The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
Today I have published draft regulations that will improve the quality of narrative reporting by Britain’s largest companies. These regulations will improve corporate accountability and transparency, and make it easier for shareholders to hold their companies to account.
This package of proposals recognises and encourages the best in reporting, of which there are many examples, and without stifling innovation, sets a model for others to follow.
These regulations will restructure the format of corporate reports. One important change will be the creation of a strategic report, based on the business review, which will contain the important information investors and other stakeholders want to see first. I believe this will result in confident strategic reporting where companies present a clear and succinct picture of themselves and their activities.
The regulations will remove some outdated and unnecessary requirements about what companies should cover in their annual reports. They will also enhance current reporting by making explicit the requirement for companies to consider human rights issues. The regulations also implement a recommendation from Lord Davies’ review of Women on Boards so that companies will be required to disclose the number of women and men within the organisation as a whole and at senior and board levels.
These regulations are not intended as a stand-alone method to improve corporate reporting. During our consultations it became clear that there is a greater role for guidance, not just on the content of annual reports, but also about how to ensure reports are meaningful and concise. The Financial Reporting Council will consult on the style of revised guidance early next year.
I believe that this package of reforms will reenergise annual reporting and send a strong signal in support of the best in annual reporting, while at the same time reshaping reports to guide others in the right direction, through regulation, best practice and guidance.