Companies had raised serious concerns about the additional red tape that the proposed reporting obligations would require.
On 16 October 2023, the UK government withdrew the draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations.
The regulations, which formed part of the wider proposals to reform the UK audit and corporate governance regulatory landscape, were laid in Parliament on 19 July 2023. They would have introduced the following additional reporting requirements for UK companies with at least 750 employees and an annual turnover of £750 million or more:
- an annual resilience statement, setting out how a company is managing risk and building or maintaining resilience over the short, medium, and long term;
- a triennial Audit and Assurance Policy Statement, explaining how the company proposes to assure non-financial reporting over the following three years as well as providing an annual update on the implementation of the policy;
- an annual statement about distributable profits and the company’s policy on distributions; and
- an annual statement on steps taken to prevent and detect material fraud.
In its press release, the UK government announced that the regulations would be withdrawn after consultation with companies raised serious concerns about the negative impact of additional reporting requirements on both existing and potential users of the UK capital markets. Instead, the Business Secretary will provide options to reform the wider framework to reduce the burden of red tape on businesses.
Latham & Watkins will continue to monitor developments in this area.