On 11 June 2018, the Draft Companies (Miscellaneous Reporting) Regulations 2018 were published. The intention behind the regulations is to build confidence in the way that large private and quoted companies are run. The regulations introduce certain reporting requirements which are intended to support these aims.

A company's strategic report must include a statement from the directors describing how they are fulfilling their duty under s.172 of the Companies Act 2006 to promote the success of the company. The directors' report must describe the actions taken to increase engagement with suppliers, customers and others in a business relationship with the company. These requirements will apply to companies meeting two out of three of the following specifications:

  • turnover of more than £36 million;
  • balance sheet total of more than £18 million; and
  • more than 250 employees.

 A company's directors' report must describe the actions taken to increase engagement with employees. This requirement applies to all companies with more than 250 U.K. employees.

A company is also required to report pay ratio information comparing the remuneration of the CEO with the remuneration of the company's U.K. employees. Specifically, the company must report the ratio of the CEO's remuneration to the median, 25th and 75th quartile pay remuneration in the director's remuneration report. A company must also give an illustration of the effect of future share price increases on executive pay outcomes. These requirements apply to U.K. incorporated quoted companies that are quoted on a recognised stock exchange (this does not include AIM companies).

A company must make a statement in the director's report stating the corporate governance code it applies, how it applies that code and if the company departed from that code, how and why the company departed from it. This requirement applies to all companies that have either:

  • more than 2,000 employees; or
  • a turnover of more than £200 million, and a balance sheet of more than £2 billion.

 If approved in their current form, the regulations will come into force on 1 January 2019.

The regulations can be accessed here:

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