On 7 September 2026, the Department for Business, Innovation, Science and Trade (BIST) published Consultation: Modernising corporate reporting, which sets out the government's plans to simplify financial and non-financial reporting obligations to create a more streamlined and proportionate framework (Written Statement and BIST Press Release). Described as a once in a generation opportunity to reset the corporate reporting regime, the consultation requests views on proposals to reform almost every aspect of the system. These include changes to the company categories, thresholds and exemptions relating to financial reporting requirements in Part 15 Companies Act 2006; examining the value of non-financial and corporate governance reporting requirements for private companies; and creating a streamlined legislative framework for financial reporting with detailed requirements moved to a set of four accounting standards. Beyond changes to the annual report and accounts, the consultation proposes a fundamental change to company law in the form of a new solvency-based regime for determining whether dividends can be lawfully paid that would replace the rules governing company distributions and capital maintenance in CA 2006. Other reforms include removing the annual advisory shareholder vote on the remuneration report, clarifying the law on virtual AGMs and making electronic shareholder communications the default option. The consultation closes on 30 November 2026.
Background
In October 2025, the government announced plans for an ambitious review of corporate reporting covering the whole of the annual report and accounts (see FC Feature 21 October 2025). At the same time, the government announced that it would legislate as soon as possible to exempt most medium-sized companies and wholly owned subsidiaries from producing a strategic report and, for all companies, remove the requirement to produce a directors' report altogether. The consultation builds on these prospective changes, which are summarised in Annex A. The consultation states that the necessary legislation to implement them will be laid before Parliament in due course.
Objectives and principles
The consultation sets out a package of wide-ranging reforms, representing a major overhaul of the UK's corporate reporting system. The proposals are underpinned by the following five principles:
- clarity of purpose – the annual report and accounts should provide financially material and decision-useful information to investors and creditors;
- flexibility and trust – companies should be trusted to tailor their disclosures to the needs of their particular investors and creditors;
- simplicity and coherence – requirements should not be duplicated across legislation, accounting standards and regulatory frameworks;
- proportionality – requirements should reflect company size, ownership structure and economic impact; and
- fit for the future – the framework should be flexible to adapt to a changing world economy and take advantage of the opportunities of digital reporting and emerging technologies.
Consultation proposals
The consultation is divided into nine chapters outlining bold proposals to simplify and modernise annual report and accounts requirements for companies and make disclosures more useful to investors and creditors. The government is keen for stakeholders to test and challenge longstanding ideas and aims to stimulate a wide-ranging discussion on how reform should be taken forward. Key potential changes outlined in the consultation include those set out below.
- Reform of definitions, thresholds and exemptions – the government wishes to simplify the reporting framework by rationalising the different company definitions, thresholds and exemptions in CA 2006 that determine reporting, audit and disclosure requirements. Chapter 3 of the consultation asks for feedback on a potential SME accounting regime that would give medium-sized companies access to some or all of the exemptions currently available to small companies, including an audit exemption. It also proposes updating the definition of an employee for the purposes of the company size thresholds (see Accounts and reports, Q&A here and Q&A here) and creating a new 'very large' companies category that could be applied to non-financial reporting obligations such as climate-related financial disclosures and corporate governance matters.
- Financial reporting requirements – Chapter 4 proposes a new financial reporting framework to simplify the relationship between company law and accounting standards. Detailed financial reporting requirements would be removed from CA 2006, which would set out high-level obligations and identify which reporting standards should be used. A streamlined set of four accounting standards would become the single source of detailed reporting obligations for each type of company specified in the Act. Consistent with the proposal for an SME regime, reporting exemptions for small companies and groups would be extended to medium-sized companies. To create a more proportionate financial reporting environment for UK SMEs, the requirement for small companies to prepare accounts that present a true and fair view would be removed and a simpler reporting standard would be available for use by these companies.
- Distributable profits and reserves – the government is considering replacing the complex rules on distributable profits and capital maintenance in CA 2006 with a solvency model for determining the lawfulness of dividends and other distributions. The proposal would require a company to state that the payment of a dividend will not affect its ability to continue as a going concern.
- Strategic report – Chapter 5 proposes removing most existing strategic reporting requirements and replacing them with a core set of baseline narrative disclosures covering the company's business model, performance, resources and relationships, strategy and principal risks. The proposed baseline model of reporting would replace the requirement to produce a section 172(1) statement, which requires companies to disclose how directors have fulfilled their duty to have regard to a range of matters (see Q&A here). Views are sought on which companies should produce baseline reporting and proposes setting a single threshold in place of the several different thresholds that currently determine a company's reporting obligations in relation to the strategic report.
- Sustainability-related financial disclosures – Chapter 5 provides an update on work to integrate UK Sustainability Reporting Standards (UK SRS), which were published for voluntary use in the UK earlier this year (see FC Feature 26 February 2026). The government will consider how UK SRS should be reflected in CA 2006 after taking into consideration feedback to the consultation and a post-implementation review of the CA 2006 requirements on climate-related financial disclosures (see Q&A here) that is due to be completed by Spring 2027. The government is currently considering responses to its June 2025 consultation on transition plan reporting (see FC Feature 26 June 2025). The consultation confirms that the government does not have any plans to introduce new requirements for reporting companies to obtain assurance over future UK SRS reporting or for other strategic reporting topics.
- Corporate governance reporting – Chapter 6 considers how corporate governance reporting under CA 2006 could be streamlined and improved. The government is interested in ideas and suggestions for making better use of the UK Corporate Governance Code's flexibility and seeks views on proposals to move reporting to group level, clarify the definition of corporate governance in CA 2006 and possible changes to the location of the corporate governance statement.
- Remuneration reporting – Chapter 7 sets out proposals to streamline remuneration reporting by quoted companies under CA 2006 and asks whether the current scope remains appropriate. It identifies the key investor-critical information the government plans to retain, as well as requirements that would be removed from legislation on the basis that they do not provide financially material or useful information for investors and creditors. The government is proposing to remove the annual advisory shareholder vote on the directors' remuneration report.
- Digital shareholder communications – Chapter 8 notes that the government has accepted a recommendation by the Digitisation Taskforce that all companies should be able to send documents and other information to shareholders electronically, subject to the right to opt in to receiving hard copy communications (see FC Feature 15 July 2025). The government welcomes views on how and when to implement changes to CA 2006 to make electronic communications to shareholders the default option.
- Fully virtual AGMs – the government intends to clarify the law in relation to fully virtual AGMs by making clear that the 'place' of a company meeting can include virtual locations, where there is shareholder consent.
- Other reforms – the government proposes to introduce a new obligation for companies to notify Companies House of the appointment of an auditor, which would include the name of the appointed audit firm and its registration number.
A full list of consultation questions is included in Annex D.
Next steps
The government aims to publish its response to the consultation within six months of the closing date, 30 November 2026.
The government will work with the FCA, PRA and FRC to modernise corporate reporting requirements. This will include close engagement with the FCA as it reviews the Disclosure Guidance and Transparency Rules (DTRs) (see FC Feature 19 May 2026) and finalises the rules aligning listed companies' sustainability disclosure obligations with UK SRS (see FC Feature 30 January 2026).
The government will consider related changes to the rules for other corporate entities such as limited liability partnerships in due course.
First published on the Corporate News Service on 7 September 2026
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