What are the new requirements for large companies?
Large companies must now include a statement in the Strategic report on how the directors have complied with s172 of the Companies Act 2006: the duty to promote the success of the company, when conducting their duties. This includes:
- the likely consequences of any decision in the long term;
- the interests of the company’s employees;
- the need to foster the company’s business relationships with suppliers, customers and others;
- the impact of the company’s operations on the community and the environment;
- the desirability of the company maintaining a reputation for high standards of business conduct; and
- the need to act fairly between members of the company.
The statement should cover:
- the issues, factors and stakeholders the directors consider relevant in complying with the above and why;
- the main methods the directors have used to engage with stakeholders and understand the relevant issues; and
- information on the effect taking these into account had on the company’s decisions and strategies during the financial year.
The above statement must also appear on a website.
All large companies must also include a statement in their Directors’ report summarising:
- how the directors have had regard to the need to foster the company’s business relationships with suppliers, customers and others, and
- the effect that has had, including on the principal decisions taken in the financial year.