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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice

Board Disclosures and Website Disclosures for CS Professional

Board disclosures are the details a company must put in the Board's report attached to its financial statements under Section 134 of the Companies Act, 2013. Website disclosures let a company point to a policy on its website instead of repeating it. To solve questions, identify the clause, apply it to the facts, and conclude with the penalty.

What this chapter covers

This chapter covers Section 134 of the Companies Act, 2013. It deals with how the financial statements are approved and signed, what the Board's report must contain, which items can be shown by web address, and what happens on default. Section 131 is a useful companion: it lets directors revise a financial statement or Board's report that does not comply with Section 129 or Section 134.

The Board's report is the main way a company tells its members how it is run. It includes the Directors' Responsibility Statement, the number of Board meetings, the risk management statement, the CSR policy details, and the Board evaluation statement. These are the same topics you meet elsewhere in Paper 1: governance, risk management and sustainability reporting. So this chapter acts as a bridge between the law and the practice of governance in the paper.

Expect case-based questions. You may be given a company's facts and asked who must sign, whether a particular item is missing from the report, whether a policy can be given by web address, or what penalty applies. Your answer should follow the order: provision, analysis of the facts, conclusion.

Section 134 is a precise, list-based section, so it rewards careful learning. Most questions can be answered with full marks if you recall the exact clause and apply it to the facts. The section also links to governance, risk and CSR topics in the same paper, so the effort here helps you across Paper 1. Practical points such as signing, attachments and penalty amounts are easy to state correctly and easy to lose marks on if you are vague.

Board Disclosures and Website Disclosures: topics in the order to study them

  1. 1Financial Statements and Approval ProcessStart here because the financial statement is what the Board's report is attached to. You need to know who approves and signs it, and that the auditor's report is attached, before the report's content makes sense.
  2. 2Board's Report under Section 134Next learn the core list in Section 134(3): what must be included, who signs, and the abridged report for a One Person Company or small company.
  3. 3Additional Disclosures in the Board's ReportWith the core list clear, study the items that need deeper treatment, such as the Directors' Responsibility Statement, risk management, CSR, evaluation and auditor or secretarial audit remarks.
  4. 4Website Disclosures by CompaniesThis comes after the content because it is an exception to it. The provisos allow a brief salient-features summary plus a web address for certain policies, and cross-reference to the financial statements.
  5. 5Penalties for Non-Compliance with Section 134Finish with the consequences of default. Penalties are easier to remember once you know exactly what the company must do.

How to prepare Board Disclosures and Website Disclosures

Treat this chapter as a checklist you can rebuild from memory and then apply to facts.

  1. Read Section 134 once in full, in order, so you see how sub-sections 1 to 8 fit together.
  2. Make a one-page list of Section 134(3) clauses (a) to (q) and learn it in groups: annual return, meetings, responsibility statement, auditor and secretarial remarks, policies, and financial matters.
  3. Learn the Directors' Responsibility Statement points in Section 134(5) as five or six separate statements. Note that the internal financial controls point applies to a listed company.
  4. Write down who signs what: the financial statement, the Board's report, and the special case of a One Person Company. Practise stating each in a sentence.
  5. Learn the two provisos on cross-reference and website disclosure, and note which clauses the website proviso covers.
  6. Solve short case questions. For each, state the provision, apply it to the facts, give your conclusion, and mention the penalty if there is a default.
  7. Read Section 131 briefly and be able to explain when and how revision of a financial statement or report is allowed.

Common mistakes in Board Disclosures and Website Disclosures

  • Listing the Board's report contents from general memory instead of from Section 134(3).

    Fix: Learn clauses (a) to (q) in groups and cite the clause when you answer.

  • Saying the internal financial controls statement applies to every company.

    Fix: Remember that the internal financial controls point is for a listed company, while the other statements apply generally.

  • Confusing who signs the financial statement with who signs the Board's report.

    Fix: The financial statement also needs the CEO, CFO and company secretary where appointed. The Board's report is signed by the chairperson if authorised, or two directors including a managing director.

  • Treating the website proviso as allowing any disclosure to be moved to the website.

    Fix: It applies to the policies in clauses (e) and (o). Even then the Board's report must give the salient features briefly and the web address.

  • Giving the wrong penalty or only one half of it.

    Fix: State both: ₹3,00,000 on the company and ₹50,000 on every officer in default.

  • Writing a theory answer without applying the facts in a case question.

    Fix: Use three parts every time: provision, analysis of the given facts, and conclusion.

Last-day revision: Board Disclosures and Website Disclosures

  • The financial statement is approved by the Board, then signed, and sent to the auditor for his report.
  • Signing: the chairperson if authorised by the Board, or two directors (one the managing director, if any), plus the CEO, CFO and company secretary where appointed. A One Person Company needs only one director.
  • The auditor's report is attached to every financial statement.
  • The Board's report is attached to statements laid before the company in general meeting.
  • The Board's report must state the number of Board meetings and include the Directors' Responsibility Statement.
  • The Board must explain every qualification, reservation, adverse remark or disclaimer by the auditor and by the company secretary in practice in the secretarial audit report.
  • The report must cover risk management policy, CSR policy initiatives and, for listed and prescribed public companies, the annual evaluation of the Board, its Committees and individual directors.
  • The Directors' Responsibility Statement covers accounting standards, policies and estimates, accounting records, going concern, internal financial controls (listed company) and compliance systems.
  • Disclosures already in the financial statements can be referred to instead of repeated.
  • For the policies under clause (e) or (o), brief salient features plus the web address are enough if the policy is on the company's website.
  • The Board's report is signed by the chairperson if authorised, otherwise by at least two directors, one being a managing director; a one-director company is signed by that director.
  • Default: the company is liable to a penalty of ₹3,00,000 and every officer in default to ₹50,000.

Board Disclosures and Website Disclosures practice questions

Board Disclosures and Website Disclosures in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Board Disclosures and Website Disclosures: frequently asked questions

Which section is the main focus of this chapter?

Section 134 of the Companies Act, 2013 is the core. It covers approval of the financial statement, the contents of the Board's report, signing, and the penalty for default. Section 131 on voluntary revision is a useful companion.

Can a company put its policies on its website instead of in the Board's report?

For the director appointment and remuneration policy and the CSR policy, yes in part. If the policy is on the company's website, the Board's report need only give the salient features and any change in brief, with the web address of the full policy.

What is the penalty for not complying with Section 134?

The company is liable to a penalty of ₹3,00,000. Every officer of the company who is in default is liable to a penalty of ₹50,000.

Is the Board's report the same for every company?

No. A One Person Company's report only needs the Board's explanations on auditor qualifications, reservations, adverse remarks or disclaimers. The Central Government may also prescribe an abridged report for a One Person Company or small company.

Can a company revise its financial statements after approval?

Under Section 131, directors may prepare a revised financial statement or report for any of the three preceding financial years if it does not comply with Section 129 or 134. They need the Tribunal's approval first, and a revision cannot be made more than once in a financial year.