Directors’ Responsibility Statement obligation of directors and associated issues

Home / Articles

Directors’ Responsibility Statement obligation of directors and associated issues

Date \| Version	September 17, 2022 \| 1.0
Keywords	Director, Director Responsibility Statement, Financial Statement, Reserve Matters, Shareholder Approval, Corporate Governance
List of Legislation Referred	Companies Act, 2013
Jurisdiction	India

Abstract

This write-up examines the responsibility of directors in relation to disclosures under the Directors’ Responsibility Statement, the consequent obligations cast upon directors under the Companies Act, and the role of shareholders in relation to such obligations.

Introduction

The financial statements of a company are required to present a true and fair view of its financial position and performance. These statements, together with the auditors’ report and the report of the Board of Directors, are placed before shareholders for adoption.

The Companies Act, 2013 envisages directors as bearing primary responsibility for the preparation and presentation of the company’s financial statements. Accordingly, the Board’s Report is required to include a Directors’ Responsibility Statement.

The article discusses the origin and purpose of the Directors’ Responsibility Statement, the statutory obligations imposed on directors under Section 134(5) of the Companies Act, 2013, and the distinction between management responsibilities and shareholder rights.

It further examines issues relating to accounting policies, internal controls, fraud prevention mechanisms, compliance systems, and the limits of shareholder intervention in matters that fall within the directors’ statutory responsibilities.

alayalegal

Most Recent Posts

All Posts
Articles

Directors’ Responsibility Statement obligation of directors and associated issues

Home / Articles