In Malaysia's modern corporate landscape, the responsibility of a company director for the preparation and integrity of financial statements is a cornerstone of good governance. For 2025, this duty, enshrined in the Companies Act 2016, has taken on new dimensions. It is no longer just about ensuring the numbers are correct; it is about navigating strict timelines, adhering to approved accounting standards, and mastering a new, mandatory digital submission process.
Section 248 of the Companies Act 2016 places the primary responsibility for financial statements squarely on the shoulders of the directors. Their key duties include:
The Companies Act 2016 sets out a strict timeline for the financial statement process:
A major procedural change for 2025 is the mandatory digital submission of financial statements via the new Malaysian Business Reporting System (MBRS 2.0). This means that:
This transition to digital submission requires companies to adapt their processes and may require the use of specialized software or service providers to ensure compliance.
While new audit exemption criteria for private companies come into effect in 2025, it is crucial for directors to understand that this does not absolve them of their responsibilities. Even if a company is exempt from an audit, the directors are still legally required to prepare and lodge financial statements that provide a true and fair view. In fact, the absence of an external audit places an even greater onus on the directors to ensure the accuracy and integrity of the financial information.
The Companies Act 2016 imposes significant penalties for non-compliance with financial reporting obligations. Both the company and its directors can face substantial fines for failing to prepare, circulate, or lodge financial statements within the prescribed timelines. Knowingly approving false or misleading financial statements can lead to even more severe penalties, including imprisonment.
The role of a director in the financial reporting process in 2025 is one of significant responsibility and accountability. The core duties of ensuring accuracy, fairness, and timeliness remain paramount, but they are now coupled with the new challenge of navigating a mandatory digital submission process. For directors, a proactive and diligent approach to these responsibilities is not just a matter of legal compliance—it is a fundamental aspect of good corporate governance and stewardship.
A 2025 guide for Malaysian directors on their responsibilities for financial statement preparation under the Companies Act 2016. This article covers the key duties, strict timelines for preparation and lodgement, and the new mandatory requirement for digital submission in XBRL format via the MBRS 2.0 platform. Learn what you need to know to ensure compliance and avoid penalties.