THE COMPANIES ORDINANCE, 1972

Directors' Reports

153.—(1) The directors shall lay before every annual general meeting of a company, or, if the company avails itself of section 141, the directors shall circulate to its shareholders and debenture holders and (where applicable) advertise under section 141(3), a report (in this Ordinance called "the directors' annual report") in respect of the company's affairs, and if the company is a holding company, in respect of the affairs of its subsidiaries :

Provided that if the company is a wholly-owned subsidiary of another company or body corporate incorporated in Seychelles, the directors' annual report need not deal with the affairs of its subsidiaries.

(2) The directors' annual report shall state the names of the persons who, at any time during the financial year, were directors of the company and the principal activities of the company and of its subsidiaries in the course of that year and any significant change in those activities in that year, and shall also : —

(a)   if significant changes in the fixed assets of the company or of any of its subsidiaries have occurred in that year, contain particulars of the changes, and, if, in the case of those assets, the market or saleable value thereof (as at the end of that year) differs substantially from the amount thereof as shown in the balance sheet, contain particulars of that difference ;

(b)   if in that year the company has issued any shares or debentures, state the reason for making the issue, the classes of shares or debentures issued and, in respect of each class of shares or debentures, the nominal value of the shares or the principal amount secured by the debentures which have been issued and the consideration received by the company for the issue ;

(c)   if, at the end of that year there subsists a contract with the company in which a director of the company has, or at any time in that year had, in any way, whether directly or indirectly, an interest, or there has, at any time in that year, subsisted a contract with the company in which a director of the company had, at any time in that year, in any way, whether directly or indirectly, an interest (being, in either case, a contract of significance in relation to the company's business and in which the director's interest is or was material), contain—

(i) a statement of the fact of the contract subsisting or, as the case may be, having subsisted ;

(ii) the names of the parties to the contract (other than the company):

(iii) the name of the director (if not a party to the contract);

(iv) an indication of the nature of the contract;

(v) an indication of the nature of the director's interest in the contract;

(d) if, at the end of that year, there subsist arrangements to which the company is a party, being arrangements whose objects are, or one of whose objects is, to enable directors of the company or of a company which belongs to the same group of companies as the company to acquire benefits by means of the acquisition of shares in, or debentures of, the company or any other company or body corporate, or there have, at any time in that year, subsisted such arrangements as aforesaid to which the company was a party, contain a statement explaining the effect of the arrangements and giving the names of the persons who at any time during that year were directors of the company or of a company which at any time during that year belonged to the same group of companies as the company, and who held, or whose nominees held, shares or debentures acquired in pursuance of the arrangements ; and also giving particulars of all outstanding loans made or guaranteed by the company, or in respect of which the company has given any security, if the loan was made to or for the benefit of any such director with a view to enabling him or his nominee to acquire shares or debentures of the company or any other company or body corporate ;

(e) in respect of each person who has at any time during the year been a director of the company, or of a company which at any time during that " year belonged to the same group of companies as the company, or of a company which has at any time during that year been an associated company of the company, contain the entries required by section 111 to be made in the register of director's holdings kept by the company, or, in the case of a company which during the whole of the year has been a proprietary company, the entries required by section 113 to be kept in the register of subscription options kept by the company : —

(i) at the beginning of the year;

(ii) at any time during the year when such a person became or ceased to be a director as aforesaid; and

(iii) at the end of the year ;

(f) contain particulars of any other matters so far as they are material for the appreciation of the state of the company's affairs by its shareholders or debenture holders, being matters the disclosure of which will not be harmful to the business of the company or of any company which belongs to the same group of companies as the company;

(g) state the directors' proposals as to the application of the profits of the company shown m its profit and loss account, including its profits and revenue reserves carried forward from earlier financial years.

(3)  If the company is a holding company (other than a wholly-owned subsidiary of another body corporate incorporated in Seychelles) the directors' annual report shall also deal with the matters specified in subsection (2) in relation to each of the company's subsidiaries.

(4)  If the directors consider that disclosure of any matter required to be included in the directors' annual report by this section would be harmful to the company or to any company which belongs to the same group of companies as the company, they may with the consent of the Registrar omit that matter from the report.

(5)  If the directors' annual report does not contain a statement required to be included therein by this section, or contains a statement which is false, deceptive, misleading or incomplete, it shall be the duty of the auditors of the company, so far as they are reasonably able to do so, to include in their report on the accounts of the company under section 158 a statement or correction giving the information required by this section.

(6)  If the directors of a company fail to comply with this section, or if they send out to shareholders or debenture holders, or advertise under section 141(3), a directors' annual report which does not contain all the information required by this section, or which contains false, deceptive or misleading information, each of the directors shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or to both such fine and imprisonment:

Provided that a director shall not be sentenced to imprisonment for any such offence unless, in the opinion of the court dealing with the case, the offence was committed wilfully.

(7) The Governor in Council may by regulations alter or add to the matters required by subsection (2) to be contained in the directors' annual report, and such regulations may be made applicable to all companies or to companies which satisfy or do not satisfy conditions prescribed by the regulations, and different provisions may be made by the regulations in respect of different categories of companies.

154.—(1) The directors of a company to which this section applies shall include in the directors' annual report: —

(a)   if during the financial year to which the report relates the company carried on two or more classes of business which differed substantially from each other, a statement of the extent (expressed in monetary terms) to which the carrying on of each class of business contributed to or diminished the profit or loss of the company for the year before taxation ;

(b)   if at any time during the year the company had one or more subsidiaries and the company and any of those subsidiaries carried on two or more classes of business which differed substantially from each other, a statement of the extent (expressed in monetary terms) to which the carrying on of each class of business contributed to or diminished the profit or loss of the company and its subsidiaries for the year before taxation as shown by the company's group accounts, or if it is not required to prepare group accounts for the year, by its profit and loss account/

(2)  Section 153(5) and (6) shall apply to the matters required to be included in the directors' annual report by this section as they apply to the matters required to be included therein by that section.

(3)  This section shall apply to such companies as the Governor in Council may from time to time prescribe by regulations, and such regulations may prescribe a company by reference to its having any of its shares or debentures quoted or dealt in on a stock exchange in Seychelles or on a recognised overseas stock exchange, or by reference to the amount of its assets or net worth or the amount of its profits, or by reference to the number of its shareholders or debenture holders, or by reference to any other matter.