Are you prepared for the new corporate governance reporting requirements?
Although first published back in July 2018, and in force since 1 January 2019, it is only now that the additional reporting requirements imposed by the Companies (Miscellaneous Reporting) Regulations 2018 (the 2018 Regulations) begin to bite. The 2018 Regulations introduced various additional reporting requirements for annual strategic reports, directors' reports, directors' remuneration report or on the company's website.
Under the 2018 Regulations, if the directors of a company knowingly do not comply with the requirements of the 2018 Regulations, or are reckless as to their compliance, they will be committing an offence.
Is your company caught by the 2018 Regulations?
Although the 2018 Regulations apply to financial reporting for financial years beginning on or after 1 January 2019 whether the additional reporting requirements apply to you will depend on the size and/or listing status of your company.
As outlined below, a company may fall within the scope of the 2018 Regulations if it: (a) has more than 250 UK employees; (b) is categorised as a “large” or “very large” company under the Companies Act 2006 (CA 2006); (c) or is a “quoted” UK company.
What constitutes a “large” company?
Under the CA 2006 a company is considered “large” if it meets two of the three following criteria:
- turnover of more than £36 million;
- balance sheet total of more than £18 million; and
- more than 250 employees
What constitutes a “very large” company?
For the purposes of the 2018 Regulations “very large” means a company with:
- 2,000 or more employees globally; and/or
- a turnover of more than £200 million and over £2 billion in net assets.
What is a “quoted” company?
For UK companies “quoted” means quoted on the UK Official List, the New York Stock Exchange, NASDAQ or any recognised stock exchange in the European Economic Area. However, this does not include companies listed on the Alternative Investment Market (AIM).
How do the 2018 Regulations affect financial reporting in 2019?
We have summarised in the table below the corporate governance reporting requirements applicable to each of the categories of organisation. Note, this is a simplification of the requirements and, if you have any concerns as to whether your company falls into one of the categories listed below, or whether or how the 2018 Regulations may apply to your company or business, our team at Brachers are here to assist: