Enhanced Directors role- Provision regarding directors under

Companies Act 2013

Prepared By:Dipendra Prasad Poudel

Article Assistant (Internal Audit)N.Kochhar & co

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Brief Introduction

• Board of directors is an important body elected by share holders which acts as an agent of shareholders

• Board is responsible for making policies of good governance and efficient running of the company.

• Section 134 of companies act 2013 casts the responsibility to the directors regarding various issues

• The reports are annexed along with financial statements which are laid before the shareholders in Annual General Report ( AGM ). Section 134(7)

Section 134(6) – signature on board report

• It should be signed by a chairperson of the company where he is authorised by the board

or by two directors out of which one shall be managing director

• In case of one person company:- Only by one director

Section 134(3)- Contents of BOD report

• Extract of annual return

• Number of meetings of held by the board

• Directors responsibility statement

• Statement of declaration given by independent director

• Company’s policy on directors’ appointment , remuneration and all the other matters covered in sub-section (1) of section 178.

(Section 178 deals with Nomination and remuneration committee and Stake holders relationship committee)

• Explanation or comments by the board on every qualification, reservation or adverse remark or disclaimer made by-

a. auditors of the company b. by company secretary in his secretarial audit

• Particulars of loans, guarantees or investment made by the company ( section 186)

• Particulars of contracts or arrangements with related parties ( section 188)

• The state of company affairs

• Amount proposed to be carried to general reserves

• Amount recommended to be paid by way of dividend

• Material changes and commitments, affecting the financial position of the company which have occurred between the end of financial year of the company to which the financial statements relate and the date of report.

• The conservation of energy, technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed.

• Statement indicating development and implementation of risk management policy.

• The details of policy developed and implemented by the company on corporate social responsibility

• A statement indicating manner in which formal annual evaluation has been made by the board of its own performance and that if its committees and individual director. ( in case of only listed company and every other public

company having such paid-up share capital as may be prescribed)

• Such other matter as may be prescribed.

Punishment in case of contravention- Section 134(8)

• Company-Fine which shall not be less than fifty thousands rupees and extend upto twenty-five lakh rupees

• Person in default- Every officer of the company who is in default shall be punishable with the imprisonment for a term which may extend upto 3 years

or fine which shall not be less than fifty thousand rupees and can be extended upto five lakhs or with both

Thank you

Dipendra Prasad Poudel mailfordipendra@gmail.com Infodipendra.blogspot.in