On 16 October, the Department of Business and Trade released an announcement that the draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023 (Regulations) are being withdrawn, only three months after they were laid before Parliament. 

The Regulations would have created requirements for large private companies to include additional statements in their annual reports and accounts such as the: 

• Distributable profits figure
• Resilience statement
• Material fraud statement
• Audit and Assurance Policy statement

These proposals were intended to strengthen corporate governance and scrutiny in the private sector but were met with significant pushback from industry on the grounds that they were unduly costly and burdensome for companies to adhere to. 

Over the course of this week, responses to the announcement have been mixed. On the one hand, leaders in the financial services sector have welcomed the news as reaffirming the UK as an appealing and competitive environment for big business. On the other, some commentators have remarked that it is another example of the government creating business uncertainty by its announcing and then delaying or scrapping significant reforms. Roger Barker, director of policy and governance at the Institute of Directors has been quoted in the Financial Times as saying the U-turn “places the government’s longstanding reforms of audit and corporate governance in disarray”.

The government appears to have listened to the business community in its shelving of the Regulations in this case and has stated that it still remains committed to a more streamlined approach for wider audit and corporate governance reform (see the press release here). Yet, with continued lack of clarity around the timing and detail of those reforms and a general election looming in the next twelve months, those looking to futureproof their governance processes are still in the dark.