The Chartered Governance Institute responds to the government withdrawal of draft new reporting regulations

The Chartered Governance Institute, UK & Ireland, has responded to the government’s announcement today that it has withdrawn the draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023, which were laid in Parliament on 19 July and were due to be debated in Parliament this month.

The regulations would have introduced further reporting requirements on both listed and private companies, including an annual resilience statement, material fraud statement and triennial audit and assurance policy statement.

The Government has taken this decision in light of business and wider stakeholder concerns that the existing non-financial reporting framework should be streamlined and simplified.   

Peter Swabey, Policy and Research Director CGIUKI said:

“Although the proposed changes were relatively minor in themselves and we welcome them as being both sensible and proportionate, they form part of a broader discussion around the burden of corporate reporting and the competitiveness of the UK market and companies will be grateful for the governments change in approach. In our recent Boardroom Bellwether report, carried out in partnership with the Financial Times, 81% of FTSE 350 company secretaries who responded told us that increasing reporting requirements are, either to some or to a large extent, reducing the time available for strategic discussions at board level, with that impact more pronounced at the smaller end of the FTSE 350. That cannot be the intention.

The ever increasing breadth and depth of reporting requirements can contribute to a rise in boiler-plate disclosures, in particular where companies feel obliged to report on issues which they believe are simply not material to their business. It is right and important that management attention is spent on reporting, but this should not unduly redirect attention away from business matters. Developments such as the Department for Business and Trade’s call for evidence on non-financial reporting offer hope that the government is looking to provide both companies and investors with more clarity, consistency and standardisation in non-financial reporting. It is essential that government strikes the right balance to ensure effective governance practice without impeding boards proper focus on company strategy.

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Notes to Editors:

1. The Chartered Governance Institute UK & Ireland is the qualifying and membership body for governance with over 125 years’ experience of educating and supporting governance professionals. With a Royal Charter purpose of leading ‘effective and efficient governance and administration of commerce, industry and public affairs’, we provide professional development, guidance and thought leadership, and work with regulators and policy makers to champion high standards.
   
   The Institute has divisions in Australia, Canada, Hong Kong/China, Malaysia, New Zealand, Singapore, Southern Africa, the United Kingdom and Zimbabwe. The division headquartered in London represents and supports members in the UK, Republic of Ireland, Crown Dependencies and associated territories, which include the Caribbean, sub-Saharan Africa, the Middle East, Mauritius and Sri Lanka. Website: www.cgi.org.uk 

2. The word ‘Institute’ is one of the ‘sensitive words or expressions’ restricted under the Companies Act 2006. s1194(1) of the Act provides that “A person must not, without the approval of the Secretary of State, carry on business in the United Kingdom under a name that includes a word or expression for the time being specified in regulations made by the Secretary of State under this section.” As a Royal Charter body, The Chartered Governance Institute UK & Ireland is legally entitled to use this term and has no connection with other training providers with similar names, calling themselves an ‘Institute’ without the necessary approval to do so.