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The government has announced proposals to reduce the narrative reporting burden in the UK. This forms part of the government's Regulation Action Plan, aimed at reforming the UK regulatory framework to drive economic growth, while protecting consumers and competition.
The changes, which the government intends to legislate for as quickly as possible, will:
- exempt most medium-sized private companies from the requirement to produce a strategic report as part of their annual report and accounts (ARA);
- exempt wholly-owned subsidiaries from the requirement to produce their own strategic report as part of their ARA where they are included in the reporting of their parent company; and
- remove the requirement to produce a directors' report as part of an ARA for all companies, although some of the disclosures currently required in the directors' report which are viewed as being useful (including on energy consumption and emissions) will be relocated to another part of the ARA.
The changes to the reporting requirements follow measures already introduced by the government to streamline non-financial reporting, including raising the monetary thresholds used for the classification of companies and removing certain disclosures from the directors' report and directors' remuneration report (see our blog posts here and here).
The government has also announced it will launch an expanded consultation on the modernisation of corporate reporting in 2026. This follows the government's announcement in October 2024 that it would consult on measures to modernise the UK's non-financial reporting framework. In light of the responses to that announcement, the government has now decided that the whole ARA should be looked at.
As part of the Regulation Action Plan in addition to the reporting changes, the government has also announced:
- the Financial Reporting Council will clarify the UK Corporate Governance Code guidance to make it clear that the payment of non-executive directors in shares is appropriate, and will publish the updated guidance in early November 2025;
- the Investment Association will discontinue its online public register of significant votes (20%+) cast against the shareholder resolutions of listed companies; and
- the launch of a questionnaire seeking views from businesses on which regulations and regulators are imposing the most burden, with the aim of delivering a pro-business set of regulatory reforms. The questionnaire closes on 16 December 2025.
The Regulation Action Plan also outlines proposals across the whole of the UK regulatory framework, including tax administration, planning and environmental permitting, and merger control.
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