# Section 134 – Financial Statements & Board's Report
## 1. Signing of Financial Statements
Financial Statements (including consolidated FS) shall be signed on behalf of the Board by:
1. The Chairperson of the company, if authorised by the Board, OR
2. Two Directors, of which one shall be the Managing Director (MD), AND
3. The CEO (if he is a director), CFO and Company Secretary of the company, wherever they are appointed.
> Note: CEO is to sign whether or not he is a director (since Companies Amendment).
## 2. Contents of Board's Report
Board's Report must include:
| # | Particulars |
|---|---|
| 1 | Extract of Annual Return (web address now) |
| 2 | Number of Board meetings |
| 3 | Directors' Responsibility Statement (see below) |
| 4 | Details of frauds reported by auditor u/s 143(12) |
| 5 | Explanations / comments on qualifications, reservations or adverse remarks made by auditor / company secretary in practice |
| 6 | Declaration by Independent Directors |
| 7 | Particulars of loans, guarantees and investments u/s 186 |
| 8 | Related Party Transactions u/s 188 |
| 9 | Amount proposed to be carried to reserves |
| 10 | Amount of dividend recommended |
| 11 | Risk Management Policy |
| 12 | Policy on directors' appointment & remuneration (Nomination and Remuneration Policy) |
| 13 | Annual evaluation of performance of Board, its Committees and Individual Directors (for listed companies & specified public companies) |
Note on Disclosures: If disclosure is made in the financial statements, the same need not be repeated in Board's Report. If a policy is put on the website, the Board's Report need only disclose the salient features and a reference to the website.
## 3. Directors' Responsibility Statement [Sec 134(5)]
The statement must confirm that:
1. In the preparation of annual accounts, applicable accounting standards have been followed, along with proper explanation of material departures.
2. Accounting policies have been selected and applied consistently, and judgments and estimates are reasonable and prudent so as to give a true and fair view of state of affairs and profit/loss.
3. Directors have taken proper and sufficient care for:
- Maintenance of adequate accounting records
- Safeguarding assets
- Preventing and detecting fraud and other irregularities
4. Annual accounts are prepared on a going concern basis.
5. Internal Financial Controls (IFC) are adequate and operating effectively (applicable to listed companies only).
6. A proper system exists to ensure compliance with the provisions of all applicable laws, and such systems are adequate and operating effectively.
## 4. Signing of Board's Report
The Board's Report shall be signed by the Chairperson if so authorised, else by at least two directors, one of whom shall be the MD (or by the director where there is only one director).
## 5. Penalty for Default [Sec 134(8)]
| Person | Penalty |
|---|---|
| Company | ₹3,00,000 |
| Every Officer in default | ₹50,000 |
## 6. Abridged Board's Report
The Central Government may prescribe an abridged Board's Report for One Person Company (OPC) and Small Companies.