{"id":989,"date":"2026-08-13T18:55:04","date_gmt":"2026-08-13T13:25:04","guid":{"rendered":"https:\/\/www.taxaj.com/learn\/directors-report-mandatory-disclosures-fy-2025-26\/"},"modified":"2026-08-18T20:52:14","modified_gmt":"2026-08-18T15:22:14","slug":"directors-report-mandatory-disclosures-fy-2025-26","status":"publish","type":"post","link":"https:\/\/www.taxaj.com/learn\/directors-report-mandatory-disclosures-fy-2025-26\/","title":{"rendered":"DIRECTOR&#8217;S REPORT \u2014 MANDATORY DISCLOSURES FY 2025-26"},"content":{"rendered":"<h2>INTRODUCTION<\/h2>\n<p>The Director&#8217;s Report is an important part of a company&#8217;s annual financial reporting and corporate compliance framework. It is prepared by the Board of Directors and provides shareholders with important information about the company&#8217;s financial performance, operations, governance, and statutory compliance during the financial year.<\/p>\n<p>For FY 2025-26, companies should ensure that the Director&#8217;s Report contains all disclosures applicable to them under the Companies Act, 2013 and the relevant rules. The exact disclosures may vary depending on the type, size, and nature of the company.<\/p>\n<h2>WHAT IS A DIRECTOR&#8217;S REPORT?<\/h2>\n<p>The Director&#8217;s Report is a report prepared by the Board of Directors and attached to the financial statements presented to the shareholders.<\/p>\n<p>It provides shareholders with an overview of the company&#8217;s performance during the year and explains important developments, changes, financial matters, and compliance-related information.<\/p>\n<p>The principal requirements are contained in Section 134 of the Companies Act, 2013, read with the applicable rules.<\/p>\n<h2>FINANCIAL PERFORMANCE AND STATE OF AFFAIRS<\/h2>\n<p>The Director&#8217;s Report should provide an overview of the company&#8217;s financial performance and state of affairs.<\/p>\n<p>Depending on the company, this may include:<\/p>\n<h2>Revenue and other income<\/h2>\n<h2>Profit or loss for the financial year<\/h2>\n<h2>Transfer to reserves, where applicable<\/h2>\n<h2>Details of significant changes in financial position<\/h2>\n<p>The report should provide shareholders with a meaningful understanding of the company&#8217;s performance during FY 2025-26.<\/p>\n<h2>DETAILS OF COMPANY&#8217;S OPERATIONS<\/h2>\n<p>The Board&#8217;s Report should discuss the company&#8217;s operations and important developments during the financial year.<\/p>\n<p>This may include:<\/p>\n<h2>Changes in the nature of business<\/h2>\n<h2>Expansion or contraction of business activities<\/h2>\n<h2>Major operational developments<\/h2>\n<h2>Significant changes affecting the business<\/h2>\n<p>Where there has been a material change in the nature of business, the same should be appropriately disclosed.<\/p>\n<h2>\u200d\ud83d\udcbc DIRECTORS AND KEY MANAGERIAL PERSONNEL<\/h2>\n<p>The Director&#8217;s Report should contain relevant information regarding directors and Key Managerial Personnel.<\/p>\n<p>Where applicable, companies should disclose:<\/p>\n<h2>Changes in directors during the year<\/h2>\n<h2>Appointment or resignation of directors<\/h2>\n<h2>Changes in Key Managerial Personnel<\/h2>\n<h2>Details required under the applicable provisions relating to directors<\/h2>\n<p>The company should ensure that the information in the Director&#8217;s Report is consistent with the company&#8217;s MCA records.<\/p>\n<h2>NUMBER OF BOARD MEETINGS<\/h2>\n<p>The Director&#8217;s Report should disclose the number of meetings of the Board held during the financial year.<\/p>\n<p>Companies should also ensure that the required Board meetings were conducted in accordance with the applicable provisions of the Companies Act and Secretarial Standards.<\/p>\n<p>The dates of Board meetings and the attendance of directors should be properly maintained in the company&#8217;s statutory records.<\/p>\n<h2>DIRECTORS&#8217; RESPONSIBILITY STATEMENT<\/h2>\n<p>The Directors&#8217; Responsibility Statement is an important mandatory component of the Board&#8217;s Report.<\/p>\n<p>The Board is required to make the prescribed statements relating to matters such as:<\/p>\n<h2>Maintenance of proper accounting records<\/h2>\n<ul>\n<li>Preparation of annual accounts in accordance with applicable accounting standards<\/li>\n<\/ul>\n<h2>Proper accounting policies and consistent application<\/h2>\n<h2>Safeguarding the assets of the company<\/h2>\n<h2>Prevention and detection of fraud and other irregularities<\/h2>\n<p>The statement confirms the Board&#8217;s responsibility for the preparation and integrity of the company&#8217;s financial statements.<\/p>\n<h2>DETAILS OF FRAUDS REPORTED BY AUDITORS<\/h2>\n<p>Where applicable, the Director&#8217;s Report should disclose details of frauds reported by the company&#8217;s auditors under the relevant provisions of the Companies Act.<\/p>\n<p>This disclosure is particularly important where the auditor has reported fraud involving officers or employees of the company.<\/p>\n<p>The company should ensure that the disclosure is consistent with the statutory auditor&#8217;s report and other corporate records.<\/p>\n<h2>PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS<\/h2>\n<p>Where applicable, the Board&#8217;s Report should contain details relating to loans, guarantees, and investments covered by the relevant provisions of the Companies Act.<\/p>\n<p>Companies should review transactions with related entities and other parties to determine whether any disclosure is required.<\/p>\n<h2>RELATED PARTY TRANSACTIONS<\/h2>\n<p>Details of applicable related party transactions should be disclosed in the prescribed manner.<\/p>\n<p>Where transactions covered by Section 188 have been entered into, the required particulars should be provided in the prescribed format.<\/p>\n<p>Companies should also ensure consistency between:<\/p>\n<h2>Financial Statements<\/h2>\n<h2>Director&#8217;s Report<\/h2>\n<h2>Related Party Transaction disclosures<\/h2>\n<h2>Form AOC-2, wherever applicable<\/h2>\n<h2>CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE<\/h2>\n<p>Applicable companies are required to provide disclosures relating to:<\/p>\n<h2>Conservation of Energy<\/h2>\n<h2>Technology Absorption<\/h2>\n<h2>Foreign Exchange Earnings and Outgo<\/h2>\n<p>The exact disclosure requirements depend on the nature and applicability of the relevant provisions and rules.<\/p>\n<h2>ANNUAL RETURN<\/h2>\n<p>The Director&#8217;s Report should contain the applicable details relating to the company&#8217;s annual return.<\/p>\n<p>Companies should also ensure that the annual return is prepared and filed separately with the Registrar of Companies within the prescribed timeline.<\/p>\n<p>The company&#8217;s website disclosure requirements should also be checked wherever applicable.<\/p>\n<h2>PARTICULARS OF EMPLOYEES<\/h2>\n<p>Where applicable, companies must provide disclosures relating to employees as prescribed under the Companies Act and the relevant rules.<\/p>\n<p>These disclosures may include information relating to remuneration and other prescribed particulars.<\/p>\n<p>The applicability depends on the company&#8217;s status and the thresholds prescribed under the applicable rules.<\/p>\n<h2>PERFORMANCE EVALUATION<\/h2>\n<p>Where applicable, the Board&#8217;s Report should contain a statement regarding the formal annual evaluation of the performance of:<\/p>\n<h2>Board of Directors<\/h2>\n<h2>Committees of the Board<\/h2>\n<h2>\u200d\ud83d\udcbc Individual Directors<\/h2>\n<p>The evaluation should be carried out in accordance with the applicable provisions.<\/p>\n<h2>DEPOSITS<\/h2>\n<p>Where applicable, companies should disclose information relating to deposits accepted during the year and other prescribed matters.<\/p>\n<p>Companies should ensure that disclosures in the Director&#8217;s Report are consistent with their statutory registers and financial statements.<\/p>\n<h2>INTERNAL FINANCIAL CONTROLS<\/h2>\n<p>The Board&#8217;s Report should include the applicable statement regarding the adequacy of internal financial controls with reference to the financial statements.<\/p>\n<p>The Board should consider the company&#8217;s internal control systems and the observations made by the statutory auditor while preparing the report.<\/p>\n<h2>IMPORTANT DISCLOSURES FOR FY 2025-26<\/h2>\n<p>Before finalising the Director&#8217;s Report, companies should review whether the following areas apply:<\/p>\n<ul>\n<li>Financial performance and state of affairs<\/li>\n<li>Dividend and transfer to reserves, where applicable<\/li>\n<li>Board meetings<\/li>\n<li>Directors and KMP changes<\/li>\n<li>Directors&#8217; Responsibility Statement<\/li>\n<li>Fraud reported by auditors, where applicable<\/li>\n<li>Related party transactions<\/li>\n<li>Loans, guarantees and investments<\/li>\n<li>Conservation of energy and technology absorption, where applicable<\/li>\n<li>Foreign exchange earnings and outgo<\/li>\n<li>Annual return information<\/li>\n<li>Employee remuneration disclosures, where applicable<\/li>\n<li>Performance evaluation, where applicable<\/li>\n<li>Deposits and related disclosures<\/li>\n<li>Internal financial controls<\/li>\n<li>Significant and material orders affecting the company&#8217;s operations<\/li>\n<li>Material changes and commitments affecting the financial position<\/li>\n<li>Details of subsidiaries, associates and joint ventures, where applicable<\/li>\n<\/ul>\n<h2>DIRECTOR&#8217;S REPORT AND AOC-4 \/ MGT-7<\/h2>\n<p>The Director&#8217;s Report should be prepared consistently with the company&#8217;s financial statements and other MCA filings.<\/p>\n<p>Companies should cross-check information appearing in:<\/p>\n<h2>Financial Statements<\/h2>\n<h2>Director&#8217;s Report<\/h2>\n<h2>AOC-4<\/h2>\n<h2>MGT-7 or MGT-7A, as applicable<\/h2>\n<h2>\u200d\ud83d\udcbc Auditor&#8217;s Report<\/h2>\n<h2>AOC-2, wherever applicable<\/h2>\n<p>Any inconsistency between these documents can create unnecessary compliance queries.<\/p>\n<h2>COMMON MISTAKES TO AVOID<\/h2>\n<p>Companies often make mistakes while preparing the Board&#8217;s Report.<\/p>\n<ul>\n<li>Using the previous year&#8217;s Director&#8217;s Report without updating disclosures.<\/li>\n<li>Missing disclosures applicable to the specific company.<\/li>\n<li>Reporting figures that do not match the audited financial statements.<\/li>\n<li>Not updating details of directors or KMP.<\/li>\n<li>Ignoring related party transactions.<\/li>\n<li>Missing applicable website and annual return disclosures.<\/li>\n<li>Not checking changes in Companies Act requirements before finalising the report.<\/li>\n<\/ul>\n<h2>CONCLUSION<\/h2>\n<p>The Director&#8217;s Report is not merely a formal attachment to the financial statements. It provides shareholders with important information about the company&#8217;s performance, governance, statutory compliance, and significant developments during the financial year.<\/p>\n<p>For FY 2025-26, companies should prepare the report after reviewing Section 134, the applicable rules, the company&#8217;s financial statements, auditor&#8217;s report, Board minutes, statutory registers, and other MCA records.<\/p>\n<p>Since disclosure requirements differ depending on the type and size of the company, a company should identify the provisions specifically applicable to it rather than using a generic Board&#8217;s Report without review.<\/p>\n<h2>Stay Connected for More Insights<\/h2>\n<h2>Join our WhatsApp Channel<\/h2>\n<p>https:\/\/whatsapp.com\/channel\/0029VaAOrtiFCCoQlhtGIx2o<\/p>\n<h2>Chat with Us on WhatsApp<\/h2>\n<p>https:\/\/wa.me\/918802912345<\/p>\n<h2>Visit Our Website<\/h2>\n<p>https:\/\/www.taxaj.com<\/p>\n<h2>Call Us<\/h2>\n<p>+91 8802912345<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understand Section 134 requirements, financial performance, directors, Board meetings, related party transactions, annual return, employee disclosures.<\/p>\n","protected":false},"author":13,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[7],"tags":[641,638,257,637,642,640,260,639],"class_list":["post-989","post","type-post","status-publish","format-standard","hentry","category-secretarial-services","tag-annual-compliance","tag-boards-report","tag-companies-act-2013","tag-directors-report-fy-2025-26","tag-directors-responsibility-statement","tag-mandatory-disclosures","tag-mca-compliance","tag-section-134-companies-act"],"_links":{"self":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/comments?post=989"}],"version-history":[{"count":2,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/989\/revisions"}],"predecessor-version":[{"id":1505,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/989\/revisions\/1505"}],"wp:attachment":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/media?parent=989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/categories?post=989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/tags?post=989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}