HOW TO PREPARE THE DIRECTORS’ REPORT AS PER COMPANIES ACT, 2013’
HOW TO PREPARE THE DIRECTORS’ REPORT AS PER
COMPANIES ACT, 2013’
I.
ADDRESS TO MEMBERS:
Language:
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How To Check The
Financial Year
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Your Directors
have pleasure in presenting the (No. of Financial Years) Annual Report
together with the Audited Statement of Accounts of your Company for the
financial year ended March 31, 2015
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i.
Check from the
Annual Return/Directors’ Report of previous financial year.
ii.
Check the
incorporation date and calculate to verify.
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II.
FINANCIAL HIGHLIGHTS:
Language:
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How To Fill the Figures
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The
Company’s financial performance for the year ended March 31, 2015:
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Check the Statement of Profit & Loss Account
for the year ended March 31, 2015. You will find required figures on the FACE
of Statement of Profit & Loss Account.
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Turnover: Section-
2(91)- Aggregate value of the realization of amount made from the sale,
supply or distribution of goods or on account of services rendered, or both,
by the company during a financial year
Deferred tax: As per Accounting Standard (AS) 22,
deferred tax is the tax effect of timing differences.
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III.
STATE OF AFFAIRS: Section 134(3)(i)
Purpose
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Language:
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How to Check the
Affairs of the Company
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134(3)(I)
The State of
The Company’s Affairs;
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The Company
is engaged in the business of ___________________________. There has been no
change in the business of the Company during the financial year ended 31st
March, 2015. Or there is _________________________ Changes in the business of
the Company during the financial year ended 31st March, 2015.
The
highlights of the Company’s performance are as under:-
o Revenue from operations increased by ______% from
Rs. _______ lacs to Rs. _____ lacs.
o Net Profit for the year increased by _______%
from Rs. _________ lacs to Rs. _____ lacs.
The
increase in revenue, net profit and EPS as mentioned above is accredited to
increase in turnover in comparison to the last financial year.
OR
The
decrease in revenue, net loss and EPS as mentioned above is debited to
decrease in turnover in comparison to the last financial year.
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o Company can find the Affairs of the Company from
the Notes to Accounts (attached as part of Balance Sheet).
o Company can find if there is any Change in the
affairs of the Company by comparing the Notes to Account of Last financial
year TO current financial year.
How
to analyze the Companies Performance:
Check
the Statement of Profit & Loss Account for the year ended March 31, 2015.
All the adjacent required figures are available on the FACE of Statement of
Profit & Loss Account. Compare the figures of Last financial year TO current financial year and
calculate the increase/Decrease in Revenue from Operation/ Net Profit/ Earning
per share.
Formula
for calculating Percentage Change:
(Turnover
of Current Financial Year- Turnover of Last Financial Year/ Turnover of Last
Financial Year)*100
If value comes in Positive (+) that will be
result of___________% increase in Revenue
If value comes in Negative (-) that will be
result of___________% decrease in Revenue
SAME FORMULA FOR NET PROFIT AND EPS.
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IV.
DIVIDEND: Section 134(3)(k)
Purpose
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Language:
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From where to Check
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The amount, if
any, which it recommends should be paid by way of dividend;
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In view of the
sustained working results during the year under review, the Board of
Directors are pleased to recommend a dividend of Rs ___/- per equity share
OR
In view of the
planned business growth, your Directors deem it proper to preserve the
resources of the Company for its activities and therefore, do not propose any
dividend for the Financial Year ended March 31, 2015.
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First:
Check the Face of Statement of Profit and Loss
Account; Amount of Dividend will be mention there.
Second:
Check the
Copy of General Meeting resolution in case of final Dividend and check the
Board Meeting resolution in case of interim Dividend.
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V.
DETAILS OF SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES:
Purpose
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Language:
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How to find out Subsidiary, JV and Associates
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Rule 8(5)(iv)
The name of
companies which have become or ceased to be its Subsidiaries, joint ventures
or associate companies
during the year;
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The Company does
not have any Subsidiary, Joint Venture or Associate Company.
OR
The names of companies
which have become or ceased to be the Company’s subsidiaries, joint ventures
or associate companies during the year under review is provided below:
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First Check:
Check the
Investment of the Company from Non Current Investment in the Balance Sheet,
check the relevant Note and analyze about Subsidiary, Associate and Joint
Venture as per definition given u/s 2(87) and 2(6) of the Companies Act,
2013.
Second:
Check
from the (Accounting Standard)
AS-18.
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VI.
INTERNAL FINANCIAL CONTROL:
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Language:
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How to Check?
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Rule 8(5)(vii)
ICAI guidance
note on adequacy of internal financial controls with reference to financial
statements can be referred for this Purpose.
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The Company has
in place adequate internal financial controls with reference to financial
statements. During the year, such controls were tested and no reportable
material weakness in the design or operation was observed
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Most listed
companies are reading requirements related to IFC as those referring to IFC
for financial reporting along with limited focus on the operational controls
aspect.
Auditors are
required to certify that the IFC are designed and operate effectively.
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VII.
PARTICULAR OF LOAN AND INVESTMENT:
Purpose
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Language:
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How to Check?
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Section
134(3)(g)
particulars of
loans, guarantees or investments under section 186;
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Particular of
Loans given, investments made, guarantee given and securities provided along
with the purpose for which the loan or guarantee or security is proposed to
be utilized by the recipient are provided in the financial statement (please
refer Note _______ to the standalone balance sheet).
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Check
the Loan and Investment from the Assets side of Balance sheet and relevant Notes.
Check
the Guarantee from the Contingent Liabilities and schedule. Also check from
the Notes to Financial Accounts.
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VIII.
CHANGE IN NATURE OF BUSINESS, IF ANY:
Purpose
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Language:
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How to check?
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Rules 8(5)(i)
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There is no
change in the business of Company and its Subsidiary Company.
The Board may
provide details relating to change in the business carried on by the company
or its subsidiaries. This shall also contain details pertaining to classes of
business in which the company has an interest.
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Check
the Followings:
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Main object of the Company
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Notes of the Financial Statement
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IX.
AMOUNTS TRANSFERRED TO RESERVES, IF ANY:
Provision
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Language:
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How to check?
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Section- 134(3)(J)
The Board of the
company has decided/ proposed to carry Rs____
to its reserves
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No amount was
transferred to the reserves during the financial year ended 31st
March, 2015.
The Board of the
company has decided/proposed to carry Rs____ to its reserves.
|
Check the
Assets side of Balance sheet, if there is increase in reserve other than the
balance of profit and loss account.
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X.
CHANGES IN SHARE CAPITAL, IF ANY:
Language:
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How to check?
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During the
Financial Year 2014-15, the share capital of the Company has been increased
from ____ to ____, pursuant to
allotment of____
equity shares of Rs ____ each under Private Placement/Preferential
allotment/Rights issue /Employee Stock Option Scheme of the Company
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Check the
Followings:
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Whether any PAS-3 filed
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Check from the Minutes of the Meeting
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Difference b/w amount of Capital in
the Balance sheet (2015-2014).
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XI.
EXTRACT OF ANNUAL RETURN:
Provisions:
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Language:
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How to check?
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Section 134(3)(a)
the extract of
the annual return as provided under sub-section (3) of section 92;
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The extract of
Annual Return, in format MGT -9, for the Financial Year 2014-15 has been
enclosed with this report
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Format of
MGT-9 given in Companies Act, 2013. For preparation of MGT-9 first prepare
the MGT-7.
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XII. NUMBER OF BOARD MEETING:
Purpose
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Language:
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How to check?
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Section 134(3)(a)
number of
meetings of the Board; held during the financial year 2014-15
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During
the Financial Year 2014-15, [**] meetings of the Board of Directors of the
company were held. [Preferable to state the dates of meetings]
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Check the
Minutes of the Board Meeting.
Get the Index
of Board Meetings from the Company.
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XIII. PARTICULARS OF CONTRACT AND ARRANGMENT WITH RELATED PARTIES:
Provision:
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Language:
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How to check?
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Section- 134(3)(h)
The Particulars
of contracts or arrangement s with related party referred to in Section
188(1) of the Companies Act, 2013 for the Financial Year 2014-15 in the
prescribed format AOC-2, has been enclosed with the report.
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All related
party transactions that were entered into during the financial year ended
31st March, 2015 were on an arm’s length basis and were in the ordinary
course of business. Therefore, the provisions of Section 188 of the Companies
Act, 2013 were not attracted. Further, there are no materially significant
related party transactions during the year under review made by the Company with
Promoters, Directors, or other designated persons which may have a potential
conflict with the interest of the Company at large. Details of the
transactions are given in AOC-2
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Check the
following :
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AS-18
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Minutes of Board Meeting &
General Meeting (If any Resolution passed)
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XIV. EXPLANATION TO AUDITOR’S REMARKS:
Provision:
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Language:
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How to check?
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Section 134(3)(f)
Explanation or
comment by the Board on every qualification, reservation, adverse remark or
disclaimer made by the statutory auditor in his report and/or by the
secretarial auditor in the secretarial Audit Report.
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The observations
of the Statutory Auditors, when read together with the relevant notes to the
accounts and accounting policies are self explanatory and does not call for
any further comment.
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Check the
Auditor Report
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XV. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
Provision:
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Language:
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How to check?
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134(3)(L)
Details
regarding any material changes / events, if any, occurring after balance
sheet date till the date of the report to be stated
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No material
changes and commitments affecting the financial position of the Company
occurred between the end of the financial year to which this financial
statement relates and the date of this report.
|
Check the
following
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Trial Balance
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Financial Position
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Market Condition
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XVI. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO:
Provision:
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Language:
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How to check?
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134(3)(M)
The details of
Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo are as
under:
a)
Conservation of Energy:
b)
Technology Absorption:
c)
Foreign Exchange Earnings/ Outgo:
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The
particulars as required under the provisions of Section 134(3) (m) of the
Companies Act, 2013 in respect of conservation of energy and technology
absorption have been furnished considering the nature of activities
undertaken by the company during the year under review.
|
Check the
following
-
Financial of the Company.
-
Check with directors.
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XVII. RISK MANAGEMENT POLICY:
Provision:
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Language:
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How to check?
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134(3)(N)
Statement indicating
the development and implementation of the risk management policy of the
company Moreover, in case the Company has constituted a risk management
committee, then the constitution and the terms of reference of the same to be
disclosed.
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The Company has
in place a mechanism to identify, assess, monitor and mitigate various risks
to key business objectives. Major risks identified by the businesses and
functions are systematically addressed through mitigating actions on a
continuing basis.
|
Check the
policy prepared by the Company.
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DETAILS OF DIRECTORS AND
KEY MANAGERIAL PERSONNEL:
Provision:
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Language:
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How to check?
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Rule 8(5)(iii)
Details of
Directors and KMP appointed or resigned during the year.
Details of
directors retiring by rotation in the ensuing Annual General Meeting
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There has been no
change in the constitution of Board during the year under review i.e. the
structure of the Board remains the same
|
Check the
Following:
-
DIR-12
-
MCA
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Comparison from
last annual return
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XVIII. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
OR COURTS OR TRIBUNAL:
Provision:
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Language:
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How to check?
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Details of the
order passed by the authorities which impacts the going concern status and
company’s operations in future
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No significant or
material orders were passed by the Regulators or Courts or Tribunals which
impact the going concern status and Company’s operations in future
|
Get the
information from the Management of the Company.
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XIX.
VOLUNTARY REVISION OF FINANCIAL STATEMENTS OR BOARD’S REPORT:
Provision:
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Language:
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How to check?
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This section is
not yet enforced
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XX.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Provision:
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Language:
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How to check?
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The employer shall include in its report the
number of cases filed, if any, and their disposal under this Act in the
annual report of his organization or where no such report is required to be
prepared, intimate such number of cases, if any, to the District Officer.
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The
Company is committed to provide a safe and conducive work environment to its
employees. During the year under review.
Your Directors further state
that during the year under review, there were no cases filed pursuant to the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013
|
Get the
information from the Management of the Company.
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XXI.CONSOLIDATED FINANCIAL STATEMENTS:
Provision:
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Language:
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How to check?
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The Board’s Report shall
contain a Separate section wherein a report on the
performance and financial
position of each:
• Subsidiary
• Associate
• Joint venture companies,
including in the consolidated financial statement is
presented
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Company doesn’t have any
subsidiaries so there is no need to prepare consolidated financial statement
for the F. Y. 2014-15. OR
Consolidated financial
statement is prepared and attached with financials.
|
Check
the followings:
-
Financial Statement
-
Whether company have subsidiary or not
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(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES
Company Secretary in Practice from Delhi and can be contacted at
csdiveshgoyal@gmail.com)
Disclaimer: The entire contents of this document have been
prepared on the basis of relevant provisions and as per the information
existing at the time of the preparation. The observations of the author are personal view and the authors do not take
responsibility of the same and this cannot be quoted before any authority
without the written
hello sir...
ReplyDeletewhat are the required annexures for directors report as per new companies act.
Hi Chaitali,
DeleteThere are some annexures:
AOC-2
MGT-9
This comment has been removed by the author.
ReplyDeleteHello Divesh,
ReplyDeleteIs it mandatory to include the headings where we do not have any changes such as changes in nature of business, transfer of amounts into reserves, etc.
yes there shold be headline.
DeleteThanks for the confn.
Deletebest review and guidelines on director's report seen till date.
ReplyDeletePBJ & ASSOCIATES
Thank you sir.
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