Fifth Schedule
DIRECTORS’ REPORT
Part I
Contents of Directors’ Report
1. Each report to which section 252 relates, shall state the following details:
(a) the net amount of the profit or loss of the company for the financial year after provision for income tax;
(b) the amounts and particulars of any material transfers to or from reserves or provisions;
(c) where, during the financial year, the company has issued any shares or debentures—
(i) the purposes of the issue, the classes of shares or debentures issued;
(ii) the number of shares of each class and the amount of debentures of each class; and
(iii) the terms of issue of the shares and debentures of each class;
(d) whether at the end of that financial year—
(i) there is a subsist arrangements to which the company is a party, being arrangements with the objects of enabling directors of the company to acquire benefits by means of the acquisition of shares in, or debentures of, the company or any other body corporate; or
(ii) there have, at any time in that year, subsisted such arrangements as aforesaid to which the company was a part
and if so, the report shall contain a statement explaining the effect of the arrangements and giving the names of the persons who at any time in that year were directors of the company and held, or whose nominees held, shares or debentures acquired under the arrangements;
(e) in respect of each person who, at the end of the financial year, was a director of the company—
(i) whether or not, according to the register kept by the company for the purposes of section 59 relating to the obligation of a director of a company to notify such company of his interests in shares in, or debentures of, the company and of every other body corporate, being the company’s subsidiary or holding company or a subsidiary of the company’s holding company, he was at the end of that year, interested in shares in, or debentures of the company or any other body corporate and, if he was so interested, the number and amount of shares in, and debentures of, each body in which, according to that register, he was then interested;
(ii) whether or not, according to that register, he was, at the beginning of that year or, if he was not then a director, when he became a director, interested in shares in, or debentures of, the company or any other such body corporate and, if he was so interested, the number and amount of shares in, and debentures of, each body in which according to that register, he was interested at the beginning of that year or, as the case may be, when he became a director; and
(iii) the total number of shares in or debentures of the company or any other such body corporate bought and sold by him during that financial year;
(f) the amount, if any, which the directors recommended should be paid by way of dividend, and any amount which have been paid or declared by way of dividend since the end of the previous financial year, indicating which of those amounts, if any, have been shown in a previous report under section 252 or under any corresponding previous written law;
(g) whether the directors, before the financial statements were prepared, took reasonable steps to ascertain what action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts;
(h) whether at the date of the report the directors are aware of any circumstances which would render the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent and, if so, giving particulars of the circumstances;
(i) whether the directors, before the financial statements were prepared, have taken reasonable steps to ensure that any current assets which were unlikely to be realized in the ordinary course of business including the value of current assets as shown in the accounting records of the company have been written down to an amount which the current assets might be expected so to realize;
(j) whether at the date of the report the directors are aware of any circumstances—
(i) which would render the values attributed to current assets in the accounts misleading; and
(ii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the company misleading or inappropriate, and, if so, giving particulars of the ≈ circumstances;
(k) whether there exists at the date of the report—
(i) anychargeontheassetsofthecompanywhichhasarisensince the end of the financial year which secures the liabilities of any other person and, if so, giving particulars of any such charge and, so far as practicable, of the amount secured; and
(ii) any contingent liability which has arisen since the end of the financial year and, if so, stating the general nature of the liability and, so far as practicable, the maximum amount, or an estimate of the maximum amount, for which the company could become liable in respect of the liability;
(l) whether any contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may affect the ability of the company to meet its obligations when they fall due and, if so, giving particulars of any such liability;
(m) whether at the date of the report the directors are aware of any circumstances not otherwise dealt with in the report or accounts which would render any amount stated in the accounts misleading and, if so, giving particulars of the circumstances;
(n) whether the results of the company’s operations during the financial year were, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature and, if so, giving particulars of that item, transaction or event and the amount or the effect of the item, transaction or event, if known or reasonably ascertainable; and
(o) whether there has arisen in the interval between the end of the financial year and the date of the report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the company’s operations for the financial year in which the report is made and, if so, giving particulars of the item, transaction or event; and
(p) any other details as determined by the Registrar.
2. The report shall state, in respect of the directors or past directors of the company, the amount of—
(a) fees and other benefits distinguished separately, paid to or receivable by them from the company or its subsidiary companies as remuneration for their services to the company or its subsidiary companies, inclusive of all fees, percentages, bonuses, commissions, compensation for loss of office, any contribution in respect of them under any pension or retirement benefit scheme and inclusive of commission paid or payable for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in or debentures of the company or of its holding company or any subsidiary of the company:
Provided that where a director or any firm of which the director is a member, acts for the company in a professional capacity, the amount paid to the director or to his firm for services rendered to the company in that capacity shall not be included in all fees, percentages, bonuses, commissions, compensation for loss of office, any contribution in respect of them under any pension or retirement benefit scheme and inclusive of commission paid or payable for subscribing ≈ pension or retirement subscribe or procuring or agreeing to procure subscriptions for any shares in or debentures of the company or of its holding company or any subsidiary of the company but shall or debentures of the whether by way of note or otherwise;
(b) by way of a note or otherwise, the estimated money value of any other benefits received or receivable by them otherwise than in cash from the company or from any of its subsidiary companies;
(c) the total of the amount paid to or receivable by any third party in respect of the services provided to the company or any of its subsidiary companies by any director or past director of the company;
(d) the total amount, if any, of any indemnity given to or insurance effected for, any director, officer or auditor of the company.
3. The directors of a company shall state in the report whether he has, since the end of the previous financial year, received or become entitled to receive a benefit, other than a benefit included in the aggregate amount of remuneration received or due and receivable by the directors shown in the accounts or the fixed salary of a full-time employee of the company, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, and, if so, the general nature of the benefit.
4. Where at the end of a financial year a company is the subsidiary of another corporation, the directors of the company shall state in, or by way of note as a statement annexed to, the company’s accounts the name of the corporation regarded by the directors as being the company’s ultimate holding company and if known to them, the country in which it is incorporated.
5. Where any option has been granted during the period covered by the profit and loss account to take up unissued shares of a company, the directors’ report shall state—
(a) the number and class of shares in respect of which the option has been granted;
(b) the date of expiration of the option;
(c) the basis upon which the option may be exercised; and
(d) whether the person to whom the option has been granted has any right to participate by virtue of the option in any share issue of any other company.
6. The directors’ report shall specify—
(a) particulars of shares issued during the period to which the report relates by virtue of the exercise of options to take up unissued shares of the company, whether granted before or during that period; and
(b) the number and class of unissued shares of the company under option as at the end of that period, the price, or method of fixing the price, of issue of those shares, the date of expiration of the option and the rights, if any, of the persons to whom the options have been granted to participate by virtue of the options in any share issue of any other company.
7. The director’s report shall specify clearly either in the profit and loss account of the holding company or consolidated profit and loss account of the holding company and of its subsidiary companies the name, place of incorporation, principal activities, and percentage of issued share capital held by the holding company in each subsidiary to which that profit and loss account or other document relates.
8. If the auditor’s report on the accounts of a subsidiary company is qualified in any way, the consolidated balance sheet of the holding company, as the case may be, shall contain particulars of the manner in which the report is qualified in so far as the matter which is the subject of the qualification is not covered by the holding company’s own accounts and is material from the point of view of its members.
9. The auditor’s report shall be shown under separate headings in the balance sheet of every subsidiary company the extent of its holding of shares in the holding company and in other related corporations.
10. The total amount paid to or receivable by the auditors as remuneration for their services as auditors, inclusive of all fees, percentages or other payments or consideration given by or from the company or by or from any subsidiary of the company.
Part II
Contents of business review
1. Each report prepared under section 252 may include a business review.
2. The business review may, to the extent necessary for an understanding of the development, performance or position of the company’s business, contain—
(a) a fair review of the company’s business;
(b) a description of the principal risks and uncertainties facing the company;
(c) a balanced and comprehensive analysis of—
(i) the development and performance of the company’s business during the financial year;
(ii) the position of the company’s business at the end of that year, consistent with the size and complexity of the business; and
(iii) the key performance indicators of the company;
(d) information about—
(i) environmental matters, including the impact of the company’s business on the environment;
(ii) the company’s employees; and
(iii) social and community issues, including information about any policies of the company in relation to those matters and the effectiveness of those policies; and
(e) subject to paragraph 7 of this Part, information about persons with whom the company has contractual or other arrangements which are essential to the business of the company.
3. If the review does not contain any of the information mentioned in subparagraphs 2(a), (b), (c) and (d), it shall state which of the information it does not contain.
4. The review may, where appropriate, include references to, and additional explanations of, amounts included in the company’s financial statements.
5. In relation to a group directors’ report, this Part has effect as if the references to the company include references to its subsidiary included in the consolidation.
6. Nothing in this Part requires the disclosure of information about impending developments or matters in the course of negotiation if the disclosure would, in the opinion of the directors, be prejudicial to the interests of the company.
7. Nothing in subparagraph 2(e) requires the disclosure of information about a person if the disclosure would, in the opinion of the directors, be prejudicial to that person and contrary to the public interest.
8. For the purposes of this Part, “key performance indicators” means factors by reference to which the development, performance or position of the company’s business can be measured effectively.
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