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The Strategic Report

By Julia Penny

The FRC recently issued (15 August 2017) a consultation on proposed amendments to their Guidance on the Strategic Report. The aim of the changes is to improve the effectiveness of s. 172 of the Companies Act, which requires a director to have regard to a number of matters, as shown below:

172 Duty to promote the success of the company

(1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

(a) the likely consequences of any decision in the long term;

(b) the interests of the company’s employees;

(c) the need to foster the company’s business relationships with suppliers, customers and others;

(d) the impact of the company’s operations on the community and the environment;

(e) the desirability of the company maintaining a reputation for high standards of business conduct; and

(f) the need to act fairly as between members of the company.

Certain large companies are now also required, as a result of the non-financial reporting directive (NFRD), to report on the following matters:

  • Environment;
  • Employees;
  • Social matters;
  • Respect for human rights;
  • Anti-corruption and bribery matters.

There is a useful summary of the NFRD and other strategic report requirements in Appendix IV to the draft guidance. The NFRD points only apply to companies or qualifying partnerships with more than 500 employees that are traded, banking, or authorised insurance companies or those carrying out insurance market activity. However, other companies may choose to include similar information in order to enhance their stakeholder communications and of course, the other strategic report requirements are more widely applicable.

The Consultation closes on 24th October 2017, so if you wish to comment you have plenty of time. 

August 2017 

 

Disclaimer
This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.

 

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