UK Government proposals to reform corporate reporting and governance

The UK Government published yesterday the long-awaited White Paper consulting on proposals to significantly shake up the UK corporate governance framework, including a package of measures aimed at improving the UK’s audit, corporate reporting and corporate governance systems in the wake of recent accounting and corporate governance scandals. Under the proposals, the regulator would have new powers to hold directors of large businesses to account, directors’ remuneration could be withheld and/or recovered in the event of serious director failings and the laws around the payment of dividends would be strengthened.

Whilst they didn’t take things as far as Sarbanes-Oxley standards in the US when it comes to directors’ liability and personal attestation of financial accounts (which many had been speculating about in the press over recent weeks and was largely thought to be the reason it was delayed by No. 10), the proposals do seek to make a number of significant proposals which we outline in the note below and, importantly, increase the scope of companies to which they would apply to now include large private companies.

The proposals are likely to be welcomed by many industry bodies and regulators including the Financial Reporting Council, Competition and Markets Authority and Sir John Kingman, all of whom published independent reviews which contributed to these proposals.

The full briefing can be found here