We found that the first mandatory Section 172 disclosures by small and mid caps are concise, easily identifiable and broadly aligned with emerging large-cap trends. However, many fall slightly short of providing the “decision-useful” information that investors need.
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Having dominated the UK corporate reporting agenda for nearly two years, mandatory Section 172 statements are now being published for the first time and no one could have imagined them arriving under more turbulent circumstances.
But rather than take away from the significance of the new disclosures, the ongoing COVID-19 crisis draws a sombre line under just how urgent Section 172 of the Companies Act 2006 really is. Coronavirus is an emergency that raises extraordinary questions about health and safety, workers’ rights, supply chain resilience, environmental impacts, community reputation and the role of business in society at large.
What is Section 172?
Section 172 of the Companies Act 2006 enshrines a director’s duty to promote the success of their company, stating that:
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 to a broad range of stakeholder concerns.
How are companies reporting on Section 172?
Our latest whitepaper explores emerging trends through a focus on small and mid-cap reporters. Not only have these companies had to meet the new disclosure requirements with more modest reporting, communication and company secretarial functions than their large-cap peers, they face a unique set of challenges that make it crucial to get Section 172 reporting right. You can find a discussion of these on page 5 of the whitepaper.
We found that the first mandatory Section 172 disclosures by small and mid caps are concise, easily identifiable and broadly aligned with emerging large-cap trends. However, many fall slightly short of providing the “decision-useful” information that investors need to asses ESG criteria and to determine the impact of stakeholder engagement activities.
Download the whitepaper now for a look at the findings, reporting examples, and our top tips for best practice Section 172 reporting.
Download whitepaper
To access our Section 172 trends whitepaper, please email daniel.redman@design-portfolio.co to request a copy.
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