Recent Changes Introduced In Board Report -2021

Introduction–

A board report is an important document of the company which is used to communicate the shareholders with the position, performance, major changes in policies, documents, plans, future goals, expansions if any, etc. This report is attached with the financial statements and is laid before the general meeting.

A new amendment was inserted in the Companies (Accounts) Rules 2014 by Ministry Of Corporate Affairs, Government of India on 24^th March 2021 to widen up the domain of disclosures required to be made in board report. The whole idea was to add some more disclosures to be made mandatorily via these changes.

Objective of the Amendment- 

The amendment was introduced with the view to enhance more transparency in the company’s working by incorporating more disclosures and following stringent policies . It introduced few more disclosures to be made mandatorily in Board Report, Audit Report and Financial Report.

Applicability of The Amendment-

These amendments shall come into force from 1-April-2021.

Amendment In Rule 8 (Matters to be Included in Board’s Report)

In rule 8, sub rule 5 after clause X, two new clauses are added to it-

1. the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.
2. the details of difference between the amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

FAQ’s Regarding These Amendments

Q1) ABC Ltd. Financial Year ends on 31^st.March.2021.The Directors report was signed on 12.August.2021. Whether the new amendment in Board Report needs to be complied here??

Ans- The recent amendment introduced shall be applicable on companies from the financial year starting on 1-April-2021 or thereafter. Thus the effect of such amendment shall be on the financial statement as on 31^st-March-2022 (i.e. F.Y. 2021-2022) .

Thus as per the given question any report that was sign till the F.Y 20-21 shall come under the purview of previous disclosures only and the new amendment shall not be applicable to them.

Conclusion-

Thus MCA introduced these amendments with the view to bring more clarity and accountability on the part of the company. However these amendments shall be applicable for the financial year 2021-2022.Hence it has made the system more transparent.

Although best efforts have been made to clarify the topic as much as possible but in case of any query you can reach our professionals on the legal window. They shall guide you with the best of their knowledge.