Disclosures in Annual Report

19/10/2022 0 By indiafreenotes

An annual report is a document that public corporations must provide annually to shareholders that describes their operations and financial conditions. The front part of the report often contains an impressive combination of graphics, photos, and an accompanying narrative, all of which chronicle the company’s activities over the past year and may also make forecasts about the future of the company. The back part of the report contains detailed financial and operational information.

Annual reports became a regulatory requirement for public companies following the stock market crash of 1929 when lawmakers mandated standardized corporate financial reporting.

The intent of the required annual report is to provide public disclosure of a company’s operating and financial activities over the past year. The report is typically issued to shareholders and other stakeholders who use it to evaluate the firm’s financial performance and to make investment decisions.

Typically, an annual report will contain the following sections:

  • General corporate information
  • Operating and financial highlights
  • Letter to the shareholders from the CEO
  • Narrative text, graphics, and photos
  • Management’s discussion and analysis (MD&A)
  • Financial statements, including the balance sheet, income statement, and cash flow statement
  • Notes to the financial statements
  • Auditor’s report
  • Summary of financial data
  • Accounting policies

State of Company’s Affairs [Section 134(3)(i)]:

Board briefing about the Company business operation ,highlights, growth, services of the Company, operating profits, performance growths, overview of the business, new projects introduced during the year or any new services undertaken by the company.

Details of status of acquisition, mergers, expansion, modernization and diversification, and key business developments.

Besides, it points out the problems faced by the company which has affected the Profits and measures that have been taken to improve the working and reduces the costs.

Dividends [Section 134(3)(k):

The amount of Dividend if any, recommended by the board should be paid by way of Dividend, as to the rate under review for the approval of members at the  Annual General Meeting AGM

Details of Subsidiary, Joint Venture and Associate Companies (Rule 8(5)(iv):

Details of company that is ceased to its subsidiaries, Joint Venture or associate company.

Particulars of Loan and Investments Section 134(3)(g):

Disclosure of all particulars of Loans, guarantees or investments under Section 186.

Change in nature of Business, if any:

Details pertaining to change of business of the Company or in the subsidiaries business or in the nature of business carried on by them.

Amounts Transferred to reserves, if any:

The board shall states the amount which it proposes to any reserve in the Balance Sheet like debenture redemption reserve in terms of Section 71(13)etc.

Changes in share Capital, if any:

Change in total Share capital of the company and any increase during the year under review, pursuant to allotment of equity/preference shares /Right issue/ Private Placement/ preferential allotment/ Employee Stock Option scheme of the Company. 10. Web Link of annual return Section 134(3)(a): Web address link where annual return of company shall be published.

Number of Board Meeting Section 134(3)(b):

The number of Board Meetings held during the year and Committee meeting and details of Board meetings attended by each of the Director should be mentioned.

Particulars of Contract and Arrangement with Related Parties Section 188:

Details of all transactions entered along with the justification for entering into such a contract and arrangement by the company during the financial year. 13. Statutory Auditors:

Details about the statutory auditors of the company, any change made during the year, whether existing auditor(s) is/are eligible for reappointment etc. Compliance certificate from either the auditor(s) or practicing company secretaries regarding compliance of conditions of corporate governance shall be annexed with the director’s report.(Para C of Schedule V of Listing Regulations).

Explanation to Auditor’s Remarks Section 134(3)(f): Explanation or comment by the board on every qualification reservation, adverse or disclaimer made by the statutory auditor in his report and /or by the secretarial auditor in the Secretarial Audit Report.

Material changes affecting the Financial position of the company Section 134(3)(l):

Details of any material changes / events, if any occurring after balance sheet date till the date of report to be stated.

Conservation of energy, technology, absorption, foreign exchange earnings and outgo section 134(3)(m):

The board report shall contain the following details:

Conservation of energy:

Impact on the conservation of energy, Company utilization of alternative source, the capital investment on energy conservation types of equipment.

Technology absorption:

Research and development expenditure, Advantages of product improvement, cost reduction, product development or impact substitution.

Foreign Exchange earnings and outgo:

Terms of actual inflows during the year and the Foreign exchange outgo during the year in terms of actual outflows.

Risk Management Policy Section 134(3)(n):

Details of the development and implementation of the risk management policy of the company.

Details of Directors and Key Managerial Personnel Rule 8(5)(iii):

Details of Directors and KMP appointed or resigned during the year.