134. Financial statement, Board‘s report, etc.— (1) The financial statement, including consolidated
financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf
of the Board at least by the chairperson of the company where he is authorised by the Board or by two
directors out of which one shall be managing director and the Chief Executive Officer, if he is a director
in the company, the Chief Financial Officer and the company secretary of the company, wherever they are
appointed, or in the case of a One Person Company, only by one director, for submission to the auditor
for his report thereon.
(2) The auditors‘ report shall be attached to every financial statement.
(3) There shall be attached to statements laid before a company in general meeting, a report by its
Board of Directors, which shall include—
(a) the extract of the annual return as provided under sub-section (3) of section 92;
(b) number of meetings of the Board;
(c) Directors‘ Responsibility Statement;
[(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other
than those which are reportable to the Central Government;]
(d) a statement on declaration given by independent directors under sub-section (6) of section
149;
(e) in case of a company covered under sub-section (1) of section 178, company‘s policy on
directors‘ appointment and remuneration including criteria for determining qualifications, positive
attributes, independence of a director and other matters provided under sub-section (3) of section 178;
(f) explanations or comments by the Board on every qualification, reservation or adverse remark
or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
(g) particulars of loans, guarantees or investments under section 186;
(h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of
section 188 in the prescribed form;
(i) the state of the company‘s affairs;
(j) the amounts, if any, which it proposes to carry to any reserves;
(k) the amount, if any, which it recommends should be paid by way of dividend;
(l) material changes and commitments, if any, affecting the financial position of the company
which have occurred between the end of the financial year of the company to which the financial
statements relate and the date of the report;
(m) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in
such manner as may be prescribed;
(n) a statement indicating development and implementation of a risk management policy for the
company including identification therein of elements of risk, if any, which in the opinion of the Board
may threaten the existence of the company;
(o) the details about the policy developed and implemented by the company on corporate social
responsibility initiatives taken during the year;
(p) in case of a listed company and every other public company having such paid-up share capital
as may be prescribed, a statement indicating the manner in which formal annual evaluation has been
made by the Board of its own performance and that of its committees and individual directors;
(q) such other matters as may be prescribed.
(4) The report of the Board of Directors to be attached to the financial statement under this section
shall, in case of a One Person Company, mean a report containing explanations or comments by the
Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his
report.
(5) The Directors‘ Responsibility Statement referred to in clause (c) of sub-section (3) shall state
that—
(a) in the preparation of the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state
of affairs of the company at the end of the financial year and of the profit and loss of the company for
that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors, in the case of a listed company, had laid down internal financial controls to be
followed by the company and that such internal financial controls are adequate and were operating
effectively.
Explanation.—For the purposes of this clause, the term ―internal financial controls‖ means the
policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its
business, including adherence to company‘s policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness of the accounting records, and the
timely preparation of reliable financial information;
(f) the directors had devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
(6) The Board‘s report and any annexures thereto under sub-section (3) shall be signed by its
chairperson of the company if he is authorised by the Board and where he is not so authorised, shall be
signed by at least two directors, one of whom shall be a managing director, or by the director where there
is one director.
(7) A signed copy of every financial statement, including consolidated financial statement, if any,
shall be issued, circulated or published along with a copy each of—
(a) any notes annexed to or forming part of such financial statement;
(b) the auditor‘s report; and
(c) the Board‘s report referred to in sub-section (3).
(8) If a company contravenes the provisions of this section, the company shall be punishable with fine
which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and
every officer of the company who is in default shall be punishable with imprisonment for a term which
may extend to three years or with fine which shall not be less than fifty thousand rupees but which may
extend to five lakh rupees, or with both.
