UK: the future of narrative reporting - BIS consultation paper published

The Department for Business, Innovation and Skills has today published a consultation paper on the future of narrative reporting: see here (pdf). To quote from the paper:

This consultation is looking at how the narrative reporting framework is working in practice. How well are companies complying with the existing requirements? Are they focusing on their strategy, their principal risks and uncertainties and providing the right quality of relevant information on these matters to enable their members to hold them to account? Are shareholders actually using the information that companies provide? Do narrative reports generally reflect the intentions and spirit underlying the statutory framework? Are there ways to improve the narrative reporting framework as a whole?

The consultation focuses in particular on the business review provisions. In this context, the Coalition commitment to reinstate an Operating and Financial Review to ensure that directors’ social and environmental duties have to be covered in company reporting and investigate further ways of improving corporate accountability and transparency is particularly relevant. It also considers issues relating to remuneration, and in particular to the link between performance criteria for payment to directors and the company’s objectives and performance".

A consultation response form is available here (Word) and further background information is available here.

UK: BIS Committee report on Kraft's takeover of Cadbury - Government response

The Government's response to the House of Commons BIS Select Committee report Mergers, acquisitions and takeovers: the takeover of Cadbury by Kraft has been published: see here (pdf). This is an interesting and important document setting out, albeit briefly, the (new) Government's position on many governance related matters and highlighting the direction of future policy.

Much clearly rests on the outcome of the Takeover Panel's recent review of takeover regulation (see here, pdf) but the response states that the Government will shortly be consulting on how to improve the quality of narrative reporting, in order to strengthen engagement between quoted companies and their shareholders (this is, presumably, the context in which the Government will say more about its intention to restore the Operating and Financial Review). The manner in which institutional shareholders and their fund managers perform their role as "responsible owners" of UK quoted companies is another area identified for consideration.

UK: the Coalition's programme for Government - governance and financial regulation

The Coalition has published its programme for Government - see here (pdf) - expanding on the broad policy agreements in the coalition agreement. The document contains the following commitments (in no particular order) with regard to corporate governance and financial regulation:

• Reinstate an Operating and Financial Review to ensure that directors’ social and environmental duties have to be covered in company reporting, and investigate further ways of improving corporate accountability and transparency.
• Make it easier for people to set up new enterprises by cutting the time it takes to start a new business ... reduce the number of forms needed to register a new business and move towards a 'one click' registration model.
• Look to promote gender equality on the boards of listed companies. [note: the Conservatives' pre-election pledge - see here - to require the long list for public company directorship appointments to include 50 per cent female candidates, appears to have fallen by the wayside].
  
• Reform the regulatory system to avoid a repeat of the financial crisis ... bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation [note: the FSA survives, despite the Conservatives' pre-election pledge for radical reform of the regulatory structure, but see the final point below].
  
• Bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector.
• Create a single agency to take on the work of tackling serious economic crime that is currently done by, among others, the Serious Fraud Office, Financial Services Authority and Office of Fair Trading.