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As the UK business world moves into the "annual report season", one of the UK's leading legal service providers is reminding companies that new requirements are now in force - which means they will have to produce a very different style report from previous years.
The changes apply to companies with financial years ending on or after 30 September 2013, and have come into force as a result of new narrative reporting regulations.
"The new style approach is intended to provide greater transparency for shareholders," says
Jayne Meacham, Corporate Governance Consultant with Jordans Corporate Law Limited, which helps thousands of companies produce their annual reports.
"The downside for those responsible is that a lot more information is now required in a different format - and failure to include that could mean upsetting the Financial Reporting Council (FRC), their shareholders... or both.
So what are the key changes that companies now need to make? And which companies are affected?
"Changes will apply to most companies," says Jayne, "although just how much new information you will have to disclose will depend on your status.
"And while larger corporates may have in-house teams or advisors who will be well up to speed on what is required, smaller businesses will also have to fall in line, and they may not have the resources to know what is required."
The new narrative reporting regulations require all but the smallest companies to prepare a strategic report which replaces the previous business review. A lot of the information will also have to be expanded or presented in a different way.
Listed companies have the extra task of supplying additional disclosures in relation to the company's strategy, business model, human rights policy, gender diversity and carbon emissions.
But the area that could potentially cause the most controversy is that listed companies will have to set out not only what their directors have received in the last year, but what the remuneration policy is going forward. What has been paid to directors will be subject to an annual advisory vote by shareholders. But the policy part will be subject to a binding shareholder vote at least every three years.
"This will give shareholders a lot more ‘clout'," says Jayne. "And if that information is not clearly set out in the annual report, there is scope for them to reject the remuneration policy or even call for a new policy to be drafted and re-submitted to shareholders."
For any business concerned about preparing their annual report, Jordans can provide telephone advice as well as providing a fully-fledged service - from preparing the report right through to organising an AGM.
Jordans has also prepared a special briefing note on the new Annual Report requirements which is free to access via their website http://www.jordans.co.uk/company-secretarial/. Jayne Meacham can be contacted directly by telephone on 0117 918 1383 or by emailing firstname.lastname@example.org.
Press contacts: Tony Watts 07738 167788 / Carol Prince 0117 918 1284
Issued for: Jordans Corporate Law, 21 St Thomas Street, Bristol BS1 6JS.
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