Learn how to use AI tools like Claude to prepare a legally compliant and professionally structured board report under section 134 of the Companies Act, 2013. This article shows you how to test AI’s legal knowledge, organise mandatory disclosures, and create a system-driven workflow that simplifies complex compliance reporting—ideal for lawyers, compliance professionals, and in-house teams.
Table of Contents
About this series
This is part 1 of our 8-part series “How to use AI to prepare board report under section 134 – Part 1: Getting Started.”
Complete series overview:
- Part 1: Getting started ← You are here
- Part 2: Building the foundation
- Part 3: Directors’ statements and professional judgment
- Part 4: External stakeholders and audit relations
- Part 5: Risk management and CSR disclosures
- Part 6: Final assembly and compliance verification
- Part 7: Complete implementation guide
- Part 8: Live demonstration – real-time board report creation
Each article builds on this foundation, showing you how to handle increasingly complex board report requirements while maintaining professional standards.
Today’s focus: setting up the system
In this article, you will watch Arjun introduce AI tools to a sceptical Ms. Rao. You will see them test Claude’s understanding of section 134 and board report requirements. Thereafter, Arjun and Ms. Rao will organise the mandatory disclosures into a logical group.
Key characters:
- Arjun Sharma: Junior lawyer who knows how to use AI tools for legal work
- Ms. Priya Rao: Senior partner at Khanna Legal Solutions, initially sceptical of AI
- Nova AgriTech: Their agri-tech client needs a board report for FY 2024-25
Key skills you will learn:
- How to test AI’s knowledge of the Companies Act requirements
- Creating a systematic approach to preparing a board report
- Setting up document frameworks that work
By the end, you will understand:
- Whether AI can handle complex legal requirements
- How to organise board reports into manageable groups
- A step-by-step approach you can use with your own clients
The challenge
“Ms. Rao, have you tried using Claude for board reports yet?” Arjun Sharma asked, looking up from his laptop in the conference room at Khanna Legal Solutions.
Priya Rao, the firm’s senior partner with over two decades of corporate law experience, glanced over her reading glasses. “I have heard about these AI tools, but honestly, I am not sure where to start. The younger associates keep talking about them, but I worry about accuracy.”
Arjun set down his coffee.
Six months ago, he had felt the same way. Fresh out of law school, he had assumed traditional legal research and drafting were the only proper ways to work. Then he discovered how AI could help with routine compliance work.
“Let me show you something,” Arjun said, pulling up the Nova AgriTech file.
“We need to draft their board report for FY 2024-25. Instead of starting from scratch like we usually do, what if I show you how Claude can help us organise every legal requirement systematically?”
Nova AgriTech Pvt Ltd was one of their key clients – a fast-growing agri-tech company developing precision farming solutions.
Their institutional investors expected professional-grade board reports that demonstrated proper governance.
“I will walk you through my approach,” Arjun offered.
“But today, we are not diving into content. Today, I want to show you how Claude can design the entire workflow for us.”
Ms. Rao leaned forward, intrigued despite her scepticism. “Show me. But if this AI produces generic nonsense, we are going back to the traditional way.”
In response, Arjun said, “Right, but if you like it, promise that you will read these two articles on AI: -”
- How I taught my senior partner to build AI-powered due diligence checklist
- How to use AI as co-pilot to draft a shareholder’s agreement in minutes
“Alright, we have a deal,” Said Ms. Rao with a smug face.
Understanding what we are building
“Before we ask Claude to organise anything,” Arjun explained, opening a fresh document, “we need to understand what we are actually creating.”
He turned to Ms. Rao. “When you explain board reports to clients, how do you start?”
Ms. Rao did not hesitate. “I tell them it is their annual report card to shareholders and regulators. Section 134 of the Companies Act makes it mandatory for the board to report on the company’s affairs, financial position, and compliance status.”
“Exactly.” Arjun began typing.
“And that is exactly how we should teach Claude. The AI needs to understand not just the legal requirements, but why they matter.”
He pulled up Nova AgriTech’s previous year’s board report – eighteen pages covering everything from board meetings to technology absorption.
“For Nova’s investors, this document validates their investment decisions. For the board, it is formal proof they are doing their job properly.”
Ms. Rao nodded slowly.
“The governance aspect is crucial. When institutional investors evaluate Nova, they are not just looking at financial performance – they want to see that the board is actively engaged and following proper processes.”
“Right. And that is where AI can help us prepare a board report that goes beyond just checking boxes,” Arjun explained. “Claude can help us tell Nova’s story while hitting every legal requirement.”
But first, Claude needed to understand the law.
Testing Claude’s understanding of section 134
Arjun began typing his first prompt:
Explain the purpose and legal basis of a board report under section 134 of the Companies Act, 2013.
Click here and scroll up to see Claude’s response to the first prompt.
Ms. Rao leaned over to read Claude’s response, her eyebrows rising as she scrolled through the comprehensive answer.
“Look at this structure,” she said.
“It started with the statutory requirement, then covered the legal basis, primary purposes, specific obligations…”
“And notice the detail,” Arjun added, pointing to the screen.
“It mentioned the signing requirements – chairperson or any two directors, including the MD. That’s not basic knowledge. It even covered the penalty framework.”
Ms. Rao continued reading.
The corporate governance framework section is well-written. ‘Complements other provisions like annual financial statements, audit reports, and annual general meeting requirements to create a comprehensive disclosure regime.’ That is exactly how I explain it to clients – it is not just compliance, it is part of the bigger transparency picture.
“What impressed me most,” Arjun said, “is how it positioned the Board’s Report as both a communication tool and an accountability mechanism. Most junior associates think of it as just a checklist.”
“But here is what is missing,” Ms. Rao observed, scrolling back up.
“No mention of Nova AgriTech. No understanding that we are dealing with a private company in the agri-tech sector. No awareness of their specific circumstances.”
“Exactly,” said Arjun. “Claude gave us excellent general legal knowledge, but it does not understand our specific situation. It knows section 134 inside and out, but it does not know Nova AgriTech from Reliance Industries.”
First lesson about AI: Start broad, then get specific. Test the AI’s knowledge base, then use follow-up prompts to make it relevant to your situation.
Preparing a list of mandatory board disclosures under section 134
“Ok, so this is what we are going to do,” Arjun said, pulling up Nova’s file structure.
“We will prepare board reports section by section, jumping from annual return to financial highlights to CSR disclosures.”
Ms. Rao raised an eyebrow. “And you think Claude can do this better?”
“I think Claude can help us see the complete picture before we start drafting anything.” Arjun began typing.
“Before we write a single word for Nova, Claude needs to understand every single legal requirement we are dealing with.”
Second prompt:
List every mandatory disclosure required in a board report under section 134(3) of the Companies Act 2013 and Rule 8 of Companies (Accounts) Rules 2014. Distinguish between requirements for private companies versus public companies. Exclude rule 8A provisions for small companies and OPCs.
Click here and scroll up to see Claude’s response to the second prompt.
Ms. Rao studied Claude’s response carefully, her finger tracing down the screen.
“This is impressive,” she said slowly.
“Look at how it organised everything – common requirements first, then public company additions, then specific distinctions.”
“And the level of detail,” Arjun added.
“It did not just list section 134(3)(a) through (p). It actually explained what each one covers.”
Ms. Rao continued scrolling.
“I am particularly impressed with the Rule 8(5) breakdown. Most lawyers miss half of these additional requirements. Look – ‘Details of IBC applications/proceedings during the year’ and ‘Details of valuation differences in one-time settlements.’ These are recent additions that even some experienced practitioners forget.”
“What I found useful,” Arjun said, pointing to the distinctions section, “is how clearly it separated private versus public company obligations. That is exactly the kind of practical guidance we need.”
Ms. Rao nodded. “And notice the exemptions section at the end. It is not just listing requirements blindly – it understands the differences.”
“This is more comprehensive and better organised than most compliance checklists I have seen. If a junior associate produced this level of systematic analysis, I would be impressed.”
Important Note: While Claude’s response was comprehensive, it is possible that one or two mandatory requirements from section 134 and rule 8 of the Companies (Accounts) Rules might be missed. Always review Claude’s output carefully against the actual legal provisions. You can also ask Claude to double-check its own response by saying, “Please review your previous response against section 134 and rule 8 to ensure no mandatory disclosures are missing.” This extra verification step helps catch any omissions.
The AI-designed workflow for the board report
“Here is where it gets interesting,” Arjun said. “Instead of me deciding how to group these requirements based on how we’ve always done it, let’s ask Claude to design the workflow from scratch.”
Ms. Rao looked sceptical. “You want an AI to tell us how to organise legal work?”
“Think about it,” Arjun explained. “Claude does not have a bias toward ‘traditional’ approaches. It can look at these requirements based purely on logical connections, drafting complexity, and review efficiency. What if its approach is actually better than ours?”
Third prompt:
These mandatory disclosures from section 134(3) and rule 8 need to be drafted efficiently for a private company. Group them into 6 logical categories for systematic board report preparation, ensuring all rule 8 requirements are properly included.
Consider:
(1) information dependencies,
(2) drafting complexity,
(3) document flow, and
(4) reviewer workflow.
Suggest the optimal sequence.
Click here and scroll up to see Claude’s response to the third prompt.
Ms. Rao’s eyes widened as she read through Claude’s response.
“This is extraordinary,” she said, scrolling through the detailed framework.
“Look at this – it did not just group the requirements. It created a complete project management system.”
“The reasoning for each category is sophisticated,” Arjun observed.
“Category 1: ‘Establishes basic corporate framework and governance structure first’ – that is exactly right. You cannot discuss business performance without first establishing who was running the company.”
Ms. Rao pointed to the screen.
“And look at the information dependencies analysis. ‘Category 1-2 provides foundation data for Categories 3-6.’ Claude understood that you need board meeting records and financial statements before you can write about operational performance.”
“The reviewer workflow is brilliant,” Arjun added.
“Phase 1: Company Secretary + CFO. Phase 2: CEO + Functional Heads. It actually mapped out who should review what based on expertise areas.”
Ms. Rao studied the timeline framework.
“Eight to ten weeks before filing for the foundation stage, then parallel processing for Categories 4-6. This mirrors exactly how I organise complex compliance projects when I am working efficiently.”
“What impressed me most,” Arjun said, “is the drafting complexity assessment. It rated ‘Directors’ Responsibility Statement’ as ‘Medium to High’ complexity, which is absolutely correct. Most people think it is just a standard template, but it requires careful consideration of the year’s specific circumstances.”
Ms. Rao continued reading.
“The risk management note is smart: ‘Audit and legal matters placed later to incorporate year-end developments.’ That is experienced practitioner thinking. You want to capture developments right up to the Board meeting.”
“And notice the parallel processing insight,” Arjun pointed out.
“Categories 4-6 can be drafted simultaneously once Categories 1-3 are complete. That is genuine efficiency optimisation.”
What we have learned
“I have to admit,” Ms. Rao said slowly, “this actually mirrors how I organise complex compliance projects when I am working at my best. Start with structure and governance, build understanding of financial position, then tackle the compliance verification.”
“That is the AI advantage,” Arjun explained.
“Claude designed this workflow without bias toward ‘how we have always done it.’ It looked at the requirements purely from a logical standpoint.”
Ms. Rao continued studying the grouping.
“The dependency management is smart. You really cannot write meaningful financial highlights without first understanding what business changes occurred and what capital movements happened.”
“And look at the review efficiency,” Arjun added.
“When you are checking our work, you can review all the governance-related sections together, then move to the financial sections as a unit. No jumping back and forth between different types of disclosures.”
Key benefits identified:
- Fewer errors: Every requirement has a designated place in the workflow
- Faster drafting: Logical sequence minimises back-and-forth revision
- Better review: Grouped sections are easier to verify for completeness
- Client confidence: Systematic approach demonstrates professional competence
Step-by-step approach
Through our work today, we have developed a systematic approach:
- Test Claude’s understanding (before asking it to draft anything)
- Improve drafts step by step (refine content through focused prompts)
- Review everything carefully (lawyer oversight ensures accuracy)
This approach lets us use AI’s organisational strengths while maintaining professional legal judgment.
Key takeaways:
- AI can understand complex legal requirements when properly guided
- Systematic organisation improves both efficiency and quality
- Testing AI knowledge before drafting ensures better results
- The 6-group framework creates a logical workflow for board reports
Progress check: You have now seen how to set up a systematic approach to board report drafting. This foundation prepares you for the actual content creation in the following articles.
Next steps
If you are following the series:
- Next: Part 2 covers Group 1 (Building the Foundation)
- We will see how Arjun and Ms. Rao create actual board report content using this framework
If you are new to the series:
- Continue reading to see the complete methodology in action
- Jump to Article 8 to see the live demonstration
Want to try this yourself?
- Start with testing Claude’s knowledge of your specific legal area
- Create comprehensive context documents for your clients
- Use the 6-group framework to organise complex compliance projects
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