Smarter regulation non-financial reporting review: call for evidence

The Department for Business and Trade has launched a call for evidence as regards current non-financial reporting obligations of UK companies. The review is triggered by various factors, including:
– the UK’s departure from the EU and the chance to take a fresh look on the requirements imposed on firms and businesses;
– the government’s goal to reduce burden of UK companies so as to foster economic growth; and
– the increasing number of reporting requirements that have been imposed on firms over the years.
In this context, the Department outlines the current key non-financial reporting obligations of firms which primarily consist of the Directors Report and the Strategic Report. The Directors‘ Report is a document that contains various statutory information and is required to be prepared by all small, medium, and large companies in the UK. The content of the Directors‘ Report depends on the size and type of the company, including for instance, firms‘ main business activity, employee policies, engagements with suppliers or business associates, suggested income distribution, etc. The Strategic Report was introduced in 2013 with the aim of informing company staff members about the performance of directors in fulfilling their duty to promote the company’s success. The level of detail required in the report varies based on company size and type, with thresholds determined by factors like employees, turnover, balance sheet, and other criteria. The main components of the Strategic Report include a review of the firm’s business and its principal risks and uncertainties.
Due to the dependencies upon firms‘ sizes, the Department is contemplating on revising the thresholds of firms‘ sizes which trigger certain additional reporting requirements as noted above. The current thresholds are noted in the table below:
Size thresholds of companies in UK

Finally, the Department is looking for views and evidence on the following general issues:
1. How easy or challenging is it to adhere to current requirements? Are there any difficulties in data collection and what additional measures can be taken to facilitate the production and distribution of information?
2. To what extent do these requirements result in the generation of information that is useful for decision-making by investors and company boards themselves?
3. Is the information produced by companies readily accessible and available to stakeholders who intend to use it for making investment decisions?
4. To what degree do stakeholders perceive alignment between the requirements outlined in company law and the regulatory rules established by other governing bodies, such as the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA)?