Signing of Board’s report and financial statement – Companies Act and SEBI

Affluence Advisory Pvt. Ltd. Signing of Board s report and financial statement Companies Act and SEBI (LODR) Section 134(1) of Companies Act, 2013 ( the Act ) provide for signing of board s report. It read as follows: (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 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, if any, and the Chief Executive Officer, the Chief Financial Officer and the Company Secretary of the company, wherever they are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon. As per section 134(1) of the Act financial statements shall be signed by: a.chairperson of the company if he is authorised by the board of the company OR b.by two directors, one of whom shall be managing director, if any AND c.CEO, CFO and CS, wherever they are appointed Where the company is a one-person company then it shall be signed by one director of that company. We shall deal with above three scenarios in this article. The term Chairman is not defined in the Acti. The Act does not provide for appointment of a Chairman of the Meeting but the Model Articles provide that the Board may elect a Chairman of its Meetings and determine the period for which he is to hold office [Regulation 70 (i) of Table F of Schedule I to the Act]ii. First scenario (Chairperson is authorised by the board to sign): This scenario as provided under section 134(1) of the Act would only arise when the chairperson is appointed by the company. If the company has not appointed any chairperson, then the company will have to consider signing the boards report under a different scenario. Second scenario (signing by two directors): This scenario would arise where the chairperson is not so authorised by the board. Then board s report shall be signed by at least two directors. As we have seen above that appointment of chairman is not mandatory. So, in case there is no chairperson appointed or if he is not so authorised to sign then in that case two directors of the company shall sign the board s report. It also states that one of them shall be a managing director. It needs to be noted here that it is not mandatory for a company to appoint managing director under the Act. Hence it is mentioned that managing director if any under section 134(1) of the Act. Section 196(2) of the Act states that the company shall not appoint managing director, manager or CS Sachin Kotian | Affluence Advisory Pvt. Ltd. | Website - www.affluence.net.in |Email - connect@affluence.net.in

Affluence Advisory Pvt. Ltd. Signing of Board s report and financial statement Companies Act and SEBI (LODR) whole-time director for a term exceeding five yearsiii. So, in case the company has not appointed a managing director then the board s report shall be signed by two directors of the company. Apart from the directors and chairperson it is mandatory for CEO, CFO and CS wherever they are appointed by the company. In the third scenario the board report shall be signed by the director of the company. This situation is mostly envisaged from the point of view of a one-person company. So, signing of board s report under section 134 would differ from company to company depending upon its board structure. Signing of financial results by equity listed entities Further now let us see if Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 provide for signing of board s report. The financial results submitted to the stock exchange shall be signed by the chairperson or managing director, or a whole-time director or in the absence of all of them; it shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial resultsiv. The annual audited financial results shall be approved by the board of directors of the listed entity and shall be signed by the chairperson or managing director, or a whole-time director or in the absence of all of them. It shall be signed by any other director of the listed entity who is duly authorized by the board of directors to sign the financial resultsv. Quarterly unaudited and annual audited financial results signing provisions are same under SEBI (LODR). Both the results are required to be signed by the following: a.Chairperson or managing director or whole-time director b.In case of their absence, it shall be signed by any director of the listed entity who is authorised by the board of directors in this behalf. This provision of signing of financial results (quarterly and annual) is applicable to equity listed entities only. Signing of financial results by entities having their debt securities or high value debt securities listed The quarterly (audited or unaudited) and annual audited results shall be taken on record by the board of directors and signed by the managing director / executive directorvi. In debt listed entities CS Sachin Kotian | Affluence Advisory Pvt. Ltd. | Website - www.affluence.net.in |Email - connect@affluence.net.in

Affluence Advisory Pvt. Ltd. Signing of Board s report and financial statement Companies Act and SEBI (LODR) it is mentioned that the financial results shall be signed by managing director or executive director. So, it is clear that in case the company has a managing director then the managing director and, in its absence, any executive director can sign the results. But it needs to be highlighted here that the executive director signing financial results shall be authorised by the board of directors in this behalf. Conclusion In essence we can say that signing of financial statements has to be done by following: 1. 2. Unlisted company Chairperson if authorised by the board OR If a chairperson is not authorised or not there then two directors. If the company has appointed a managing director, then he shall be one of the signatories among two directors CEO, if any CFO, if any CS, if any Chairperson or MD or WTD if authorised by the board. In the absence of a chairperson or MD or WTD any director authorised by the board can sign. In this case, at least two directors should be authorised to sign in case of annual audited financial statements. CEO, if any CFO CS Chairperson if authorised by the board. If the chairperson is not authorised of not there then by two directors. If the company has appointed a managing director, then he shall be one of the signatories amongst two directors. CEO, if any CFO, if any CS 3. 4. 5. 1. 2. Equity entity listed 3. 4. 5. 1. 2. Debt entities listed 3. 4. 5. Disclaimer:This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement CS Sachin Kotian | Affluence Advisory Pvt. Ltd. | Website - www.affluence.net.in |Email - connect@affluence.net.in

Affluence Advisory Pvt. Ltd. Signing of Board s report and financial statement Companies Act and SEBI (LODR) i https://www.icsi.edu/media/webmodules/GN_on_Meetings_of_BOD_3122020.pdf - point 5.1 ii Ibid iii https://ca2013.com/196-appointment-of-managing-director-whole-time-director-or-manager/ iv Reg 33(2)(b) of SEBI LODR v Reg 33(2)(d) of SEBI LODR vi Reg. 52(2)(b) of SEBI LODR CS Sachin Kotian | Affluence Advisory Pvt. Ltd. | Website - www.affluence.net.in |Email - connect@affluence.net.in