By Daniel Hunter
Measures to improve the quality of narrative reporting by Britain’s largest companies were published today (Thursday) by the Department for Business, Innovation and Skills (BIS).
The draft regulations will help to increase corporate transparency and make it easier for shareholders to hold companies to account. They will also remove outdated and duplicated requirements to cut the clutter from reports.
Following recommendations from Lord Davies' review of Women on Boards, quoted companies will also in future be required to report on the number of women and men within the organisation, both overall and in senior executive positions. This will allow investors to identify gender imbalances and help companies address talent blockages.
A concise, stand-alone report focussed on strategy and the organisation’s business model will replace the existing business review. This will mean that shareholders can easily find out about a company’s strategy, the risks it faces, how it is performing and the direction in which it is heading.
“It’s widely acknowledged that the UK leads the world in standards of annual reporting, and that those standards are rising every year. However, over a period of years reports have become longer, more complex and increasingly difficult for shareholders to navigate," Business Minister, Jo Swinson said.
“There are many examples of excellent reporting, but there is still room for improvement. Today’s reforms will encourage companies to produce innovative and engaging reports, in line with current business best practice. And requiring them to disclose the number of senior women in the organisation will persuade companies to pursue greater diversity and develop the pipeline of talent, helping drive a long-term culture change at the heart of business.”
The legislation will come into force in October 2013 at the same time as changes to voting and reporting on pay.
The Financial Reporting Council (FRC) will consult early next year on improved guidance to help companies follow the new regulations and produce succinct and meaningful reports.
Join us on