The Companies Act has been revised by the Companies (Miscellaneous Reporting) Regulations 2018 which has introduced additional reporting requirements, for large companies, in both the Directors’ Report and Strategic Report. The new requirements come into effect for accounting periods commencing on or after 1 January 2019.
The principal changes relate to the way that directors fulfil their responsibilities under Section 172 of the Companies Act. This section states that, in promoting the success of the company, directors must have regard to:
- The long term consequences of decisions
- The interests of employees
- The need to foster relationships with suppliers and customers
- The impact of the company’s operations on the community and environment
- The need to maintain a reputation for high standards of business conduct
- The need to act fairly between members of the company
A general statement relating to how the directors meet this requirement is required in the Strategic Report and further details about how the directors engage with employees and with suppliers and customers is required in the Directors Report. In addition, very large private companies are now required to provide details of their governance arrangements in their Directors Report.
Separate legislation has introduced requirements for large companies to provide information on their energy consumption and emissions. The requirements of the Companies (Directors Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 come into effect for accounting periods commencing on or after 1 April 2019.
A large company is one which exceeds two of the following three thresholds (provided it is not excluded from being treated as small or medium sized under S384 of S467 of the Companies Act):
- Turnover > £36m
- Balance Sheet Assets >18m
- Employees >250
A summary of the detailed requirements can be found here.
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