Abridged Board’s Report for Small Companies and OPC

Background:

MCA vide its notification dated July 31, 2018[1] has brought the Companies (Accounts)
Amendment Rules, 2018 which broadly deals with two changes:
1. Additional disclosures for companies other than small companies and OPCs;
2. Abridged list of contents for small companies and OPCs

Even though the aforesaid amendment in the said Rules have been brought in line with the
proposed changes in section 134 of the Companies Act, 2013 (‘CA, 2013’) under the
Companies (Amendment) Act, 2017, however, the said amended section has not been enforced
till date.

Additional disclosures for companies other than small companies and OPCs:

The additional disclosures required to be made are with respect to:

 Maintenance of cost records in accordance with section 148(1) of the CA, 2013 in case
the same is applicable on such company.
 A statement on constitution of Internal Complaints Committee under the Sexual
Harassment of the Women at workplace (Prevention, prohibition and Redressal) act, 2013.


Relief for small companies and OPCs:

The Rules state that small companies and OPCs are not required to make the disclosures
stated under Rule 8. Instead, as per Rule 8A of the aforesaid Rules, an abridged list of
disclosures have been given for small companies and OPCs, which are as follows:

1. The web address of the company, where the annual return has been placed; 6
2. Number of meetings of the Boards; 5
3. Director’s Responsibility Statement; 9
4. Details of frauds reported by auditors to Central Government as per section 143(12)
of the CA, 2013; 10
5. Explanations or comments by Board on every observation made by the auditor in his
report; 4
 6. The state of the Company’s affairs; 2
7. The financial summary or highlights; 1
8. The material changes in the nature of business and its effect on the financial position
of the Company; 7
9. The details of appointment/resignation of directors; 3
10. Details of material orders passed by regulators/courts/tribunals which can impact the
going concern status of the company and its operations in future; 8
11. The Board’s Report shall also include the particulars of the contract or arrangements
entered with related parties as per section 188(1) of the CA, 2013 in the Form AOC-2.
11

Conclusion:

Following the aforesaid change, there are basically three categories of board’s report:

Category I Category II Category III

Unlisted Company and

Listed Company and Public every public company with
Company with PUSC[2] of PUSC of less than Rs. 25 Small Companies and
Rs.25 crores or more crores OPCs

All matters in the Board’s

report as specified under
section 134 (3) of the CA,
2013 read with Rule 8 of the
Accounts Rules except for
the following:

 Section 134 (3)

All the matters in the Board’s
report as specified in Section
134(3) of the CA, 2013 read
with Rule 8 of the Companies
(Accounts) Rules, 2014
(‘Account Rules’).
clause(p)
“a statement indicating the
manner in which formal
annual evaluation has been
made by the Board of its own
performance and that of its
committees and individual
directors;”
 Rule 8 sub-rule (4) of All the matters in the Board’s
the Accounts Rules report as specified under Rule
“a statement indicating the 8A of the Accounts Rules.
Category I Category II Category III

Unlisted Company and

Listed Company and Public every public company with
Company with PUSC[2] of PUSC of less than Rs. 25 Small Companies and
Rs.25 crores or more crores OPCs

manner in which formal

annual evaluation has been
made by the Board of its own
performance and that of its
committees and individual
directors.”

In the Recent Update from MCA , MCA has issued amended rules for Companies in respect to
Preparation of Board Report for OPC and Small Companies where ministry as provided relief to
Company Directors for preparation of Board Report that will not require much information and
provided mandatory points that are required to be disclosed in the board report.
The Board Shall be prepared on the basis on standalone Financial Statement and shall be in
abridged form and contain the following points :
1. The Web Address, if any where annual return has been placed

2. Number of meeting of Board of Directors of the company held During the Financial Year

3. Directors Responsibility Statement

4. Details in respect of frauds reported by auditors

5. Explanation and comments by board on qualification or adverse remarks by auditors

6. Financial Summery of Company during the financial year

7. Statement of Company affairs

8. Material Changes form the date of Closure of Financial Year in nature of business of the
company and their impact on financial position of the company.

9. All details of Directors who were appointed and resigned during the year.

10. All Details of Significant material order passed by Regulators

11. Details with contracts and arrangements with related parties in Form AOC-2