What is a directors' report and what must it say?
The directors' report is a statement by the board attached to the financial statements. Under sections 252 and 253 and the Fifth Schedule of the Companies Act 2016 it names the directors, states the principal activities, results, dividends and directors' interests, and covers other prescribed matters. At least two directors sign it.
The directors' report is part of the annual package sent to members and lodged with SSM, alongside the financial statements.
Who prepares it. Section 252: the directors prepare it for each financial year and attach it to the financial statements. The Board approves it, and at least two directors sign it on the directors' behalf (or the single director of a one-director company).
What it contains. Section 253 and the Fifth Schedule require:
- The names of everyone who was a director during the year and up to the date of the report
- The principal activities of the company and its subsidiaries
- Net profit or loss after tax, and material transfers to or from reserves
- Shares or debentures issued during the year, and dividends recommended or paid
- Directors' interests in shares and debentures
- Directors' fees and other benefits
- Statements on bad and doubtful debts, current asset values, contingent liabilities, and material or unusual items or events, including after year end
Relief. Under section 255 the directors may apply to SSM for relief from form and content requirements in limited cases.
Points for owners:
- It should agree with the financial statements, especially dividends and remuneration
- Errors or omissions are the directors' responsibility
- Failing to take reasonable steps to prepare it is an offence under section 252(4)
- An audit exemption does not remove the duty to prepare the report
Legal basis
- Companies Act 2016, s.252
- Companies Act 2016, s.253 and Fifth Schedule
- Companies Act 2016, s.255
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.
- How soon must transactions be recorded in the books?Under section 245 of the Companies Act 2016, entries must be made in the accounting records within 60 days after the transaction is completed. Leaving the books for a full year-end rush is therefore not compliant.
- How do I choose my company's financial year end?You choose it, usually when you incorporate, and it is not fixed to 31 December. Pick a date that suits your business cycle and your accountant's workload; every later deadline for financial statements and filings is counted from it.
- Can a company change its financial year end, and how?Yes. The Companies Act 2016 does not state a maximum length for a financial year or how often it can change. But a new year end that pushes the circulation or lodgement date later needs an extension of time from SSM, applied for before the original deadline. A subsidiary's year end must also stay in line with its Malaysian holding company's.
- What do a company's financial statements contain?A company's financial statements normally include a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity, a statement of cash flows and notes with accounting policies. The set must give a true and fair view.