The Ministry of Corporate Affairs(“MCA”) on 31 July 2018 published the Companies (Accounts) Amendment Rules 2018. With the amendment coming into effect, the MCA has mandated few insertions to be made by a Company while preparing its Board Report and the disclosures to be made by a Small company and One Person Company while preparing their Board Report. The MCA has brought below amendments in Rule 8 of the Companies (Accounts) Rules 2014 which provides for the matters to be included in the Board Report of a Company:
- The sub-rule 5 provides for additional details to be specified in the Board Report. The MCA has inserted two more disclosures to be included in the Board Report:
- a disclosure, as to whether maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained,
- a statement that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
- The Rule 8 is not applicable on One Person Company or Small Company.
The MCA has also inserted Rule 8A to the Companies (Accounts) Rules 2014 which is applicable only for One Person Company and Small Company. The said rule prescribes following matters to be included in Board’s Report for One Person Company and Small Company: (1) The Board’s Report of One Person Company and Small Company shall be prepared based on the stand-alone financial statement of the company, which shall be in abridged form and contain the following: - (a) the web address, if any, where annual return referred to in sub-section (3) of section 92 has been placed; (b) number of meetings of the Board; (c) Directors’ Responsibility Statement as referred to in sub-section (5) of section 134; (d) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government; (e) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report; (f) the state of the company’s affairs; (g) the financial summary or highlights; (h) material changes from the date of closure of the financial year in the nature of business and their effect on the financial position of the company; (i) the details of directors who were appointed or have resigned during the year; (j) the details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future. (2) The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2. Source: http://www.mca.gov.in/Ministry/pdf/companisAccountsRules_31072018.pdf