Better disclosures with better understanding

A majority of Indian firms have approached disclosures, made in their annual reports in the first year following new provisions prescribed under the Companies Act 2013, as a compliance exercise, as observed from a sample study undertaken by Deloitte Touche Tohmatsu India LLP for its research report titled "Insights into Annual Reports FY2015".

The report analysed disclosures by Indian companies across five critical areas - board evaluation, internal financial controls, enterprise risk management, related party transactions and compliance with applicable laws and regulations.

For instance, the report highlighted that 63 per cent of the companies in the sample did not disclose the manner in which they had conducted the annual evaluation of boards, despite this being a mandate according to the Act.

Abhay Gupte, partner, Deloitte Touche Tohmatsu India LLP, pointed out that with better understanding of the Act and appreciation of the impact of effective disclosures and meaningful compliance on shareholder confidence and trust, companies may possibly be expected to adopt a more plenary approach in the ensuing years.