Burdensome legislation withdrawn in latest move to cut red tape for businesses

The Government has today [16 October] withdrawn draft regulations after consultation with companies raised concerns about imposing additional reporting requirements.

Instead, the Government will pursue options to reduce the burden of red tape to ensure the UK is one of the best places in the world to do business.

Draft regulations published in July would have added certain additional corporate and company reporting requirements to large UK listed and private companies, including an annual resilience statement, distributable profits figure, material fraud statement and triennial audit and assurance policy statement.

This would have incurred additional costs for companies by requiring them to include additional layers of corporate information in their annual reports.

Since July, the Government has completed a call for evidence on existing non-financial reporting requirements, which has identified a strong appetite from businesses and investors for reform, including to simplify and streamline existing reporting.

The Business Secretary has now decided to withdraw these regulations, and will be setting out options to reform the wider framework shortly to reduce the burden of red tape on businesses.

The Government remains committed to wider audit and corporate governance reform, including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council. We will bring forward legislation to deliver these reforms when Parliamentary time allows.

Business Minister Kevin Hollinrake said:

Since the Government first published these draft regulations in July, discussions with businesses and stakeholders have highlighted a strong appetite for existing reporting requirements to be simplified.

The Government has decided not to implement the draft regulations at this time, while we continue at pace with our plans to reform the wider non-financial reporting framework.

This will deliver a more targeted, simpler and effective framework for both business and investors, reinforcing that the UK is one of the best places in the world for firms to list and to do business.

This move will form part of a wider package of reform from the Government to streamline and simplify regulation for businesses.

It also builds on the 12-week call for evidence launched earlier this month to carry out an in-depth review of all regulators across the UK, in a campaign to bring about smarter regulation and make companies’ lives easier.

Julia Hoggett, CEO, London Stock Exchange plc, said:

This is a welcome step and will boost the competitiveness of the UK. Good corporate governance should be an enabler for companies to grow and reach their full potential in the interests of all stakeholders. However, founders, company boards and, increasingly, shareholders have highlighted that the UK’s approach of ever-increasing corporate governance processes has, however well-intentioned, impacted the effectiveness of listed companies and the standing of the UK over other capital markets.

Releasing listed companies from the additional reporting burdens that were proposed is another step toward the level playing field UK companies need to compete and drive the growth economy to the benefit of all stakeholders. If companies are to have the certainty they need, it is vital that this reform and steps to enhance the competitiveness of the UK, are backed by political consensus.

The Capital Markets Industry Taskforce said: 

This decision is an important sign that the Government does listen to business and that the Business Secretary is prepared to remove incremental burdens on business.  

We are committed to continuing to work with the Government on more steps to ensure the UK remains a competitive environment for business and investment, including in the area of corporate governance.

David Postings, CEO, UK Finance, said:

I welcome the news that the Department for Business and Trade has listened to feedback and withdrawn these regulations. 

This is an important step in terms of making the UK an attractive place for businesses to grow and list. The government now has the opportunity to make further reforms to create a simpler, streamlined and more effective reporting and corporate governance regime.

Burkhard Keese, Chief Financial Officer, Lloyd’s said:

Lloyd’s appreciates the close and productive engagement we have had with Government on corporate governance reform.

We welcome this first step that the government is taking to ensure that the UK has a proportionate and competitive corporate governance framework and look forward to ongoing collaboration as its work continues in this area.

Miles Celic, Chief Executive Officer, TheCityUK:

The government’s decision to withdraw this proposal is a significant step which will reaffirm the UK’s reputation as a business-friendly destination.

We welcome the government’s support for fostering a growth environment in the UK and our industry remains committed to working with the public sector to increase the attractiveness of the UK as a public equity listing market and to send a strong signal globally that the UK is an ideal destination for business and investment.

Notes to editors

• The draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023 were laid in Parliament on 19th July and withdrawn today. They would have introduced certain new reporting requirements on risk and dividend affordability, as part of the Government’s planned reforms of audit and corporate governance, published in May 2022.
• The Government is carrying out a Review of Non-Financial Reporting as part of its wider work on Smarter Regulation. A Call for Evidence closed on 16th August, and Ministers are considering reform options in light of that.