New measures to 'simplify and strengthen' company reporting
The Government is introducing new measures which it says will both simplify and strengthen company reporting.
The reforms mean that annual reports will include additional information on human rights issues, gender representation across the company and disclosures on greenhouse gas emissions. Ministers say the changes are designed to address concerns that reports from public listed companies have become bogged down in corporate jargon and are sometimes confusing for readers.
Business Minister Jo Swinson said: “In order for shareholders to fully hold a company to account they need to have the right information to hand. Annual reports are a key tool for shareholders to get a good understanding as to how a company is performing, but they need to be produced in an open and transparent way.
“This helps build the trust and confidence that shareholders, and the wider public, need to have in our top companies. By including additional information on human rights, gender representation and greenhouse gases, these changes can only strengthen that level of trust.”
The main changes to the regulations include:
- Introduction of a ‘Strategic Report’. This will apply to all companies and replace the previous ‘Business Review’. The aim is to allow the company to tell its story, starting with the strategy and business model and the principle risks and challenges the company has faced.
- A breakdown of the number of men and women on their board, in senior management positions and in the company as a whole.
- New disclosures on their greenhouse gas emissions. This is to encourage companies to think about ways in which emissions can be reduced.
- Information on human rights issues. This would include information on the position, performance and future direction of a business.
- The narrative reporting changes will affect all reports produced in relation to financial years ending on or after 30 September 2013.
Please contact Jon Alvarez if you would like more information about the issues raised in this article or any aspect of company law.