Companies Act 2014 section 325

Obligation to prepare directors' report for every financial year

Section 325 requires the directors of a company to prepare an annual directors' report covering specified matters, with exemptions for small and micro companies, and additional requirements for holding companies preparing group financial statements.

• Directors must prepare an annual report covering general matters, a business review, share acquisitions or disposals, interests in shares or debentures, and a statement on relevant audit information
• Small companies are exempt from including the business review, and micro companies are fully exempt from preparing a directors' report provided share transaction details appear as a note or footnote to the balance sheet
• Holding companies preparing group financial statements must produce a group directors' report covering the parent and all consolidated subsidiaries as a whole, and this single report can replace a separate holding company report provided all holding-company-specific information is included
• Directors, shadow directors and de facto directors who fail to comply with these requirements commit a category 3 offence