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Companies (Miscellaneous Reporting) Regulations 2018
The Companies (Miscellaneous Reporting) Regulations 2018 were published on 19 July 2018. They provide for new requirements for the annual reports of certain companies, including compulsory reporting on employee and stakeholder engagement, and on the ratios between CEO and average staff pay. In addition, large private and public companies will have to include a statement in their strategic report setting out how the directors have had regard to the matters in section 172(1)(a) to (f) of the Companies Act 2006 (long term consequences, employees, fostering business relationships, impact on the community and the environment, high standards of business conduct and acting fairly between members) when carrying out their duty to promote the success of the Company.
The regulations will come into force on 1 January 2019 and apply in relation to financial years beginning on or after 1 January 2019, so companies will need to change their annual reporting from 2020.
The requirements and the companies which are affected by each of them are as follows:
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New reporting requirement |
Companies affected |
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(i) Statement in the strategic report of how directors have complied with their duty to have regard to the matters in 172(1)(a) to (f) |
All companies, except those qualifying as medium-sized and companies entitled to the small companies exemption |
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(ii) Statement in the directors' report summarising how directors have engaged with employees and taken account of their interests |
Companies with more than 250 UK employees |
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(iii) Statement in the directors' report summarising how directors have engaged with suppliers, customers and others in a business relationship with the company |
As (i) above |
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(iv) Statement in the directors' report about the corporate governance arrangements applied by the company |
Companies with either • 2,000 or more employees globally; or • global turnover over £200m and a global balance sheet over £2bn Companies already required to report on their corporate governance (e.g. premium and standard listed companies) are not within the scope of this requirement. |
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(v) Publication in the directors' remuneration report of the ratio of the CEO's remuneration to the median, 25th and 75th quartile pay of their UK employees |
UK incorporated Quoted companies with more than 250 UK employees. "Quoted" means quoted on the Official List, NYSE, NASDAQ or a recognised stock exchange in the EEA, but not the AIM Market. |
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(vi) Illustration of the effect of future share price increases on executive pay outcomes in the directors' remuneration report |
UK incorporated Quoted companies ("Quoted" has the same meaning as above) |