In 2020, we will start to see private UK companies including the new corporate governance and reporting regulations of The Companies (Miscellaneous Reporting) Regulations 2018 in their annual reports. The annual reports of large UK companies, including UK subsidiaries of overseas companies, for financial years starting on or after 1 January 2019 will need to explain how corporate governance arrangements have been applied, directors have fulfilled their statutory duties, and employees and stakeholders have been engaged by the company.
Please see below a summary of the key new provisions and to which types of company they apply.
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Reporting Requirement
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Description
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Applicability
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Statement of corporate governance arrangements
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Statement to include:
- which governance code has been applied, if any (or what other arrangements are in place);
- how the chosen code was applied; and
- any departures from it.
The governance code developed for private companies is known as the Wates Principles.
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A company with:
- 2,000 or more global employees; OR
- a turnover of over £200 million globally and a balance sheet over £2 billion globally.
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Section 172(1) statement
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A statement which describes how the directors have had regard to the matters set out in Section 172(1)(a) to (f) when performing their statutory duty under Section 172.
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A “large” company as defined under the Companies Act 2006 as exceeding two of the following criteria:
- £36 million turnover;
- £18 million total balance sheet assets; and/or
- 250 employees.
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Employee Engagement
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A statement describing action taken to engage with employees.
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A company with over 250 employees
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Stakeholder Engagement
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A statement summarizing how directors have had regard to the need to foster the company’s business relationships with suppliers, customers, and others, and the effect of that regard, including on the principal decisions taken by the company during the financial year.
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A “large” company as defined under the Companies Act 2006 as exceeding two of the following criteria:
- £36 million turnover;
- £18 million total balance sheet assets; and/or
- 250 employees.
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