Simpler narrative reporting requirements will not come into force until 2013, Government says

Out-Law News | 23 Feb 2012 | 2:15 pm | 1 min. read

Proposed changes to companies' annual reporting requirements intended to provide greater clarity on how businesses are run and increase transparency with regards to executive pay will not take effect until April 2013, the Government has announced.

The Department for Business, Innovation and Skills (BIS) said that it would publish its response to the consultation on proposals to simplify corporate narrative reporting next month. The Government had previously planned to introduce any changes from October 2012.

BIS added that its initial analysis of responses to its consultation had shown "support" for the plans.

"Our initial analysis shows support for the proposed new structure, although several organisations said that bringing the changes into force in October 2012 will not give companies enough time to adjust. We therefore propose to bring the changes into force in April 2013," it said in a short update published on its website.

"Companies will be keen to learn more about the proposed changes from the consultation response in March, but will generally welcome the extended timetable for implementation," said Lynette Jacobs, an expert in employee incentive plans with Pinsent Masons, the law firm behind Out-Law.com.

The consultation proposed simplifying companies' annual reporting requirements into two separate documents. A Strategic Report will provide information on financial results, the company's business model and strategy, risks, remuneration and environmental and social issues. The Annual Directors' Statement will provide more detailed information, and will be published online.

The Government has said that these simpler reports would increase transparency and accountability in the investment chain and enable shareholders to get a real picture of what is happening to their investments.

The consultation was published in September along with further plans to allow shareholders a binding vote on executive salaries and the right to 'claw back' bonuses where these are later proven to be unjustifiable. Business Secretary Vince Cable announced in January that the Government would take these proposals forward.