The Financial Reporting Council (FRC), the UK's audit regulator and corporate governance watchdog, has published amendments to its "Guidance on the Strategic Report", which encourages businesses to consider the interests of stakeholders and for directors to keep in mind the long term impact of decisions when seeking to promote the success of the company. In the amended guidance, the FRC has placed an emphasis on the way businesses provide information and improve accountability to shareholders. This has been reflected in an increase to the disclosures certain companies are required to make in relation to a number of areas, including anti-corruption and anti-bribery. The FRC has invited comments and feedback on the draft amendments by 24 October 2017.


On 22 October 2014, the EU introduced Directive 2014/95/EU, amending accounting directive 2013/34/EU, laying down the rules on disclosure of non-financial and diversity information by large companies. The Directive applies to large public interest companies with more than 500 employees and covers approximately 6,000 companies across the EU, including listed companies, banks and insurance businesses.

In 2014, the FRC published its Guidance on the Strategic Report and in December 2016 the UK government published Regulations to implement the Directive and amend the strategic report requirements as set out in the Companies Act 2006 (the Act) and effective for financial years beginning on or after 1 January 2017.

Amendments to Guidance on the Strategic Report

The FRC has sought to reflect the development, since the publication of the guidance in 2014, of the need for businesses to consider their impact on society and to report on broader matters that may affect the sustainability of the business over the long term. This has led to an increased focus on s172 of the Act, which requires a director to have regard to a number of factors in promoting the long term success of the company, and in reducing harmful, short-sighted activity.

The amendments to the guidance include, for the first time, an express requirement that companies disclose information in the strategic report about "anti-corruption and anti-bribery matters". Companies are required to disclose information only when the issues are "material", that is "if its omission or misrepresentation could reasonably be expected to influence the economic decisions of shareholders".

The guidance acknowledges that the approach to combating bribery and corruption may vary depending upon the jurisdiction in which a company operates, and that the due diligence required to ensure that policies are adhered to in the same way may differ from country to country. The amendments to the guidance state that where this is relevant, "the information disclosed should be sufficiently specific to enable investors to understand the different risks posed by different parts of the entity's operations."

Potential impact and future of reporting

If, following the consultation period, the amendments to the guidance come into force, it will remain to be seen what impact the proposed amendments to the guidance will have, as companies grapple with the amount of detail they reveal in annual reports on a case by case basis. Continuing with the theme of bribery and corruption, companies may draw a distinction between (a) material issues that the state is investigating and (b) those that the company is investigating internally. In practice, such a distinction may be difficult to sustain, particularly where a company is investigating an issue in which it is clear the state will be interested. Overall, the suggested amendments are a continuation of the onus on companies to self-govern as effectively as possible, investigate potential issues if necessary and to report to stakeholders and or local authorities at as early a stage as possible.