Disclosure Requirements under the Companies Act, 2013 by CS Sadhna Sharma

• May 20, 2025
• 5 people
• Organisation
• Call Connect

INTRODUCTION

Transparency through adequate disclosures is pivotal for efficient functioning of organisations and enabling informed investment decisions. Indian company mandate extensive disclosures by companies to shareholders, investors and other stakeholders. However, concerns have been raised from time to time regarding the efficiency and adequacy of the disclosure regime.

KEY DISCLOSURE REQUIREMENTS UNDER THE COMPANIES ACT, 2013

1. Disclosures by Directors (Section 184 & 164)
   a) MBP-1 - Disclosure of interest in other entities by directors, submitted in the first Board Meeting of each financial year or when there is a change.
   b) DIR-8: Declaration by directors confirming non-disqualification, submitted annually.
2. Board’s Report (Section 134)

Every company, except One Person Company, is required to attach a detailed Board’s Report with its financial statements, disclosing:

1. Financial summary and highlights
2. State of the company’s affairs
3. Details of directors and KMP appointments/resignations
4. Number of board meetings held
5. Directors’ Responsibility Statement
6. Details of subsidiaries, associates, and joint ventures
7. Explanations or comments on qualifications by the auditor or secretarial auditor
8. Conservation of energy, technology absorption, and foreign exchange earnings
9. CSR activities
   
   3. Related Party Transactions (Section 188)

Details of contracts or arrangements with related parties must be disclosed in the Board’s Report along with a justification for entering into such contracts. Approval may be required by Board or Shareholders depending on thresholds.

4. Loans and Investments (Section 186)

Disclosure in financial statements of loans given, guarantees provided, securities extended, and investments made, along with the purpose.

5. CSR Reporting (Section 135)

If CSR is applicable, the Board’s Report must include:

1. Details of the CSR policy and projects undertaken
2. Amount spent/unspent
3. Reason for not spending, if applicable
   
   6. Managerial Remuneration (Section 197 & Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)
   a) Ratio of remuneration of each director to median employee remuneration
   b) Remuneration details of directors and top employees
   
   7. MGT-7 / MGT-7A – Annual Return
   a) Shareholding pattern
   b) Details of directors and KMPs
   c) Promoters and changes during the year
   d) Certification by PCS for listed companies and prescribed unlisted companies

DISCLOSURES SPECIFIC TO LISTED COMPANIES

Events which shall be disclosed without any application of the guidelines for materiality:

1. Acquisition, merger, demerger, restructuring, or disposal of major units or subsidiaries.
2. Issuance, forfeiture, split, consolidation, buyback, or alteration of securities.
3. New or revised credit ratings.
4. Disclosure of board meeting outcomes within stipulated time.
5. Significant non-routine agreements and their changes or terminations.
6. Fraud, defaults, or arrests involving the entity, promoters, or key personnel.
7. Changes in directors, key managerial personnel, senior management, auditors, or compliance officer.
8. Auditor resignation reasons to be disclosed within 24 hours.
9. Independent director resignation reasons to be disclosed within 7 days.
10. Appointment/discontinuation of share transfer agent.
11. Notices, resolutions, and circulars sent to stakeholders or advertised.
12. Proceedings of AGMs and EGMs.
13. Amendments to Memorandum or Articles of Association.
14. Regulatory or judicial actions against the entity or key persons.
15. Voluntary revision of financial statements or board report under Section 131.