The Companies (Miscellaneous Reporting) Regulations 2018 has now achieved parliamentary approval. This introduces additional reporting requirements for certain qualifying companies. Ahead of their inaugural year we have outlined some of the Regulations’ key provisions.
Much has been made of the regulations additional emphasis on s.172(1) of The Companies Act 2006 - (the duty to promote the success of the company (and which matters to consider when achieving said promotion)).
Detailed in Regulation 4 of the Regulations is the requirement which falls to those that meet two out of the three following requirements:
If that means your business, your new Strategic Report will have to include a ‘Section 172(1) Statement’ detailing how the company’s directors have, for example, engaged with its employees, appreciated employee interests and how this appreciation has impacted any directorial decisions during the financial year.
Along with gender-pay equality there has been a targeted governmental focus on CEO salaries and the financial gap between those at the top and those at the bottom of an incorporation. Regulation 17 of the 2018 Regulations seeks transparency and requires any quoted, UK incorporated company which has more than 250 UK employees to, alongside their Director’s Remuneration Report, publish the ratio of their CEO’s total remuneration to the 50th, 25th and 75th percentile FTE remuneration of their UK employees.
The regulations reference three pre-approved means of making this calculation (including one referring to any formal gender pay gap information) appreciating many companies have multiple payroll systems. Regardless, the key component is that this information must be verifiable and accompanied by supporting information including, but not limited to reasons for changes from year to year and how the company believes that the median is consistent with wider employee pay.
These new regulations are further evidence of a governmental emphasis on corporate transparency. Coupled with recent rumours that the Home Office will now be writing to some 17,00 businesses that failed to file a Modern Slavery report, it will be interesting to see how much further the government will take this proactive approach.