A directors’ report is a financial document that major limited corporations must file at the end of the fiscal year. It is written in the law and is part of a broader movement toward increased corporate transparency.
Private limited companies must submit statutory accounts at the end of each financial year. The directors’ report, which is prepared by the board of directors (BOD) and summarizes the company’s financial situation, is one of these accounts. Small businesses and micro-entities are excluded from having to produce directors’ reports.
A directors’ report also lists the names of all company directors who served throughout the entity’s financial year. The dividend amount that the board of directors recommends to shareholders is also included. The reporting also specifies the occurrence and degree of any events that occur after the balance sheet date that has a major influence on the company’s finances. Lastly, it explains any important changes in the firm’s fixed asset valuation.
The directors’ report provides information that helps shareholders determine if the company’s finances are in great condition and whether it can grow and expand. It also helps shareholders determine how effectively the company is adhering to accounting standards, financial regulations, and social responsibility requirements, as well as how well the market is operating.