Section 134 — Financial statement, Board’s report, etc

2[(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 B oard 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.]
(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—
3[(a) the web address, if any, where annual return referred to in sub -section (3) of section 92 has been
placed;]
(b) number of meetings of the Board;
(c) Directors’ Responsibility Statement;
4[(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;

1. Ins. by notification No. S.O. 1227(E), dated 29th March, 2016 (w.e.f 1-4-2015).
2. Subs. by Act 1 of 2018, s. 36, sub-section (1) (w.e.f. 31-7-2018).
3. Subs. by s. 36, ibid., for clause (a) (w.e.f. 31-7-2018).
4. Ins. by Act 21 of 2015, s. 12 (w.e.f. 29-5-2015).

(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 d evelopment 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 incorporate 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 1[annual evaluation of the
performance of the Board, its Committees and of individual directors has been made];
(q) such other matters as may be prescribed:
2[Provided that where disclosures referred to in this sub -section have been included i n the financial
statements, such disclosures shall be referred to instead of being repeated in the Board's report:
Provided further that where the policy referred to in clause (e) or clause (o) is made available on
company's website, if any, it shall be su fficient compliance of the requirements under such clauses if the
salient features of the policy and any change therein are specified in brief in the Board's report and the web-
address is indicated therein at which the complete policy is available.]
3[(3A) 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.]
(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 suc h 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 th e 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 another 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

1. Subs. by Act 1 of 2018, s. 36 , for “annual evaluation has been made by the Board of its own performance and that of its
committees and individual directors” (w.e.f. 31-7-2018).
2. The provisos ins. by s. 36, ibid., (w.e.f. 31-7-2018).
3. Sub-section (3A) ins. by s. 36, ibid., (w.e.f. 31-7-2018).

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).