UK Government announce expanded plan to modernise Corporate Reporting requirements

The UK Department of Business and Trade (DBT) has announced plans which seek to modernise Corporate Reporting requirements and make it easier for businesses to grow and invest. Some of the plans which DBT intend to bring forward include:

• An exemption for most medium-sized companies from the need to produce a Strategic Report. DBT have noted that this would mean that “medium-sized businesses who can benefit from existing exemptions will no longer need to prepare narrative reporting, so they can focus on running their business rather than producing information that is disproportionate to their scale and ownership model”.
• An exemption for wholly-owned subsidiaries from producing a strategic report if they are covered by the reporting of a UK parent. DBT have stated that this proposal would “eliminate duplicative reporting within corporate groups”.
• A removal of the requirement for preparing a Directors Report. The Department have noted that this report is often seen as a “cluttered, compliance-driven document that has accumulated numerous disclosures over time, which offers little useful insight for investors”. Under the proposal, some requirements which are deemed to be more useful, such as reporting on energy and emissions, would be retained and moved elsewhere in the Annual Report.

In its announcement, the Minister for Small Business and Economic Transformation indicated his intention to deliver the proposed changes “as quickly as possible”

In addition to the above proposals, DBT have announced an expansion of their non-financial reporting review to include financial reporting, remuneration reporting and governance reporting, as well as considering how reporting can be modernised for the digital age. In view of this expansion, the previously named “non-financial reporting review” will be renamed the “Modernisation of Corporate Reporting review”.

To address this, DBT have announced its intention to hold a consultation on the corporate reporting framework next year. It has also issued a survey asking businesses to raise any issues they might have regarding regulation which is not fit for purpose.