the efforts made towards technology absorption;

ii. the benefits derived like product improvement, cost reduction, product
development or import substitution;
iii. in case of imported technology (imported during the last three years
reckoned from the beginning of the financial year)a. the details of technology imported;
b. the year of import;
c. whether the technology been fully absorbed;
d. if not fully absorbed, areas where absorption has not taken place,
and the reasons thereof; and
iv. the expenditure incurred on Research and Development.
C. Foreign exchange earnings and OutgoThe Foreign Exchange earned in terms of actual inflows during the year and the
Foreign Exchange outgo during the year in terms of actual outflows.
16.2 a statement indicating the manner in which formal annual evaluation has been
made by the Board of its own performance and that of its committees and
individual directors. (Chapter IX - Rule 8.4)
16.3 In addition to information under Rule 8.4, the report shall also contain (Chapter
IX - Rule 8.5)
i. the financial summary or highlights;
ii. the change in the nature of business, if any;
iii. the details of directors or key managerial personnel who were appointed or
have resigned during the year;
iv. the names of companies which have become or ceased to be its Subsidiaries,
joint ventures or associate companies during the year;
v. the details relating to deposits, covered under Chapter V of the Act,a. accepted during the year;
b. remained unpaid or unclaimed as at the end of the year;
c. whether there has been any default in repayment of deposits or
payment of interest thereon during the year and if so, number of such
cases and the total amount involved(i) at the beginning of the year;
(ii) maximum during the year;
(iii) at the end of the year;
vi. the details of deposits which are not in compliance with the requirements of
Chapter V of the Act;
vii. the details of significant and material orders passed by the regulators or
courts or tribunals impacting the going concern status and companys
operations in future;
viii. the details in respect of adequacy of internal financial controls with
reference to the Financial Statements.
17. Rules Chapter XIII
17.1 Every listed company shall disclose in the Boards reporti. the ratio of the remuneration of each director to the median remuneration of

ii.

iii.
iv.
v.
vi.
vii.

viii.

ix.
x.
xi.

xii.

the employees of the company for the financial year;

the percentage increase in remuneration of each director, Chief Financial
Officer, Chief Executive Officer, Company Secretary or Manager, if any, in
the financial year;
the percentage increase in the median remuneration of employees in the
financial year;
the number of permanent employees on the rolls of company;
the explanation on the relationship between average increase in
remuneration and company performance;
comparison of the remuneration of the Key Managerial Personnel against the
performance of the company;
variations in the market capitalisation of the company, price earnings ratio
as at the closing date of the current financial year and previous financial year
and percentage increase over decrease in the market quotations of the
shares of the company in comparison to the rate at which the company came
out with the last public offer in case of listed companies, and in case of
unlisted companies, the variations in the net worth of the company as at the
close of the current financial year and previous financial year;
average percentile increase already made in the salaries of employees other
than the managerial personnel in the last financial year and its comparison
with the percentile increase in the managerial remuneration and
justification thereof and point out if there are any exceptional
circumstances for increase in the managerial remuneration;
comparison of the each remuneration of the Key Managerial Personnel
against the Performance of the company;
the key parameters for any variable component of remuneration availed by
the directors;
the ratio of the remuneration of the highest paid director to that of the
employees who are not directors but receive remuneration in excess of the
highest paid director during the year; and
affirmation that the remuneration is as per the remuneration policy of the
company.

Explanation.- For the purposes of this rule.

(i) the expression median means the numerical value separating the higher half of a
population from the lower half and the median of a finite list of numbers may be found
by arranging all the observations from lowest value to highest value and picking the
middle one;
(ii) if there is an even number of observations, the median shall be the average of the
two middle values.
17.2 Employees drawing remuneration not less than Rs.60 lakhs [earlier section
217(2A)]. The statement referred to in sub-rule (2) shall also indicate
i. designation of the employee;
ii. remuneration received;
iii. nature of employment, whether contractual or otherwise;
iv. qualifications and experience of the employee;
v. date of commencement of employment;
vi. the age of such employee;
vii. the last employment held by such employee before joining the company;
viii. the percentage of equity shares held by the employee in the company

within the meaning of clause (iii) of sub-rule (2) above; and

ix. whether any such employee is a relative of any director or manager of the
company and if so, name of such director or manager:

Listing Agreement
Training of Independent Directors - details of such training imparted shall be
disclosed in the Annual Report.
The Annual Report of the company to contain a declaration signed by the CEO
affirming compliance with the Code of Conduct by directors and senior
management on an annual basis.
The company shall formulate a policy for determining material subsidiaries
and such policy shall be disclosed to Stock Exchanges and in the Annual Report.
The company shall disclose the policy on dealing with Related Party
Transactions on its website and also in the Annual Report.
All pecuniary relationship or transactions of the non-executive directors
vis--vis the company shall be disclosed in the Annual Report.
In addition to the disclosures required under the Companies Act, 2013, the
following disclosures on the remuneration of directors shall be made in the
section on the corporate governance of the Annual Report:
o

All elements of remuneration package of individual directors summarized

under major groups, such as salary, benefits, bonuses, stock options,
pension etc.

Details of fixed component and performance linked incentives, along with

the performance criteria.

Service contracts, notice period, severance fees.

Stock option details, if any - and whether issued at a discount as well as the
period over which accrued and over which exercisable.

The company shall disclose the number of shares and convertible instruments
held by non-executive directors in the annual report.
Management Discussion and Analysis report should form part of the Annual
Report to the shareholders.
Disclosure of relationships between directors inter-se shall be made in the
Annual Report, notice of appointment of a director, prospectus and letter of
offer for issuances and any related filings made to the stock exchanges where
the company is listed.
The company shall obtain a certificate from either the auditors or practicing
company secretaries regarding compliance of conditions of corporate
governance as stipulated in this clause and annex the certificate with the
directors report, which is sent annually to all the shareholders of the
company.

The details of establishment of vigil mechanism shall be disclosed by the

company on its website and in the Boards report.
The company shall disclose the remuneration policy and the evaluation criteria
in its Annual Report.