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

Meghdoot Textiles Ltd, a listed company, closed its books on 31 March. On 20 May, before the Board's report was signed, its main plant was destroyed in a fire, and a large insurance claim is pending. Under section 134(3), where should this event be dealt with in the Board's report?

The fire must be disclosed as a material change or commitment affecting financial position. Section 134(3)(l) covers events between the financial year-end and the date of the Board's report, so a post-year-end plant loss falls squarely within it and cannot be left out.

  1. AAs a material change or commitment affecting financial position between the year-end and the date of the reportCorrect
  2. BOnly in the Directors' Responsibility Statement
  3. CIt need not be reported because the event occurred after the year-end
  4. DOnly in the explanation on auditor's qualifications

Explanation

Section 134(3)(l) requires the Board's report to include material changes and commitments affecting the company's financial position that occurred between the end of the financial year and the date of the report. The fire falls in that window. Saying it need not be reported ignores that the clause covers exactly post-year-end events.

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