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Consultation has begun on UK government plans to resurrect the idea of requiring businesses to produce an annual Operating and Financial Review (OFR) that covers their social and environmental impacts.
The consultation closes on 19 October and is seeking views from all concerned with company reporting, including businesses themselves, their shareholders, and others ‘who regularly use company reports’. The Department for Business Enterprise and Skills will publish its conclusions at the end of the year.
Business minister Edward Davey said the objective of the consultation would be ‘to look at ways to drive the quality of company reporting to the level of the best and thereby enable stronger and more effective shareholder engagement’. He said the coalition government would explore ‘all options, regulatory and non-regulatory’ in pursuit of this aim.
The consultation document says the government wants ‘to ensure that directors’ social and environmental duties have to be covered in company reporting’ but gives few hints as to how it would achieve this.
Instead it asks a series of questions, including on whether interested parties would like to see an OFR as a statutory or voluntary requirement.
It also seeks views on whether OFRs, if introduced, should be subject to advisory votes at annual general meetings that would allow shareholders to express their view on directors’ performance and the company’s future prospects on the basis of the OFR’s description of forward looking strategy and risks.
Aside from reporting, the document also raises the issue of directors’ remuneration, and asks if existing disclosure requirements in this area need to be improved upon.
An OFR regime was due to be introduced by the last Labour government as part of its Company Law reforms, but was abandoned at the last minute after strong lobbying by the Confederation of British Industry.
The new government emphasizes that where change is proposed, ‘it is as likely to be non-regulatory as regulatory and may require further public consultation before being taken forward’. Davey says that once consultation has ended he will discuss his analysis of the responses with various groups.
The consultation closes on 19 October and is seeking views from all concerned with company reporting, including businesses themselves, their shareholders, and others ‘who regularly use company reports’. The Department for Business Enterprise and Skills will publish its conclusions at the end of the year.
Business minister Edward Davey said the objective of the consultation would be ‘to look at ways to drive the quality of company reporting to the level of the best and thereby enable stronger and more effective shareholder engagement’. He said the coalition government would explore ‘all options, regulatory and non-regulatory’ in pursuit of this aim.
The consultation document says the government wants ‘to ensure that directors’ social and environmental duties have to be covered in company reporting’ but gives few hints as to how it would achieve this.
Instead it asks a series of questions, including on whether interested parties would like to see an OFR as a statutory or voluntary requirement.
It also seeks views on whether OFRs, if introduced, should be subject to advisory votes at annual general meetings that would allow shareholders to express their view on directors’ performance and the company’s future prospects on the basis of the OFR’s description of forward looking strategy and risks.
Aside from reporting, the document also raises the issue of directors’ remuneration, and asks if existing disclosure requirements in this area need to be improved upon.
An OFR regime was due to be introduced by the last Labour government as part of its Company Law reforms, but was abandoned at the last minute after strong lobbying by the Confederation of British Industry.
The new government emphasizes that where change is proposed, ‘it is as likely to be non-regulatory as regulatory and may require further public consultation before being taken forward’. Davey says that once consultation has ended he will discuss his analysis of the responses with various groups.
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