Companies Act 2063

Chapter 7 Accounts And Records Of Company

Section 109 : Annual financial statement and report of board of directors
1) The following annual financial statements shall be prepared by the board of directors of a public company every year at least thirty days prior to the holding of its annual general meeting, and in the case of a private company, within six months of the expiry of its financial year:
(a) Balance sheet as at the last date of the financial year.
(b) Profit and loss account of the financial year.
(c) Description of cash flow of the financial year.
2) This annual financial statement to be prepared pursuant to Sub-section(1) shall give true and fair view of the state of affairs of the company as at the last day of the financial year concerned and also state the account of profit and loss and description of cash flow made in that financial year. Such financial statements shall be prepared in the format prescribed by the prevailing law.
3) The annual financial statements as referred to in Sub-section (1)shall have to be approved by the board of directors and audited.
4) The board of directors of every public company or every private company with the paid –up capital of ten million rupees or more or with an annual turnover of one hundred million rupees or more shall also prepare a separate report of board of directors during that period stating the following matters, in addition to the annual financial statements required to be prepared pursuant to Sub-section (1):
(a) Review of the transactions of the previous year;
(b) Impacts, if any, caused on the transactions of the company from national and international situation;
(c) Achievements in the current year as at the date of report and opinions of the board of directors on matters to be done in the future;
(d) Industrial or professional relations of the company;
(e) Alterations in the board of directors and the reasons therefore;
(f) Major things affecting the transactions;
(g) If there are any remarks in the audit report, the comments of the board of directors on such remarks;
(h) Amount recommended for payment by way of dividend;
(i) In the event of forfeiture of shares, details regarding the number of forfeited shares, face value of such shares, total amount received by the company for such shares prior to the forfeiture thereof, proceeds of sale of such shares after the forfeiture thereof, and refund of amount ,if any, made for such forfeited shares;
(j) Progress of transactions of the company and of its subsidiary company in the previous financial year and review of the situation existing at the end of that financial year;
(k) Major transactions completed by the company and its subsidiary company in the financial year and any material changes taken place in the transactions of the company during that period;
(l) Disclosures made by the substantial shareholders of the company to the company in the previous financial year;
(m) Details of shareholding taken by the directors and officers of the company in the previous financial year and , in the event of their involvement in share transaction of the company, details of information received by the company from them in that respect;
(n) Details of disclosures made about the personal interest of any director and his/her close relative in any agreements related with the company during the previous financial year;
(o) In the event that the company has bought its own shares (buy-back), the reasons for such buyback ,number and face value of such shares, and amount paid by the company for such buy-back;
(p) Whether there is an internal control system in place or not; and details of such system, if it is in place;
(q) Details of total management expenses during the previous financial year;
(r) Name-list of the members of audit committee, remuneration, allowances and facilities received by them, details of the functions performed by that committee, and details of suggestions, if any, made by that committee;
(s) Amount, if any, outstanding and payable to the company by any director, managing director ,chief executive, substantial shareholder or his/her close relative or by any firm company, corporate body in which he/she is involved;
(t) Amount of remuneration, allowances and faculties paid to the director, managing director, chief executive and officer;
(u) Amount of dividends remaining unclaimed by the shareholders ;
(v) Details of sale and purchase of properties pursuant to Section 141;
(w) Details of transactions carried on between the associated companies pursuant to Section 175;
(x) Any other matters required to be set out in the report of board of directors under this Act and the prevailing law;
(y) Other necessary matters.
5) While preparing the annual financial statements pursuant to Sub-section (1), such statement shall also contain, in the case of the year of incorporation of the company, the accounts from the date of its incorporation to the last day of that financial year, and thereafter, the accounts of the previous financial year.
6) The annual financial statements prepared pursuant to this Section shall be kept open for inspection by any shareholder, if he/she so desires.
7) The annual financial statements and the report of board of directors prepared pursuant to this Section shall be approved by the board of directors and signed by the Chairperson of the board of directors and at least one director.
8) The accounts and annual financial statements prepared by a
company pursuant to this Chapter shall be kept safely for at least five
years after the date of expiry of the financial year concerned.
9) The officers who prepare any false annual financial statements, reports of board of directors and other returns and reports required to be prepared pursuant to this Act and the directors who approve the same shall be liable to punishment under this Act.