Legislative changes ahead


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In recent years, The Department for Business, Innovation and Skills (BIS) has produced three discussion documents, The Future of Narrative Reporting, A Long-term Focus for Corporate Britain and The Future of Narrative Reporting (Further Consultation). These, together with other reports such as the Kay Review which called for immediate action in restoring trust and confidence in the investment chain have highlighted an urgent consensus that changes to the narrative reporting framework were needed. This autumn sees the government's response - new legislation in strategic reporting. Here, Mark Jackson, senior policy advisor at BIS, discusses the new changes.

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  • Asset values - This required companies to note in their narrative reports any differences between the value of land they own, as noted in the balance sheet and directors’ view of the value of that land. This information is now required to be included in financial reports and so is no longer needed in narrative reports. Charitable donations - This requires companies to report on any charitable donations they have made above £2000 and the purpose of these donations. Acquisition of own shares by private companies - This requirement implemented an element of an EU Directive that imposed an obligation on public companies to disclose certain information if they have in the course of the year acquired their own shares. In the UK the implementation on this went beyond what was required by the Directive, in imposing the requirement on private companies too. We intend to remove the requirement on private companies. Employment of disabled people - This requires companies to report on how they have applied any policies they have about the employment of disabled people. The requirement was first introduced in 1980 and therefore predates the 1995 Disability Discrimination Act which prohibits discriminating on grounds of disability. Policy and practice of payment to creditors - Successive governments have attached a great deal of importance to prompt payment to creditors by business. However, we understand that the information this requirement provides is not considered useful for either creditors or shareholders so are removing this requirement.
  • Legislative changes ahead

    1. 1. Narrative Reporting
    2. 2. Structure • A quick run through the various consultations • What the various reports could look like • Some of the new disclosure requirements • What we chose not to pursue • Next steps • Questions
    3. 3. 2010 to 2012 • The Long term focus for Corporate Britain – Communication of a long term strategy by companies is important • The Future of Narrative Reporting – High quality reporting out there but room for improvement especially on strategic disclosure • The Future of narrative Reporting : – Separate section for the High level messages
    4. 4. The Strategic Report • A concise report of the company’s financial year – Including: – The companies strategy – Business model – Principle risks (those that keep the board awake) – Environmental, employee, community, social and human rights information (where material) – Gender breakdown – GHG emissions (if material)
    5. 5. Directors Report • The compliance based information that the company must disclose – Possibly GHG emissions – More detailed disclosure • We do see this as a supporting document to the strategic report
    6. 6. Specific disclosures • Greenhouse gas emissions • Gender diversity • Human rights
    7. 7. What we did not pursue • Annual Directors statement – Template – Online format • Removal of other disclosure requirements – Charitable donations –
    8. 8. Current State of Play • Laid in the house on • To be debated in Parliament • No amendments allowed – only a yes or no • After this – The Minister signs regulations and they become law. • Following this we will make some “negative” instruments to finish the job
    9. 9. Any Questions ? • Thank you for listening
    10. 10. Any Questions ? • Thank you for listening