How to Make Director Report for OPC and pvt Ltd Company

Every Indian company needs to prepare a Directors’ Report. Yet many company-owners, directors and professionals get tripped by what exactly it must contain, how it must be structured, and how it interacts with e-filings. This guide takes you step-by-step through the law, the purpose, the key disclosure requirements, practical drafting tips, and common pitfalls.
Whether you run a public limited company, a small/OPC or a private firm, the fundamentals apply—and by tailoring carefully you’ll ensure compliance and enhance transparency.

1. Why the Directors’ Report matters

At its core, the Directors’ Report is the bridge between a company’s management (the board) and its shareholders (and other stakeholders). By law it is attached to the annual financial statements and laid before the general meeting (Companies Act, 2013 Section 134(3)).
Here are the key reasons why it matters:

• Transparency & accountability: The board reports on performance, financial results, operations, risks, future prospects—giving shareholders meaningful information to judge how the company has been managed.
• Legal compliance: The Act and associated rules mandate a range of disclosures. Non-compliance may lead to regulatory attention or shareholder dissatisfaction.
• Corporate governance and investor confidence: A clear, well-drafted Directors’ Report demonstrates good governance practices and builds trust in the management.
• Decision-making support: The report helps shareholders and other stakeholders assess the past year, understand strategic shifts, and form expectations for the future.

In short: it is more than a compliance checkbox. When drafted well, the Directors’ Report becomes a communication tool—aligning the board’s viewpoint with shareholders’ interests and laying the foundation for the next year.

2. Legal framework: Key provisions you must know

Understanding the legal backbone of the Directors’ Report helps avoid errors. Here are the principal statutes and rules:

2.1 Section 134 of the Act

Section 134(3) prescribes what the Board’s Report must include.
Some highlights:

• The web address of the company’s annual return (if posted on website) (Sec 134(3)(a)).
• Number of Board meetings held during the year (Sec 134(3)(b)).
• Directors’ Responsibility Statement (Sec 134(3)(c)).
• Explanation or comment by the Board on every qualification, reservation or adverse remark in the auditor’s report or secretarial audit report (Sec 134(3)(f)).
• Material changes and commitments, if any, affecting the financial position (Sec 134(3)(l)).
• Conservation of energy, technology absorption, foreign exchange earnings/outgo (Sec 134(3)(m)).
• Risk management policy (Sec 134(3)(n)).
• Corporate social responsibility (CSR) details in case of applicable companies (Sec 134(3)(o)).
• Any other matters as may be prescribed.

Section 134(6) specifies signature requirements: the Chairperson (if authorised) or at least two directors (one being MD) must sign.

2.2 Companies (Accounts) Rules, 2014 – Rule 8 (and for small companies OPCs, Rule 8A)

Rule 8 prescribes further details of the Board’s Report for companies to which Section 134 applies. For example, Rule 8(5) requires the Board’s Report to include: financial summary, change in nature of business, subsidiaries/associates reporting, internal financial controls, etc.
For small companies and OPCs, Rule 8A offers an abridged format—fewer disclosures for smaller entities.

2.3 Other linked disclosure laws

• Section 149 (Independent Directors) – declaration by ID’s.
• Section 188 (Related Party Transactions) to be disclosed.
• Section 135 (CSR) for companies crossing thresholds.
• Section 131 (Revision of financial statements/Board’s Report) – if revisited during the year.

3. What must the Directors’ Report contain – section-by-section

Let’s now break down the typical structure of the Directors’ Report, along with drafting guidance for each section.

3.1 Introductory paragraph

Start with a formal salutation to members: “Dear Members,” followed by a statement such as:

“Your Directors have pleasure in presenting the (No. of AGM) Annual Report together with the audited financial statements for the year ended …”

This sets the tone and covers the basic mandatory statement that the Report is for the year under review.

3.2 Financial Summary or Highlights

Under Rule 8(5)(i) of the Accounts Rules (and equivalent under Rule 8A for smaller companies) the Report should include a comparative table for the year under review and the preceding year: revenue, profit before tax, current tax, deferred tax, prior year tax adjustments, profit for the year, opening and closing balance of retained earnings.

Drafting tip:

• Use a clear table.
• Provide amounts in required units (₹ in thousand/lakh/crore).
• Use footnotes if applicable (change in accounting policy, unusual items).
• Follow with a narrative (2-3 sentences) summarizing performance (“During FY 2024-25 the Company registered a revenue of …, up X% over prior year”.)

3.3 State of Affairs / Business Review

Statutory requirement: Sec 134(3)(i) read with Rule 8(5)(ii) requires disclosure of the state of company’s affairs and material changes in nature of business.

Elements to cover:

• Nature of business and principal activities.
• Key developments during the year (for example: launching new products/services, entering new markets, major contracts, funding, regulatory change).
• Change in business? If so – mention change of registered office, restructuring, change in model.
• Future outlook (brief).

Drafting tip: Provide a well-balanced narrative—celebrate achievements, acknowledge challenges, indicate strategic intent. Avoid vague platitudes; be specific.

3.4 Web Link of Annual Return

Section 134(3)(a) mandates that if the company has a website, the web-link where the Annual Return (MGT-7) is placed must be given. If not, a statement that website is not maintained is fine.

Drafting tip:

“The Company’s website is www.example.com and the Annual Return of the company for the year ended March 31,2025 has been placed on that website.”
OR
“The Company does not maintain a website and hence disclosure under Section 92(3) is not applicable.”

3.5 Meetings of Board of Directors

Under Sec 134(3)(b) the number of Board meetings held during the year must be disclosed. Also, as per governance norms one should show dates, attendance, total number of directors, % attendance, etc.

Drafting tip: Include a table similar to:

Date of meeting	Total Directors on date	Number attended	% attendance
DD/MM/YYYY	6	5	83.33%

Add a brief narrative: “The maximum interval between two meetings did not exceed 120 days in compliance with Section 173.”

3.6 Details in respect of fraud

Section 134(3)(ca) requires disclosure of frauds reported by auditors under Section 143(12). If none reported, state so.

Drafting tip:

“During the year under review, the Statutory Auditors did not report any instances of fraud by the Company’s officers or employees under Section 143(12) of the Act.”
If there were frauds, provide the details (amounts, nature, status) as required.

3.7 Board’s comment on the Auditors’ Report

Under Sec 134(3)(f) (and Rule 8/8A) you must comment on each qualification, reservation, adverse remark or disclaimer in the auditor’s report or secretarial audit. If none, mention that the observations are self-explanatory.

Drafting tip:

“The observations of the Statutory Auditors, when read together with the notes to the accounts, are self-explanatory and do not call for further comment.”

If there are qualifications, provide a bullet or paragraph per item explaining rationale, action taken or expected in the next year.

3.8 Material changes and commitments after year-end

Under Sec 134(3)(l) you must state any material changes and commitments between the end of financial year and date of report that affect financial position.

Drafting tip:

“There have been no material changes and commitments which affect the financial position of the Company between the end of the financial year and the date of this report.”
OR
“The following material changes have occurred …; their impact is not determinable at this stage: …”

3.9 Change in directorship / constitution of board

Under Rule 8(5)(iii) for public companies (and similar under 8A for small/OPCs) disclose if any director resigned, appointed, re-designated etc.

Drafting tip:

“No change occurred in the composition of the Board during the year.”
OR
“Mr. A (DIN ___) was appointed as Director w.e.f. DD/MM/YY and Mr. B (DIN ___) resigned w.e.f. DD/MM/YY.”

3.10 Significant material orders passed by regulators / tribunals

Under Rule 8(5)(vii) – require disclosure of any significant material orders impacting going concern / operations. (ICSI)

Drafting tip:

“No significant material order was passed by the regulators, courts or tribunals which would impact the going concern status of the Company.”
OR
“Details of the following material order affecting the company’s operations are given in Annexure __.”

3.11 Contracts and Arrangements with Related Parties

Disclosure under Section 134(3)(h), Section 188 and Rule 8/8A: details of all RPTs must be given with justification and cross-reference to financial statement notes.

Drafting tip:

“All Related Party Transactions entered during the year were in the ordinary course of business and at an arm’s length basis, hence Section 188 is not attracted. Disclosures as required under Accounting Standard Ind AS-24 are given at Note ___.”
If material RPTs: provide table or summary with nature, value, terms, and justification.

3.12 Secretarial Standards Compliance

State that the company has complied with SS-1 (Board meetings) & SS-2 (General Meetings) issued by Institute of Company Secretaries of India (ICSI), approved under Section 118(10).

Drafting tip:

“The Company confirms compliance with applicable Secretarial Standards issued by ICSI for Board meetings and General meetings.”

3.13 Particulars of loans, investments, guarantees (Section 186)

Under Section 134(3)(g) and Rules, disclose if the company has given any loans, guarantees or made investments.

Drafting tip:

“The Company has not made any investments, given guarantees or provided securities during the year under review, hence compliance under Section 186 is not required.”
OR
Provide table detailing each transaction: Name, amount, date, nature of guarantee, who benefited, etc.

3.14 Transfer to reserves & Dividend

Under Section 134(3)(j) and (k) you must state any transfer to reserves and declare dividend (or state none).

Drafting tip:

“The Board has decided not to transfer any amount to reserves for the year ended March 31,2025.”
“The Board is pleased to recommend a dividend of ₹ XX per equity share of face value ₹ XXXX each (X%).”
Alternatively: “The Board has decided not to recommend any dividend for the year.”

3.15 Conservation of Energy, Technology & Foreign Exchange

Under Section 134(3)(m) read with Rule 8(3)(A)(B)(C). This disclosure is more relevant for manufacturing/energy-intensive companies but still required to be stated.

Drafting tip:

“Operations of the Company are not energy-intensive. However, efforts are made to ensure efficient use of energy. Steps taken for alternate energy: NIL; Capital investment: NIL.”
“Foreign exchange earnings: ₹ Nil; Out-go: ₹ Nil.”
For companies where relevant, include details of steps, benefits derived, import substitution, etc.

3.16 Risk Management Policy

Under Section 134(3)(n). For listed companies or large companies, this must be a separate risk management policy disclosure.

Drafting tip:

“The Company has instituted a risk management framework covering business, financial, compliance, project execution and environmental risks. The Board reviews the risk map periodically and mitigation measures are in place.”

3.17 Prevention of Sexual Harassment (POSH)

While not explicitly in Section 134, it is a best practice (and often included in reports) to disclose POSH policy compliance. Many template reports include this (especially for medium/large companies).

Drafting tip:

“The Company has adopted a policy for prevention of sexual harassment in line with the POSH Act, 2013. The Internal Complaints Committee has been constituted. Number of complaints received/disposed/pending: …”

3.18 Subsidiaries, Joint Ventures & Associates

Under Rule 8(5)(iv) you must provide a report on performance and financial position of each subsidiary, JV, associate included in the consolidated financial statements.

Drafting tip:

“The Company had no subsidiary or joint venture or associate company as at March 31,2025.”
OR
“The Company has X associate companies and Y joint ventures. The salient features of their financials are annexed as Annexure – __.”

3.19 Internal Financial Controls

Under Rule 8(5)(viii) the Board must state adequacy of internal financial controls with reference to financial statements.

Drafting tip:

“The Company has adequate internal financial control systems in place with reference to the financial statements and they were tested during the year. No reportable material weakness was observed.”

3.20 Auditors

Under Section 139 read with appointment/ratification rules, the Directors’ Report must provide details of the statutory auditors and, where applicable, their re-appointment. Also mention cost auditors or secretarial auditors if applicable.

Drafting tip:

“At the ___ AGM held on DD/MM/YY the members approved M/s ___ (FRN ___) as Statutory Auditors for five years commencing from the conclusion of that meeting.”
“The Board recommends ratification of the Auditor’s appointment at the next AGM.”
“The Company has received the required certificate under Section 141 from the Auditors.”

3.21 Directors’ Responsibility Statement

A key disclosure under Section 134(5). Directors must state that:

• Accounts are prepared on going concern basis and in compliance with applicable accounting standards.
• Accounting policies selected and applied consistently.
• Adequate records maintained.
• Proper systems for safeguarding assets and detecting fraud.
• Internal financial controls designed and operating effectively (where applicable).
• Systems for compliance with applicable laws.

Drafting tip: Use the exact wording structure required, with slight tailoring, for example:

“In the preparation of the annual accounts, we confirm that: (a) the applicable accounting standards … (b) the Directors have selected such policies … (c) the Directors had taken care … (d) the accounts are prepared on going concern basis … (e) the Company being unlisted, sub-clause (e) of Section 134(3) is not applicable … (f) the Directors had devised proper systems …”

3.22 Deposits

Under Rule 8(5)(v) & (vi) you must disclose whether the Company accepted any deposits under Chapter V of the Act (Sections 73-76).

Drafting tip:

“During the year, the Company has not accepted any deposits falling within the ambit of Chapter V of the Act.”
If accepted, give a table of breakdown: amount outstanding, no. of depositors, default (if any).

3.23 Corporate Social Responsibility (CSR)

Under Section 135(2) & (4) and Rule 8(5)(o) you must disclose CSR activities (for companies meeting thresholds).

Drafting tip:

“The Company has constituted a CSR Committee. As required under Section 135, the Company was required to spend ₹ ___ during FY 2024-25 and the same has been spent on the activities outlined in Schedule VII. The brief outline of CSR policy and initiatives is included as Annexure – II.”
If the spend was not made, state reasons for not spending.

3.24 Cost Records

Under Rule 8(5)(ix) you must indicate whether the Company is required to maintain cost records under Section 148.

Drafting tip:

“The Company is not required to maintain cost records under Section 148 of the Act.”
OR
“The Company confirms that cost records for the year were duly maintained in accordance with Section 148.”

3.25 Declarations by Independent Directors

Under Section 134(3)(e)(ii) and Section 149(6) you must state that the company has received the necessary declaration(s) from Independent Directors.

Drafting tip:

“The Company has received necessary declarations from all Independent Directors in accordance with the provisions of Section 149(6) and 149(7), confirming that they meet the criteria of independence as prescribed.”

3.26 Vigil Mechanism / Whistleblower

For certain companies (e.g., those with audit committee) under Section 177(9) read with Rules you should disclose the existence of the vigil mechanism.

Drafting tip:

“The Company has adopted a Vigil Mechanism/Whistle-blower policy to enable directors/employees to report concerns about unethical behaviour, fraud or violation of the Code of Conduct. The Audit Committee reviews the functioning of the mechanism quarterly.”

3.27 Particulars of Employees, Directors & KMP

Under Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 you must disclose employees’ remuneration details if certain thresholds met, and information about KMPs and directors.

Drafting tip:

“In terms of Section 197(12) and Rule 5, the required disclosures relating to remuneration of directors, key managerial personnel and employees are annexed as Annexure – __.”

3.28 Management Discussion & Analysis (MD&A)

While MD&A is not always mandatory under Section 134 for every company, it is a good governance practice. Many annual reports include this section.

Drafting tip:

“The Management Discussion & Analysis Report for the year forms part of this Annual Report.”

3.29 Corporate Governance

For listed companies or other large companies, a stand-alone corporate governance report may be required. The Directors’ Report can refer to it.

Drafting tip:

“The Company continues to pursue best practices in corporate governance, guided by robust disclosure norms, effective board oversight and transparent accounting policies. The report on corporate governance is annexed as Annexure – __.”

3.30 Annual Evaluation of Board and its Committees

Under Clause (o) of Section 134(3) (for specified companies) you must disclose that the Board carried out an annual evaluation of its own performance, committees and individual directors.

Drafting tip:

“The Board, its committees and individual directors were evaluated for FY 2024-25 against key parameters and the performance was found satisfactory.”

3.31 Insolvency & Bankruptcy Code (IBC) proceedings / difference in valuation

Under Rule 8(5)(xi) & (xii) you must disclose, if applicable, details of one-time settlement of loans and difference in valuation in case of IBC.

Drafting tip:

“The Company has not made any one-time settlement of loans with banks/financial institutions; hence the details required under Rule 8(5)(xi) / (xii) are not applicable.”

3.32 Maternity Benefit compliance

Under Rule 8(5)(xiii) you must state compliance with Maternity Benefit Act, 1961.

Drafting tip:

“The Company confirms that it has complied with all applicable provisions of the Maternity Benefit Act, 1961 and has extended all statutory benefits to eligible women employees during the year.”

3.33 Acknowledgement

A concluding paragraph that thanks employees, consultants, government departments, shareholders, etc. This is not strictly mandated but is customary and good practice.

Drafting tip:

“Your Directors place on record their appreciation of the commitment and contribution of all employees, consultants and stakeholders, whose efforts enabled the Company to achieve its objectives this year.”
“The Board also acknowledges the assistance and cooperation of government authorities, shareholders, financial institutions and business partners.”

3.34 Signature & Date

The Report must bear date and place and must be signed, as required under Section 134(6).

“For and on behalf of the Board of Directors”
Name of Company
Signatures of at least two directors (one being MD) or Chairperson (if authorised)
DIN numbers
Address of director(s)

5. Differences for Small Companies, OPCs & Public Companies

5.1 Small companies / One Person Companies (OPCs)

These entities benefit from a simplified format: Rule 8A prescribes an abridged Board’s Report for small companies/OPCs.
Key differences: fewer disclosures (for instance, no detailed MD&A, risk policy disclosure may be lighter, CSR may not apply).
For example, disclosures under clauses like independent directors declaration, dividend recommendation, risk management etc may be “Not applicable” and may simply be mentioned as such.

5.2 Public companies & listed companies

Public companies (especially listed ones) face higher expectations:

• More detailed disclosures (e.g., dividend policy, financial controls, corporate governance, board evaluation)
• Additional rules under stock-exchange listing requirements
• More frequent queries from analysts/investors and regulatory scrutiny
• Need to align narrative disclosures with their corporate governance reports and MD&A.

When drafting a public company report, adopt a more narrative-rich approach, linking strategy, operations, risk, people, sustainability, and forward outlook.

6. Common pitfalls and how to avoid them

Here are some frequent mistakes and how to deal with them:

• Omission of mandatory disclosure: Missing any required clause under Section 134/Rule 8 yields non-compliance. Use a checklist.
• Inconsistent figures: The numbers in the Report must match financial statements. Cross-verify.
• Late Board approval: If the Board hasn’t approved the Report before signing, filing will be wrong. Schedule the Board meeting ahead.
• Ambiguous statements: Avoid vague language (“significant growth”, “industry leading”). Provide specificity (“Revenue grew by 18% to ₹ X crore”).
• Inadequate narrative on risks or challenges: Overly optimistic tone without discussing headwinds reduces credibility. Balance successes with caution.
• Poor annexure cross-referencing: If something is in notes/annexures, refer clearly to them.
• Not marking non-applicability: Better to say “not applicable” than to leave blank.
• Failure to publish required web-link: If website exists, you must provide Annual Return link.
• Ignoring governance best practices: Even if not strictly mandatory, including board evaluation, internal audit, controls, CSR (if applicable) elevates the report.

7. Best practices to elevate your Directors’ Report

• Use infographics or charts (within the annual report) showing trends (revenue, profitability) for easy readability.
• Use tables for board attendance, RPT summary, key risks, CSR spend.
• Include a short forward-looking statement: “The Company plans to expand its digital portfolio, invest ₹ X crore in FY 2025-26, and mitigate supply-chain risk by…”
• Use simple, clear headings and sub-headings. Make the report scannable.
• Adopt governance tone: mention how the Board oversees strategy, risk & people.
• Provide a link to the full policy documents (e.g., risk management policy, CSR policy) on the company’s website.
• Highlight sustainability/ESG if relevant—investors increasingly look for this.
• Ensure accessibility: digital version should be searchable, with alt-text for graphics, and mobile-friendly.
• Archive the previous year’s Report on the website to allow comparative review.

8. Sample outline you can adapt

1. Introductory paragraph
2. Financial Highlights
3. Business Review – state of affairs
4. Board meetings & attendance
5. Fraud & Auditors’ Report commentary
6. Material changes post year-end
7. Board composition changes
8. Related Party Transactions
9. Secretarial Standards & compliance
10. Internal Financial Controls & Risk Management
11. CSR (if applicable)
12. Dividend & Reserves
13. Conservation of Energy/Technology/Foreign Exchange
14. Loans, Investments, Guarantees (Section 186)
15. Particulars of Employees, Directors & KMP
16. Forward outlook
17. Acknowledgement
18. Signatures

You can expand each heading to provide narrative, tables or annexure references.

9. Why your blog readers (Company law + Tax + GST audience) should care

Since you run the YouTube channel Synopsis 24 and focus on Company law, Income Tax & GST, this topic is especially relevant:

• Professionals preparing annual filings can use this guide as a reference.
• Tax consultants who check annual returns and financial statements will benefit from understanding how the Directors’ Report ties in with statutory filings (e.g., e-form AOC-4 linked report).
• Entrepreneurs and start-ups (especially small/OPC) often misunderstand the simplified rules under Rule 8A—this post helps clarify.
• Auditors, secretarial professionals and accountants will appreciate the detailed breakdown and practical tips for compliance.

In short: the Directors’ Report sits at the intersection of company law, accounting standards and governance reporting—making it essential for your audience.

10. Closing thoughts

The Directors’ Report is no longer just a perfunctory document at the end of an annual report. It is a statement of stewardship, a disclosure of risk and performance, and an assurance of good governance. When drafted thoughtfully, it adds value to shareholders and enhances the board’s credibility.
By following the legal requirements, adopting best practice formats, telling your company’s story clearly and avoiding the common mistakes, you can deliver a report that ticks the compliance box and supports strategic communication.
Whether you run a modest small company or a large public entity, use this guide as your roadmap—and make the Directors’ Report a document you feel confident in.