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

Sagar Infra Ltd, a listed company, has Board's report disclosures on related party contracts, loans and guarantees already given in detail in the notes to its financial statements. A director proposes to refer to the financial statements instead of repeating them. The CS also notes that the Board's report was signed by the chairperson, who has not been authorised by the Board, and by one non-executive director. Which statement is correct?

The cross-reference is valid, but the signing is defective. The first proviso to section 134(3) permits referring to disclosures in the financial statements, while section 134(6) requires, absent the chairperson's authorisation, at least two directors, one of them a managing director, to sign the report.

  1. ABoth the cross-reference and the signing are valid
  2. BThe cross-reference is valid, but the signing is defective because without authorisation it needs at least two directors including a managing directorCorrect
  3. CThe cross-reference is invalid, but the signing is valid
  4. DBoth are defective, because disclosures cannot be cross-referred and the chairperson must always sign alone

Explanation

The first proviso to section 134(3) allows disclosures already in the financial statements to be referred to rather than repeated. Under section 134(6), the chairperson signs only if authorised by the Board; otherwise at least two directors must sign, one of whom is a managing director. A chairperson without authorisation plus one non-executive director does not meet that.

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