Guidance Note - ICSI

1 Guidance Note on Report of the Board of Directors(ii)MAY 2019 Price : Rs. 200/- (Excluding postage) THE INSTITUTE OF COMPANY SECRETARIES OF INDIAAll rights reserved. No part of this publication may be translated or copied in any form or by any means without the prior written permission of The Institute of Company Secretaries of IndiaPublished by :THE INSTITUTE OF COMPANY SECRETARIES OF INDIAICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 Phones : 011-4534 1000, 4150 4444 Fax +91-11-2462 6727 E-mail Website (iii)PREFACEThe Board s Report is an important means of communication by the Board of Directors of a company with its stakeholders.

2 The Board s Report provides the stakeholders with both financial and non-financial information, including the performance and prospects of the company, relevant changes in the management and capital structure, recommendations as to the distribution of profits, future and on-going programmes of expansion, modernisation and diversification, capitalisation of reserves, further issue of capital and other relevant Companies Act, 2013, mandates certain disclosures to be made in the Board s Report, additionally, a listed company is required to comply with disclosures requirement stated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3 To promote uniformity of disclosures in the Board s Report, the Secretarial Standard on Report of the Board of Directors (SS-4), was issued by the Institute of Company Secretaries of India (ICSI), effective from 1st October, 2018 for recommendatory observance. This Guidance Note on Report of the Board of Directors issued by the ICSI, sets out the explanations, procedures and practical aspects in respect of the provisions contained in SS-4 to facilitate compliance thereof by the place on record my sincere thanks to CS Satwinder Singh, Chairman-Secretarial Standards Board (SSB), CS Narayan Shankar (Group Convener)

4 And all Members of the SSB for their efforts and contribution made in the preparation and finalisation of this Guidance commend the dedicated efforts put in by CS Rakesh Kumar, Assistant Director led by CS Banu Dandona, Joint Director under the overall Guidance of CS Ashok Kumar Dixit, Officiating Secretary of the ICSI, in bringing out this Guidance Note. (iv)I urge upon the Corporates as well as all my professional colleagues to ensure uniformity of disclosures in Board s Report, in the light of this Guidance Note so as to promote good Corporate is a continuous process and therefore, suggestions of the readers to improve this Guidance Note are most : New Delhi CS Ranjeet Pandey Date: 14th May, 2019 President, ICSI(v)CONTENTSPg.

5 1 SCOPE 2 DEFINITIONS 3 Guidance ON THE PROVISIONS OF SS-4 4 PART I: DISCLOSURES 1. COMPANY SPECIFIC INFORMATION 4 2. GENERAL INFORMATION 14 3. CAPITAL AND DEBT STRUCTURE 14 4. CREDIT RATING OF SECURITIES 21 5. INVESTOR EDUCATION AND PROTECTION FUND (IEPF) 22 6.

6 MANAGEMENT 24 7. DISCLOSURES RELATING TO SUBSIDIARIES, ASSOCIATES 36 AND JOINT VENTURES 8. DETAILS OF DEPOSITS 38 9. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS 39 10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES 40 11. CORPORATE SOCIAL RESPONSIBILITY (CSR) 42 12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, 43 FOREIGN EXCHANGE EARNINGS AND OUTGO 13. RISK MANAGEMENT 44 14. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM 45 15. MATERIAL ORDERS OF JUDICIAL BODIES /REGULATORS 46 16. AUDITORS 46 17. SECRETARIAL AUDIT REPORT 46 18. EXPLANATIONS IN RESPONSE TO AUDITORS QUALIFICATIONS 47(vi) 19.

7 COMPLIANCE WITH SECRETARIAL STANDARDS 49 20. CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE 49 INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) 21. FAILURE TO IMPLEMENT ANY CORPORATE ACTION 49 22. ANNUAL RETURN 50 23. OTHER DISCLOSURES 51 24. ADDITIONAL DISCLOSURES UNDER LISTING REGULATIONS 51 25. DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN 54 AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 PART II: OTHER REQUIREMENTS 26. APPROVAL OF THE REPORT 56 27. SIGNING OF THE REPORT 56 28. DISSEMINATION 58 29. FILING AND SUBMISSION OF THE REPORT 59 ANNEXURES TO THE REPORT 62 Annexure-I Matters to be included in the Board s Report of OPC and Small 63 Company Annexure-II Format for disclosure of financial information in the Board s Report 65 Annexure-III Specimen Resolution for approval of Board s Report 66 Annexure-IV Corporate Governance Report 67 Annexure-V Form No.

8 AOC -2 73 Annexure-VI Details of Remuneration 75 Annexure-VII Form No. MR-3 (Secretarial Audit Report) 76 Annexure-VIII Format of the Annual Report on CSR activities to be included 81 in the Board s Report 1 Guidance NOTE ONREPORT OF THE BOARD OF DIRECTORSThe Secretarial Standard on Report of the Board of Directors (SS-4), formulated by the Secretarial Standards Board (SSB) of the Institute of Company Secretaries of India (ICSI) and issued by the Council of the ICSI, has been effective from 1st October, 2018. Adherence to SS-4 is Guidance Note sets out the explanations, procedures and practical aspects in respect of the provisions contained in SS-4 to facilitate compliance thereof by the Companies Act, 2013, requires the Board of Directors of every company to attach its report to the financial statements to be laid before the members at the annual general meeting.

9 The Board s Report is an important means of communication by the Board of Directors of a company with its stakeholders. The Board s Report provides the stakeholders with both financial and non-financial information, including the performance and prospects of the company, relevant changes in the management and capital structure, recommendations as to the distribution of profits, future and on-going programmes of expansion, modernisation and diversification, capitalisation of reserves, further issue of capital and other relevant information. The Companies Act, 2013, mandates certain disclosures to be made in the Board s Report.

10 A listed company is also required to comply with certain additional requirements as stated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Similarly, a company, whose securities are listed on an overseas stock exchange, is required to comply with additional requirements as may be specified by such stock exchange. Guidance NOTE ON REPORT OF THE BOARD OF DIRECTORS2 Further, a company which is regulated under other laws, may also be required to make additional disclosures in its Board s Report as stated in the respective applicable laws.