In brief
On 7 September 2026, the Department for Business, Innovation, Science and Trade published its consultation, Modernising Corporate Reporting to support long-term economic growth (“Consultation”). It proposes a fundamental reset of the UK corporate reporting regime, driven by an acknowledgment by the Government that there is currently a complex reporting framework in place which could be modernised, alongside company law fundamentals that are in need of modernisation. If the proposed changes in the Consultation are implemented in full, this will be the most significant change to how UK listed companies interact with their stakeholders in a generation. The key proposals from the Consultation are summarised below.
The Consultation closes on 30 November 2026 and the Government aims to publish a consultation outcome within six months of the consultation closing.
This Governance Bite focuses on the proposals of particular relevance to UK listed companies. On the same day, Baker McKenzie also published a Governance Bite that provides a general overview of the Consultation, which can be accessed here.
Key proposals
Virtual general meetings: the Government intends to amend the Companies Act 2006 (“CA 2006”) to clarify that companies may hold fully virtual general meetings, subject to shareholder consent. The Consultation seeks views on what shareholder safeguards may be appropriate and gives examples of possible safeguards.
Directors’ remuneration disclosures: the Government proposes retaining core disclosures, including the single total figure for each director (subject to possible refinements on calculation), the remuneration committee chair’s statement, disclosures on how performance measures were applied, the forward-looking remuneration policy and the 10-year CEO pay/Total Shareholder Return (TSR) graph. Matters that the Consultation proposes to remove include CEO-employee pay ratios, relative spend on pay, the 50% share-price appreciation illustration, and statutory disclosures relating to remuneration committee activity, advisers, malus and clawback, workforce and shareholder engagement, pay alignment and how significant shareholder dissent on remuneration has been addressed.
Annual voting on the directors’ remuneration report: the Government also proposes removing the annual advisory vote on the directors’ remuneration report, while retaining the existing (at least) triennial binding shareholder vote on remuneration policy.
Dividends and capital maintenance: as discussed in our separate alert published today, which can be accessed here, the Government proposes to replace the existing distributable profits and capital maintenance-based regime with a solvency-based test for determining the lawfulness of dividends and other corporate actions that currently depend on the availability of distributable profits. Under the proposal, the directors would instead be required to state that the payment of the dividend would not affect the company’s ability to continue as a going concern.
Corporate governance reporting: the Government proposes moving corporate governance reporting from individual company level to group level, reflecting that strategy and risk management are generally set for the group, as well as proposing to refine what constitutes “corporate governance” for reporting purposes, and considering whether that reporting should be on a website rather than in the annual report.
Climate reporting: the Consultation does not propose that climate-related financial disclosures should change; instead they are the subject of a separate post-implementation review. The Consultation nevertheless considers how Climate-related Financial Disclosures (CFD), UK Sustainability Reporting Standards (SRS) and any future transition plan requirements should interact, including to minimise unnecessary duplication. Subject to the outcome of the consultation, the Government intends to clarify that UK SRS constitutes a national reporting framework for the purposes of CA 2006, allowing companies to use UK SRS S2 disclosures to satisfy overlapping CFD obligations. The Consultation makes clear that the higher liability standard that applies to the strategic report will also be extended to sustainability-related disclosures that may be located outside the strategic report.
Gender disclosures: quoted companies are currently required to disclose the number of persons of each sex who are directors, senior managers and employees. The Government proposes removing this statutory requirement. The Consultation notes that the Financial Conduct Authority’s (FCA) Listing Rules contain similar and overlapping disclosure requirements.
Other key annual report changes that the Government proposes
- Section 172(1) statement: replacing the section 172(1) statement with a new “resources and relationships” disclosure focused on the resources and relationships important to companies’ long-term success.
- Strategic report: replacing most prescriptive requirements with a core set of baseline narrative disclosures. The five baseline areas are business model, performance review, resources and relationships, company strategy, and risks.
- Non-financial and sustainability reporting: removing a number of existing topic-specific reporting requirements relating to environmental, employee, social, community, human rights, anti-corruption and anti-bribery matters, whilst continuing to expect disclosure of those matters where financially material.
- Reporting thresholds: consolidating the various thresholds and definitions that currently apply across non-financial reporting requirements through the introduction of a new “very large” company category.
- Communications with shareholders: electronic communications would become the default, subject to a shareholder right to opt into hard copies.
Key takeaways
The Consultation forms part of a wholesale review of the UK corporate reporting framework. Several of the proposals would materially change the way UK listed companies interact with shareholders and report to the market.
In particular, the proposed move to fully virtual Annual General Meetings (AGMs) and the proposed removal of the annual advisory shareholder vote on the directors’ remuneration report are likely to have an impact on how shareholders and companies currently interact. If the Consultation is implemented in full, future annual reports could be much more concise, which in turn would achieve long fulfilled aims of various industry bodies of ensuring only the most relevant and important information is contained in annual reports.
UK listed companies should continue to monitor developments as the reform programme progresses through further consultation and, ultimately, implementation.
Tatiana Kalaji, Associate, has contributed to this legal update.