A board of directors report contains details about a company’s status, which includes information about how it has performed against expectations, the progress made towards achieving its goals and any changes in ownership survey. The type of information disclosed may vary depending on the nature of the industry or field. The board of directors report further contains details about the company’s current business activities, including management’s activities, financial condition and other information that may be helpful to those interested in investing in the security or shares of the company.
Board of directors reporting is a financial tool used by companies. Board members collect and provide information to shareholders on a regular basis at the board’s general meeting. Fintalent’s board of directors reporting consultants agree that it is often used as part of management’s efforts to keep shareholders informed on key issues and decisions.
The board of directors report can be an important governance tool for companies; it enables the company to inform shareholders about their business performance, the strategy, resources, risks and investigations in relation to the company and its directors’ activities. The report is usually prepared by the chief executive officer and submitted to the board members for approval before being issued to stakeholders. The timing of when it should be delivered may differ from company to company.
Some industries regarding the reporting, may require a more frequent reporting than others, e.g. financial services industry which imposes regulations for daily or weekly reports in comparison to other industries such as manufacturing that only needs a report at a quarterly basis or yearly basis. Each company should therefore consider their corporate culture and industry environment when deciding how frequently they are going to plan and issue their board of directors’ reports.
Board directors reporting is also a required tool for compliance purposes as well as to meet the SEC’s requirements of making detailed, timely and accurate disclosures to investors. Generally, in the United States, it is required that all companies with a class A or class B stock publically filed with the Securities Exchange Commission must issue a report by their board directors. Companies have different requirements for different types of stockholder reports. In certain cases, filings with the Securities Exchange Commission can be omitted if compliance with these rules is not required by law or regulation – (these additional private company rules apply to entities that are subject to less government regulation).
Some reports are filed online, others on paper. Publicly traded companies in the U.S. must make a quarterly report available to shareholders and the public at least 20 days prior to the company’s annual meeting of shareholders – in addition other countries have similar requirements.
The board of directors report is designed for stakeholder information, so it should not contain any non-public information that is not relevant for stakeholders, i.e., only actual matters with public relevance should be disclosed in the board of directors’ report or other required materials such as proxy statement or annual report.
The Information, including the board of directors report itself and all reports, do not contain confidential information, therefore they are protected by the same legal mandate that shields stockholders’ communications to their nominees on proxy sensitivity and fairness. These communications’ confidentiality is separate from the duty of fair representation (duty of loyalty) that protects the stockholders’ proxies in general. For example, if a company engages in improper acts such as illegal business practice or employment discrimination, if a shareholder communicates this to their nominee it may be considered evidence that they are not fulfilling their duty of fairness (i.e. a “mitigating factor” – see Section 10(b) of the Securities Exchange Act of 1934).
The board of directors report is not a formal legal document. It is simply a description of the company’s current business, including management’s activities, financial condition and other information that may be helpful to those interested in investing in the security or shares of the company. In addition, if specific individual or corporation are accused in court cases, it does not mean that their names should be disclosed as part of any public filing on a company’s SEC filings (such as quarterly reports).