The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 approved by parliament in August 2013, introduced an amendment to the Companies Act 2006 that impacts directors’ reports for all companies for years ending on or after 30 September 2013.
The principal change is the removal of the requirement to include a business review section within the directors’ report for large and medium companies. Instead, such companies will now present a separate ‘strategic report’ in addition to the directors’ report. The strategic report essentially replicates the content of the business review that would previously been reported within the directors’ report.
Consequently, for unquoted companies there is little impact from this change. Small companies continue to be exempt from the preparation of a business review and strategic report. The statutory instrument also imposes further additional disclosure requirements for the strategic reports of quoted companies. The strategic report (like the directors’ report) must be approved by the board and signed on its behalf by a director or secretary of the company.
The revised legislation also introduces a number of consequential amendments to the requirements for the content of directors’ reports which remove certain disclosure requirements. These include:
- the requirement to disclose the principal activities of the company;
- the requirement to disclose differences between the book value and director’s value of land;
- the requirement to report on any charitable donations made above £2,000 and the purpose of these donations;
- the requirement for private companies to make disclosures relating to the acquisition of the company’s own shares; and
- the requirement to disclose the policy and practice of payment to creditors.