Every Company registered under Companies Act,2013, is required to place an Annual Report at their Annual General Meeting convened on a yearly basis. This Annual Report gives a summarised view of the conduct of business of the Company during the year which includes financial position, compliance with law, and state of affairs of the Company etc.
Companies registered under any other statute have to follow their specific guidelines along the provisions of Companies Act,2013.For instance, a listed company’s annual report is far more elaborate as its cover’s compliance given under Listing regulation of Securities and Exchange Board of India.
Preparation of annual report is a significant activity for any Company since it depicts the picture of the Company to its stakeholder and general mass of that particular year for which it pertains.
Section 134 of the Companies Act, 2013 (“Act”) and Rule 8 of the Companies (Accounts) Rules, 2014 is the guiding provisions for preparation of annual report in addition with specifications mentioned in particular sections of the Companies Act,2013 for example, The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 specifies additional disclosure for listed companies.
All these provisions cover vast aspects of any Company; however such extensive disclosure requirements are not appropriate for company’s operating small business, such companies are covered under Companies Act,2013 as small companies and OPC i.e. One person company.
One person Company as per Section2(62) of Companies Act,2013 is a company which has only one person as a member.
Small Company as per Section 2(85) of Companies Act,2013 are Companies (other than a public company, whose:
1. paid-up share capital does not exceed Rs. 50 lakh rupees or such higher amount as may be prescribed which shall not be more than 32[ten crore rupees and
2. turnover as per profit and loss account for the immediately preceding financial year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than Rs. 100 crores
Further this clause is not applicable on
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
To facilitate ease of paperwork for these small companies, Ministry of Corporate Affairs inserted subsection 3(A) in Section 134 of the Act, vide3 The Companies (Amendment) Act,2017 which got effective from 31st July 2018
134 (3A) read as
The Central Government may prescribe an abridged Board’s report, for the purpose of compliance with this section by One Person Company or small company
Further vide The Companies (Accounts) Amendment Rules, 2018; Rule 8A, “Matters to be included in Board’s Report for One Person Company and Small Company” was inserted.
Accordingly, an OPC and Small Companies can prepare their annual report as per Rule 8A of the Companies (Accounts) Rules, 2014.
As per this rule below given points should be covered in an annual report of OPC and Small Companies:
1. The web address, if any, where annual return referred to in section 92(3) has been placed
2. Number of meetings of the Board
3. Directors’ Responsibility Statement as referred to in section 134(5)
4. Details in respect of frauds reported by auditors under section 143(12) other than those which are reportable to the Central Government
5. Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report
6. The state of the company’s affairs
7. The financial summary or highlights
8. Material changes from the date of closure of the financial year in the nature of business and their effect on the financial position of the company
9. The details of directors who were appointed or have resigned during the year
10. The details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.
11. Particulars of contractor in the Form AOC-2.