The Companies (Miscellaneous Reporting) Regulations 2018 (the Regulations) will come into force on 1 January 2019.
What is happening?
The Regulations introduce new reporting requirements, including requirements for companies to declare their corporate governance arrangements and to report on how directors have considered the factors listed in s172(1)(a)-(f) of the Companies Act 2006.
Why does it matter?
(i) S172 Companies Act 2006
Companies which are obliged to prepare strategic reports (not including medium-sized companies) must include a statement to describe how their directors have had regard to the factors in s172(1)(a)-(f) of the Companies Act 2006 in the relevant financial year. Under the new Regulations, both quoted and unquoted companies are also required to make this statement available on a website.
(ii) Corporate Governance Code
Very large companies must provide a statement to say which, if any, corporate governance code they applied in the relevant financial year. This requirement does not extend to companies which are already required to provide a corporate governance statement, charitable companies or Community Interest Companies. The statement must explain how the code was applied, or if the code was departed from, how and why this was the case. If no code was applied, this fact must be stated and an explanation of the alternate corporate governance arrangements must be provided.
(iii) Engagement with stakeholders
Large companies (both quoted and unquoted) must report on the company’s engagement with customers, suppliers and others in a business relationship with the company during the financial year. This does not apply to companies that satisfied two or more of the following requirements in the relevant financial year: turnover of not more than £36m; balance sheet assets of not more than £18m; and/or not more than 250 employees.
What action should you take?
- Review the Regulations and identify those which may affect your business.
- Where necessary, seek guidance on the extent to which the Regulations will apply to your company and the means by which they should be implemented.
- Put in place practices and procedures to ensure and facilitate compliance with the new requirements.