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CS Professional · Drafting, Pleadings and Appearances · Art of Advocacy and Appearances

Vihaan Industries Ltd is defending a claim. Its authorised representative learns that a Board's report relied on by the company omitted the explanations on an auditor's qualification. Under the Companies Act, 2013, the Board's report must include which of the following on this point?

The Board's report must contain the Board's explanations or comments on every qualification, reservation, adverse remark or disclaimer in the auditor's report. It is not limited to material remarks, so an omission is a weakness to anticipate in preparing the case.

  1. AExplanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his reportCorrect
  2. BOnly the auditor's own explanation of the qualification
  3. CComments only on qualifications the Board considers material
  4. DA statement by the shareholders on the auditor's remarks

Explanation

Section 134(3)(f) requires the Board's report to give explanations or comments on every qualification, reservation, adverse remark or disclaimer by the auditor. It is not limited to material ones, so the 'material only' option is wrong. The omission is a gap to be anticipated when preparing the case.

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