The holiday season is never dull; just before parliament recessed this year, the Companies (Miscellaneous Reporting) Regulations 2018 (the Regulations) came into force on 21 July 2018 and apply to medium, large or very large sized companies reporting on financial years starting on or after 1 January 2019.
In general terms, medium and large-sized companies are defined by fulfilling at least two of the three criteria under the Companies Act 2006 (CA 2006) as follows:
| “Medium” | “Large” | “Very Large” |
Turnover | Over £10.2 million – £36 million | Over £36 million – £200 milllion | Over £200 million globally |
Balance Sheet Total | Over £5.1 million – £18 million | Over £18 million – £2 billion | Over £2 billion globally |
Number of Employees | 51 – 250 | 251 – 1,999 | 2,000 or more globally |
The Regulations bring in some new annual reporting requirements that companies in the above categories should familiarise themselves with, including:
(i) Large and very large companies must:
- include a statement in their strategic report and on their website of how the directors have complied with their s172 CA 2006 duty – the duty to promote the success of the company taking into consideration, among other things, the long term consequences of decisions, employees’ interests, business relationships, the community and environment, maintaining high standards and acting fairly as between the company members; and
- include a statement in their directors’ report summarising how the directors have had regard to the need to foster relationships with suppliers, customers and others;
(ii) Very large companies must include a statement in their directors’ report about which corporate governance code has been applied by the company and how, along with any departure from that code and why. If no such code has been applied by the company it must give reasoning;
(iii) Regardless of size, any companies with 250+ UK employees must include within their directors’ report a summary of director-employee engagement, directors’ regards to employee interests and decisions taken in light of such regard;
(iv) Regardless of size, any UK quoted companies with 250+ UK employees must publish in their directors’ remuneration report, along with supporting information, the ratio of their CEO’s total remuneration to the median, 25th and 75th quartile pay remuneration of their UK employees; and
(v) Regardless of size, any UK quoted companies must include within their directors’ remuneration report additional provisions, e.g. the possible impact of future share price increases on executive pay outcomes linked to performance periods.
It is therefore important that directors ensure that they are familiar with the new requirements and are prepared for 1 January 2019 and the need to provide the relevant information in their annual reports. If you require advice in doing so, do not hesitate to contact any member of LA’s experienced corporate team.
For more information, please contact Grant Esterhuizen, Partner, on 01202 786224 or grant.esterhuizen@LA-law.com
www.lesteraldridge.com
Tags: UK200
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