|
|
These proposals reflect the FRC’s desire to improve the effectiveness of section 172 of the Companies Act 2006. This section requires a director to have regard to a number of matters including the long term impact of any decisions, the interests of stakeholders; and non-financial matters in pursuing their duty to promote the long term success of the company. The FRC is therefore encouraging companies, to provide better information on how companies have fulfilled this duty to improve accountability to shareholders and other stakeholders.
The proposals reflect the enhanced disclosures that certain large companies are required to make in respect of the environment, employees, social matters, respect for human rights and anti-corruption and anti-bribery matters. The guidance also encourages all companies to disclose information on how boards have considered broader stakeholders when taking decisions to promote the long term success of the company.
The Guidance on the Strategic Report was first issued in 2014, following the introduction of the requirement for companies to produce a strategic report. It is being amended now to take account of the new regulations for non-financial reporting that are effective for financial periods beginning on or after 1 January 2017. In line with the FRC’s Clear & Concise initiative, the guidance continues to encourage companies to produce a cohesive annual report that provides information that is relevant for an understanding of the development, performance position and impact of the company’s activity.
Comments and feedback on the FRC’s exposure draft are invited by 24 October 2017.