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Board's Report under Section 134 of the Companies Act, 2013

Updated 11 October 2026 · Fact-checked

The Board's report is a report by the directors attached to the financial statements laid before the general meeting. Section 134(3) lists what it must contain, and 134(5) sets out the Directors' Responsibility Statement. Approve the financial statements first, sign them as 134(1) requires, then sign the report as 134(6) requires.

Understand Board's Report under Section 134

Shareholders own the company, but directors run it. Once a year the directors must explain to shareholders what happened and why. The Board's report is that explanation. It sits alongside the financial statements and the auditor's report.

Section 134(3) says the report is attached to the statements laid before the company in general meeting. It then lists what it must include. Think of the list in groups. Some items are about the business: state of affairs, amounts carried to reserves, dividend recommended, and material changes between the year-end and the date of the report. Some are about governance: number of Board meetings, independent directors' declarations, the nomination and remuneration policy, and the annual evaluation of the Board, its committees and individual directors. Some are about risk and responsibility: the risk management statement, the CSR policy details and the Directors' Responsibility Statement.

A third group is about answering others. The Board must explain every qualification, reservation, adverse remark or disclaimer made by the auditor, and by the company secretary in practice in the secretarial audit report. It must also give particulars of loans, guarantees and investments under section 186, and of related party contracts under section 188(1) in the prescribed form. Details of frauds reported by auditors under section 143(12), other than those reportable to the Central Government, are also included.

The Directors' Responsibility Statement (DRS) is the Board's formal confirmation under 134(5). It covers accounting standards, accounting policies and judgments, adequate accounting records, going concern, and, for listed companies, internal financial controls. It also confirms systems for compliance with all applicable laws.

The law also reduces repetition. If a disclosure is already in the financial statements, the report can refer to it. If the policy under clause (e) or (o) is on the company's website, the report can give its salient features and the web address. For ESG study, note the links: risk management, CSR, board evaluation and the Board's accountability are all reported here.

Key rules to remember

Approval and signing of financial statements: Board approves first; then signed by chairperson (if authorised) OR two directors (one being MD, if any), plus CEO, CFO and CS where appointed; Section 134(1). In a One Person Company, only one director signs. Signing is for submission to the auditor for the report.
Signing of Board's report: Chairperson (if authorised by the Board) OR at least two directors, one being MD; where there is one director, that director; Section 134(6). It applies to the report and its annexures.
Auditor's report: Attached to every financial statement; Section 134(2).
Contents of the Board's report: Section 134(3), clauses (a) to (q); Includes annual return web address, number of Board meetings, DRS, independent directors' declaration, auditor and secretarial audit remarks, section 186 and 188 particulars, state of affairs, reserves, dividend, material changes, risk policy, CSR policy, Board evaluation and prescribed matters.
Directors' Responsibility Statement: Section 134(5)(a) to (f): accounting standards; policies and prudent judgments; accounting records; going concern; internal financial controls (listed companies); compliance systems; Clause (e) on internal financial controls applies to listed companies only. Clauses (a), (b), (c), (d) and (f) apply to all companies.
Board evaluation statement: Listed companies and prescribed public companies must state how formal annual evaluation of the Board, its committees and individual directors was made; Section 134(3)(p).
Circulation: Signed financial statements go out with notes, auditor's report and Board's report; Section 134(7).
Penalty: Company: ₹3,00,000. Every officer in default: ₹50,000; Section 134(8).
One Person Company report: Report means explanations or comments on every auditor qualification, reservation, adverse remark or disclaimer; Section 134(4). Section 134(3A) allows an abridged report for OPC or small company as prescribed.

How to solve Board's Report under Section 134 questions

Exam questions give you a company scenario and ask what the Board's report must contain, who signs, or whether the DRS is correct. Use this method for any of them.

1Identify the question type: contents, DRS, signing and approval, or default and penalty.
2Identify the company type: listed or unlisted, public or private, One Person Company, small company. This decides clause (e) of the DRS, clause (p) and the abridged report.
3State the rule with its sub-section, such as 134(3), 134(5) or 134(6).
4Match each fact in the case to a clause of 134(3). Name the clause content in plain words.
5Check the sequence: Board approval, signing by authorised persons, submission to the auditor, then the report laid before the general meeting.
6Check for relief: disclosures already in the financial statements, or policies on the website with salient features and web address.
7Conclude clearly: compliant or not, what the missing item is, and the consequence under 134(8) if there is a default.

Quickest way: Group-and-check recall

When to use it: Use this when a question asks you to list contents or spot what is missing in a draft report.

Recall the groups: business, governance, risk and responsibility, answering auditors and others.
Business: state of affairs, reserves, dividend, material changes, energy, technology and foreign exchange.
Governance: meetings, independent director declarations, remuneration policy, evaluation.
Risk and responsibility: risk policy, CSR policy, DRS.
Answering others: auditor remarks, secretarial auditor remarks, sections 186 and 188 particulars, fraud details.
Add the annual return web address and prescribed matters.
Finish with signing: chairperson if authorised, else two directors including an MD.

Common mistakes in Board's Report under Section 134

Saying the internal financial controls clause of the DRS applies to all companies.
Students remember the DRS as one block of points.
Fix: Clause (e) applies only to a listed company. The other clauses apply to every company.
Saying the Board's report is signed by any two directors.
Students mix up the rule with other signing provisions.
Fix: Under 134(6), the chairperson signs if authorised by the Board. Otherwise at least two directors sign, one being a managing director. A company with one director is signed by that director.
Mixing up signing of financial statements and signing of the report.
Both rules look alike.
Fix: Financial statements under 134(1) also need the CEO, CFO and company secretary where appointed. Section 134(6) for the report does not name them.
Leaving out the explanation of the company secretary's secretarial audit remarks.
Students remember only the auditor's remarks.
Fix: Clause (f) covers both the auditor's report and the secretarial audit report of the company secretary in practice.
Treating policy disclosure as always needing the full policy in the report.
Students miss the second proviso.
Fix: For clauses (e) and (o), if the policy is on the website, the report gives salient features, changes and the web address.
Quoting the wrong penalty.
Old penalty figures are circulating in notes.
Fix: Section 134(8): ₹3,00,000 on the company and ₹50,000 on every officer in default.

Worked examples

Example 1

Sundaram Textiles Limited, a listed company, has prepared its Board's report. The Board did not state how it evaluated itself, and the DRS omits any mention of internal financial controls. The chairperson, not authorised by the Board, signed the report alone. Advise on compliance.

Show the solution

Rule: Section 134(3)(p) requires a listed company to state how the formal annual evaluation of the Board, its committees and individual directors was made.
Rule: Section 134(5)(e) requires the DRS of a listed company to state that internal financial controls were laid down and were adequate and operating effectively.
Rule: Section 134(6) lets the chairperson sign only if authorised by the Board. Otherwise at least two directors sign, one being a managing director.
Application: the report lacks the evaluation statement. The DRS lacks clause (e). The chairperson has no authorisation, so the sole signature is invalid.
Consequence: under 134(8) the company is liable to a penalty of ₹3,00,000 and every officer in default to ₹50,000.

Answer: The report is non-compliant on three counts: missing evaluation statement, missing internal financial controls clause in the DRS, and defective signing. The Board should correct the report and have it signed by two directors, one being an MD, or by an authorised chairperson. Default attracts the penalties in 134(8).

Example 2

Kaveri Agro Private Limited is an unlisted company. Its auditor made an adverse remark on inventory records. Its secretarial auditor made a qualification on filing delays. The Board's report is silent on both. A director says the report need not cover the secretarial audit remark. Is he right?

Show the solution

Rule: Section 134(3)(f) requires the Board to give explanations or comments on every qualification, reservation, adverse remark or disclaimer made by the auditor in his report.
The same clause covers remarks made by the company secretary in practice in the secretarial audit report.
Application: the company is unlisted, but clause (f) is not limited to listed companies. Both remarks must be addressed.
The director's view ignores clause (f)(ii).
Consequence: omission is a default under section 134, so 134(8) penalties apply.

Answer: The director is wrong. The Board's report must explain both the auditor's adverse remark and the secretarial auditor's qualification. Omitting them is a default under section 134, attracting ₹3,00,000 on the company and ₹50,000 on each officer in default.

Exam tips

Write the sub-section number with each point, such as 134(3)(f) or 134(5)(e). It shows precision.
For a DRS question, list all six points and flag that clause (e) is for listed companies only.
In case questions, first state the company type. Many answers turn on listed versus unlisted.
Link the report to ESG themes: risk policy, CSR policy and Board evaluation show how the Board reports on sustainability and governance.
End every answer with the consequence: penalty under 134(8) or the corrective step.

Practice questions from Board Disclosures and Website Disclosures

Board's Report under Section 134 in other exams

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

Board's Report under Section 134: frequently asked questions

What must the Board's report include under Section 134?

Section 134(3) lists clauses (a) to (q). They include the annual return web address, number of Board meetings, the Directors' Responsibility Statement, independent directors' declaration, auditor and secretarial audit remarks with explanations, section 186 and 188 particulars, state of affairs, reserves, dividend, material changes, risk policy, CSR policy and Board evaluation. Prescribed matters are also included.

What does the Directors' Responsibility Statement say?

Under 134(5), directors confirm that applicable accounting standards were followed, policies were consistent and judgments prudent, adequate accounting records were kept, accounts were prepared on a going concern basis, and compliance systems are adequate. Listed companies also confirm internal financial controls.

Who signs the Board's report?

Under 134(6), the chairperson signs if authorised by the Board. If not, at least two directors sign, one of whom is a managing director. Where there is one director, that director signs.

What is the penalty for default under Section 134?

Under 134(8), the company is liable to a penalty of ₹3,00,000. Every officer of the company who is in default is liable to ₹50,000.

Is the Board's report different for a One Person Company?

Yes. Under 134(4), the report for a One Person Company means a report with explanations or comments on every qualification, reservation, adverse remark or disclaimer by the auditor. Section 134(3A) also lets the Central Government prescribe an abridged report for an OPC or small company.