Corporate Reporting – Government Launches Root And Branch Review Of The UK Corporate Reporting Regime

The proposals being considered by the Government could radically reform the reporting landscape for UK incorporated companies, particularly small and medium‑sized companies (SMEs) and group companies

The Department of Business, Innovation, Science and Trade (BIST) has published its long-awaited consultation on modernising corporate reporting. Billed as a once in a generation review, the consultation seeks views on almost every aspect of the annual report and accounts (ARA), and on a number of related issues. 

Background

The Starmer Government set out a commitment to reducing the administrative cost of regulation by 25% by the end of the current Parliament, and identified reducing the reporting burden on companies as part of that commitment. The publication of the Modernising Corporate Reporting consultation is the next step in the process, following some targeted changes proposed in October 2025 (see our blog post here). 

Proposed reporting reforms 

The consultation considers potential reforms across the whole of the ARA, including:

• Purpose – clarifying the purpose of the ARA, with investors and creditors identified as being the target audience for disclosure of “financially material and decision-useful information”;
• Size of companies – aligning the criteria for categorising company size across the reporting landscape and introducing a new “very large” category for the most economically significant companies;
• Strategic report – changing the approach to the strategic report by moving away from a prescribed list of required disclosures to a system based on a set of baseline narrative reporting requirements, and considering which companies should be required to produce a strategic report;
• SMEs and group companies – further simplifying the reporting regime for SMEs and subsidiaries, including by extending the small company audit exemption to all SMEs and removing the requirement for a parent company guarantee for wholly-owned subsidiaries using the existing audit exemption;
• Governance reporting – modernising corporate governance reporting by moving to group level, rather than entity-based, reporting and moving the required disclosures out of the ARA; 
• Remuneration reports – streamlining the disclosures required in relation to directors’ remuneration, and abolishing the annual advisory vote on directors’ remuneration reports (for more details, see the post on our Remuneration and Incentives Notes blog here); and
• Electronic communication – moving to a digital first approach to reporting, with a default presumption in favour of electronic communications and exploring the use of company websites and online portals for certain disclosures. 

For listed companies, there is overlap between the Companies Act 2006 (CA 2006) reporting framework and their disclosure obligations under the UK Listing Rules. The consultation acknowledges this interplay and says the Government is engaging with the Financial Conduct Authority (FCA) on these areas.

Other proposals

In addition to the proposals to streamline the reporting regime, the consultation also seeks views on a number of related company law issues, including:

• Dividends – introducing a solvency model for determining whether distributions may be made to shareholders, in place of the current regime based on the availability of distributable reserves (for more details, see our PLC Insight article on unlawful distributions);
• Virtual meetings – amending the CA 2006 to allow fully virtual shareholder meetings with shareholder consent;
• Auditors – introducing new Companies House notification obligations in relation to the appointment and removal of auditors; and
• Payments to governments – abolishing the payments to governments reporting requirements, which apply to entities operating in extractive industries (see our Corporate Governance Fundamentals for more details on this regime).

Timing and next steps

The consultation is open until 30 November 2026, after which the Government aims to publish its response within six months. Depending on which of the proposals are ultimately taken forward, amendments will need to be made to the CA 2006, and so both primary and secondary legislation will be required.