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Companies Act, 1973 (Act No. 61 of 1973)

Schedule 4: Requirements for annual financial statements, interim reports and provisional annual financial statements

Part III : Directors' Report

 

 

Preliminary

 

67)
a) The directors' report shall deal in narrative form with all descriptive matters under appropriate headings and amounts or statistics shall be set out as far as practicable in tabular form.
b) Any matter not prescribed by this Schedule but which is material for the appreciation of the state of affairs of the company and its subsidiaries, if any, shall be dealt with in the directors' report under appropriate headings.
c) Where any amounts are stated, the corresponding amounts, if any, in respect of the immediately preceding accounting period shall be stated.

 

General Review

 

68)
a) The said report shall generally review the business and operations of the company during the accounting period and the results thereof and shall deal with every fact or circumstance material to the appreciation of the state of affairs and financial position of the company by its members including a statement of the estimated proportion of net income or loss attributable to the various classes of business of the company.
b) The said report shall deal with any material fact or circumstance which has occurred between the accounting date and the date of the report.

 

Specific Matters

 

69) Unless such information is already given in any document annexed to the annual financial statements, the said report shall state--
a) the nature of the business of the company and of its subsidiaries, if any, and any major change therein during the accounting period;
b) in aggregate figures the amounts and particulars of any shares, convertible instruments and debentures issued during the accounting period and the purposes for and circumstances in which such shares, convertible instruments and debentures have been issued;
c) any major change in the nature of the fixed assets of the company and of its subsidiaries, if any. during the accounting period or any change in policy relating to the use of fixed assets;
d) the amount. if any, already paid or declared or proposed to be paid by way of dividends in respect of each class of shares;
e) the fact that the business of the company or any part thereof or of a subsidiary has been managed by a third person or a company in which a director has an interest, under any agreement during the accounting period (if it has been so managed) and the names of such third person or company and the director's interest in such company, if material:
f) the names of the directors and the secretary, the secretary's business and postal address, and any changes during the accounting period; and
g) the name of the company's holding company and its ultimate holding company, if any, and if any such holding company has been incorporated in a foreign country, the name of that country.

 

 

Matters to be stated where Company is a Holding Company

 

A. General Information

 

70) If the company is at the accounting date a holding company and if it is not itself a wholly owned subsidiary the directors' report shall in respect of each principal subsidiary state-
a) the name and, if incorporated in a foreign country, the name of that country;
b) if any of the businesses, or part thereof, of any subsidiary controlled by the holding company, have been managed during the accounting period by any third person under an agreement, that fact and the name of such third person; and
c) if the financial year of any subsidiary did not end with that of the company-
i) the reasons for that fact; and
ii) the accounting period of such subsidiary in respect of which the information has been included in the annual financial statements of the holding company.

 

B. Financial Information in respect of Subsidiaries

 

Interest in each Subsidiary

 

71) In respect of each subsidiary and any company which was a subsidiary at the preceding accounting date but which is no longer a subsidiary at the accounting date to which the report refers, and where the interest of the subsidiary is material to the financial position or the results of the holding company, there shall be stated-
a) the amount of its issued capital of any class, the percentage thereof held by the holding company, either in its own name or through a nominee or a subsidiary, and any changes in such holdings during the accounting period; and
b) the amount of the interest of the holding company consisting of shares in the subsidiary or amounts owing to the holding company (whether on account of loan or otherwise) distinguishing shares from indebtedness and any change in such interest during the accounting period.

 

Net Income of Subsidiaries

 

72) In so far as concerns the interest of the holding company in its subsidiaries, there shall be stated the aggregate amount of income after tax and the aggregate amount of the losses (after taking into account taxation, if any, paid by subsidiaries reporting losses).

 

C. General Review of Group

 

73) The said report shall-
a) generally review the business and operations of the group during the accounting period and the results thereof and shall deal with every fact or circumstance material to the appreciation of the state of affairs and financial position of the group by the members of the holding company, and
b) deal with any material fact or circumstance which has occurred in the group between the accounting date and the date of the report.