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ANNUALREPORT

SPRS AND CO.

“DirectorsReportandCorporateSocialResponsibility”CompaniesLawRefresherCourse

organizedbyPuneBranchofWIRCofICAI

- CSRahulSahasrabuddhe

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• VIEWS EXPRESSED IN THISPRESENTATION ARE STRICTLY MYPERSONAL VIEWS AND NEED NOTNECESSARILY BE VIEWS OF ANY OFMY PAST OR PRESENTORGANISATIONS, I HAVE WORKED/AMWORKINGWITH.

• CARICATURES USED IS NOT THEWORKOFMINE.

• THIS PRESENTATION IS FORACADEMIC PURPOSEONLY.

ANNUALREPORT

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An Annual Report is acomprehensive report on acompany's activitiesthroughout the precedingyear. Annual reports areintended to give shareholdersand other interested peopleinformation about thecompany's activities andfinancial performance.

SPRS AND CO.

WhatisincludedinAnnualReport?

Typicalannualreportswillinclude• GeneralCorporateInformation• Accountingpolicies• Balancesheet• Cashflowstatement• Profitandlossaccount• Notestothefinancialstatements• Auditorsreport

SPRS AND CO.

WhatisincludedinAnnualReport?

Typicalannualreportswill include(non-auditedinformation)

• Chairpersonsstatement• Operatingandfinancialreview• NoticeofAGM• AttendanceSlipandProxyForm• Otherfeatures

SPRS AND CO.

WhatisincludedinAnnualReport?

Typicalannualreportswillinclude(non-auditedinformation)

SPRS AND CO.

AnnualReportConsistsof

AnnualFinancialStatementsalongwithAuditors’Report

Board/Directors’Report

SecretarialAuditReport,ifapplicableSPRS

AND CO.

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BOARDREPORT

SPRS AND CO.

WhyBoardReport?

Some people have legitimately asked whether thecosts of governance reforms are too high. In thiscontext, it should be noted that the failure toimplement good governance procedures has a costbeyond mere regulatory problems. Companies that donot employ meaningful governance procedures willhave to pay a significant risk premium whencompeting for scarce capital in today’s publicmarkets.

N.RNarayanaMurthyChairmanCommitteeonCorporateGovernance,SEBI

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Whatisboardreport?• It is a document by the board to shareholdersreportingon the company's condition

• It is an inalienable part of the annual report.• The report includes a summary of initiatives,activities of the board, and personalperspectiveof the company's future.

• Board Report is also known as Directors’Report

GeneralRules

• PreparedonthebasisofStandAloneFinancialStatementsofthecompany

• Separatesectiononperformanceandfinancialpositionofitssubsidiaries,JointVentureCompaniesandAssociateCompanies

• Signedby– Chairpersonor– TwodirectorsincludingManagingDirector,ifany.

DisclosuresrequiredinBoardReport

1.• UnderCompaniesAct,2013

2.•ListingRegulations andSEBI(ShareBasedEmployee Benefits)Regulations,2014

3.• Anyotherlawthatmayapplytothecompany

DISCLOSURESUNDERSection134(3)

ofCompaniesAct,2013&

Rule8oftheCompaniesAct(Accounts)Rules.

CONTENTSOFREPORTSec134(3)ExtractsofAnnualReturnasprovidedundersection92(3)FormNo.MGT-9

1. REGISTRATIONANDOTHERDETAILS:2. PRINCIPALBUSINESSACTIVITIESOFTHECOMPANY3. PARTICULARSOFHOLDING,SUBSIDIARYANDASSOCIATECOMPANIES4. SHAREHOLDINGPATTERN

a) Category-wiseShareHoldingb) ShareholdingofPromotersc) ChangeinPromoters’Shareholdingd) ShareholdingPatternoftoptenShareholderse) ShareholdingofDirectorsandKeyManagerialPersonnel:

5. INDEBTEDNESS6. REMUNERATIONOFDIRECTORSANDKEYMANAGERIALPERSONNEL7. PENALTIES/PUNISHMENT/COMPOUNDINGOFOFFENCES

CONTENTSOFREPORTSec134(3)

• Numberofmeetingsheldinayear– 4meetinginayear– OnemeetingperQuarter– MaximumgapbetweentwoBMnotmorethan120days.

CONTENTSOFREPORTSec134(3)

• Frauds reported by Auditors otherthan reportable to CG– 143(12)

CONTENTSOFREPORTSec134(3)• Statement of Declaration given by ID• Companies Policy with regard to the

– Qualification– Appointment– Remuneration

Applicable to– Listed Cos– Public Cos with a pd up capital more than Rs. 10

Crores– Public Cos with a turnovermore than Rs. 100 Crores– Public Cos having loans/borrowings/Deposits over Rs.

50 Crores

CONTENTSOFREPORTSec134(3)• ExplanationandCommentsonevery

qualificationandreservation ontheadverseremarkanddisclaimermade– Bytheauditorinhisreport– BythecompanysecretaryinpracticeinhisSecretarialReport

• particularsofloans,guaranteesorinvestmentsundersection186

• ParticularsofcontractsandagreementsenteredintoinFORMAOC2– DetailsofcontractorarrangementthatareArmsLengthPrice

– DetailsofContractsorarrangementthatarenotatArmsLengthPrice

CONTENTSOFREPORTSec134(3)

• Thestateofthecompany’saffairs• AmountproposedtocarriedtoReserves• DividendRecommended,ifany.• MaterialchangessubsequenttoFYclosure

CONTENTSOFREPORTSec134(3)

• Theconservationofenergy,technologyabsorption,foreignexchangeearningsandoutgo

• RiskManagementPolicy

• PolicydevelopedandimplementedontheCorporateSocialResponsibilityinitiativesduringtheyear– BriefoutlineaboutCosCSRPolicy– CompositionofCSRCommittee– AverageNPfor3years– PrescribedCSRexpenditure– DetailsofCSRSpends– ReasonsfornotspendingprescribedCSRamount– ResponsibilityStatementbyCSRCommittee

– Applicableto:• CowithaNWofRs.500crore• TurnoverofRs.1000Crore• NetProfitofRs.5Crore inthelast3years

CONTENTSOFREPORTSec134(3)

CONTENTSOFREPORTSec134(3)DirectorsResponsibilityStatement:

• Applicableaccountingstandardshavebeenfollowed

• ConsistentAccountingPoliciesappliedtorepresenttrueandfairviewofstateoftheaffairsoftheCompany

• Properandsufficientcareforaccountingrecordsandfrauddetectionmechanism

• Goingconcernbasis• InternalfinancialcontrolforListedCompanies• Mechanismtoensurecompliancesofallthe

applicablelaws.

• DetailsofperformanceevaluationmadebytheBoardonitsownperformance andoftheCommitteesandindividualDirectors– Applicableto

• ListedCos• PublicCohavingpaidupcapitalmorethanRs.25Crores

CONTENTSOFREPORTSec134(3)

• Section199:(12)EverylistedcompanyshalldiscloseintheBoard'sreport,theratiooftheremuneration ofeachdirector tothemedianofemployee'sremuneration.(14)MDorWTDgettingcommissionfromtheCompany mayalsogetcommissionfromitsHCorSCsubjecttoitsdisclosurebythecompanyintheBoard'sreport.

DISCLOSUREUNDERCOMPANIES(ACCOUNTS)RULES,2014

DisclosureunderRule8(5):• Financialsummaryorhighlights• Changeinnatureifbusiness,ifany• DetailsofchangeintheDirectorsorkeyManagerialPersonnel

• DetailsofDepositsacceptedduringtheyear,remainedunpaidorunclaimedasattheendoftheyear.

• Anymaterialorderpassedbythecourtorregulatoraffectingthestatusoroperationsofthecompany.

ANYOTHERLAWTHATMAYAPPLYTOTHECOMPANY

ForExample

• Section22ofTHESEXUALHARASSMENTOFWOMENATWORKPLACE(PREVENTION,PROHIBITIONANDREDRESSAL)Act– AnnualReportoftheBoardtocontainNo.ofcasesfiledanddisposedoffduringtheyear.

SuggestedListofItemstobeIncludedIntheReportonCorporateGovernanceintheAnnualReportof

Companies

Non- mandatoryitemsthatcanbeincluded:

• Briefstatementoncompany’sphilosophyoncodeofgovernance

• BoardofDirectors– CompositionandCategory– AttendanceofeachdirectorattheBoardmeetingsandthelastAGM

– NumberofotherBoardsorBoardCommitteesinwhichhe/sheisamemberorChairperson.

• DetailsofVariousCommitteesoftheBoard:– CompositionandnamesofmembersandChairperson

– Meetingsandattendanceduringtheyear

• Meansofcommunication– Quarterlyresults– Newspaperswhereinresultsnormallypublished– Anywebsite,wheredisplayed– Whetheritalsodisplaysofficialnewsreleases;and

– Thepresentationsmadetoinstitutionalinvestorsortotheanalysts.

• GeneralShareholderInformation:– DateofBookclosure– DividendPaymentDate– RegistrarandTransferAgents– ShareTransferSystem– Distributionofshareholding– Dematerializationofsharesandliquidity,etc.

• Detailsofnon-compliancebythecompany,penalties,stricturesimposedonthecompanybyStockExchangeorSEBIoranystatutoryauthority,onanymatterrelatedtocapitalmarkets,duringthelastthreeyears.–MandatoryNow

Contravention

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• Coshallbeliable• Rs.50ktoRs.2500K

• Officer– Imprisionmentupto3years;or– Rs.50ktoRs.500K

SPRS AND CO.

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“DirectorsReportandCorporateSocialResponsibility”CompaniesLawRefresherCourse

organizedbyPuneBranchofWIRCofICAI

SPRS AND CO.

35SPRS

AND CO.

Sec135(1)&(2)- Applicability

• ConstituteCSRCommitteehaving3Directors(1ID)

• DisclosecompositionofCSRCinBR

– NWmorethanRs.500Crore;or– T/OmorethanRs.1000Crore;or– NPmorethanRs.5Crore

SPRS AND CO.

Sec135- CSRC

Shall• FormulateCSRPolicy• RecommendCSRObligation• MonitorimplementationofCSRP

SPRS AND CO.

Sec135(5)

Shall• FormulateCSRPolicy• RecommendCSRObligation• MonitorimplementationofCSRP

SPRS AND CO.

Sec135- Compliance(5)TheBoardofeverycompanyreferredtoinsub-section(1),shallensurethatthecompanyspends,ineveryfinancialyear,atleasttwopercent, oftheaveragenetprofitsofthecompanymadeduringthethreeimmediatelyprecedingfinancialyears,inpursuanceofitsCorporateSocialResponsibilityPolicy:……….

Providedfurtherthatifthecompanyfailstospendsuchamount,theBoardshall,initsreportmadeunderclause(o)ofsub-section(3)ofsection134,specifythereasonsfornotspendingtheamount.

SPRS AND CO.

ContactCo-ordinatesCS Rahul P. SahasrabuddheFounding Partner

SPRS And CoCompany SecretariesMobile No. 98 196 500 45Email: RAHUL@SPRSCS.COM

THANKYOU40