Integrated Reporting by Indian Companies

following guest post is contributed by Nivedita
, who is an associate company secretary with a keen interest in
corporate law. She can be reached at [email protected]]
The Securities and Exchange Board
of India (SEBI), by way of its circular
issued on 6 February 2017
(Circular), advised the top 500 listed companies in
India to adopt Integrated Reporting on a voluntary basis from the financial
year 2017-2018. Prior to that, such companies have been required to submit a Business
Responsibility Report
(BRR) that pertains to areas such as environment,
governance, stakeholder relationships, and the like. Since the Circular does
not mandate preparation of Integrated Report (IR), a company may voluntarily
opt to prepare IR. In such a case, the company has to provide cross reference
in its IR to information that has already been disclosed in accordance with any
other national or international requirement / framework.
Reporting by the International Integrated Reporting Council (IIRC)
The guiding principles for the
preparation of an IR, including its content and how information is to be
presented, have been prescribed by the IIRC. The aim is to allow organisations to
provide a concise integrated report allowing an insight into their strategy and
the connectivity between factors that affect an organisation’s ability to
create value over a period of time. Such factors encompass external environment
that affects an organisation, the types of capital used by the organisation (as
named below) and how the organisation interacts with the external environment
and types of capital to create value for its stakeholders over time.
Purpose behind the
With the Circular, SEBI intends to
align reporting by Indian companies with international standards with the following
dual purpose:
1.         Improved
disclosure standards through increased credibility by those charged with
governance in the company; and
2.         Providing
stakeholders and interested shareholders with relevant information useful for
making investment decisions.
How does IR
differ from BRR?
Although the intent behind both the
reports is the same viz., better
disclosure regarding the company, yet the approach between both the reports is
different. BRR is strictly to be carried out on the basis of the format prescribed
by SEBI, whereas the IR does not contain any prescribed format for reporting.
In fact the IR only sets out certain parameters / principles which need to be
used by those charged with the responsibility of preparation and presentation
of the IR to determine which matters are material and how they are disclosed.
It is also important to note that the
IR does not provide for disclosure of specific financial parameters as required
in Section B of Annexure I to BRR’s suggested format. In fact, the IR moves
beyond disclosure of mere financial details to further classify capital (apart
from financial capital) as manufactured capital, intellectual capital, human
capital, social and relationship capital and natural capital. The intent behind
such micro-classification is for companies to assess the effect of such types
of capital on the organisation’s ability to create value over time and the
availability of such capital to meet future demands.
The detailed principles relating to
the IR can be viewed here.
The Circular is clearly another
step towards bringing parity in disclosures by Indian companies with
international reporting. However, given the principle-based approach of the IR,
the Circular is a clear indication that SEBI also intends to make future
reporting by Indian companies such that they are not merely confined to prescribed
– Nivedita Kannan

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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