GC100 rejects government’s disclosure proposals

first_imgGeneral counsel at Britain’s biggest companies have rejected government plans to force companies to disclose more information about corporate social responsibility and risk. The GC100, the association for general counsel and company secretaries in FTSE 100 companies, said the requirement might leave companies vulnerable to legal action and mislead investors. It issued the warning in its response to a consultation on narrative reporting by the Department for Business, Innovation and Skills (BIS). The City of London Law Society echoed this view, insisting that there is ‘no value’ in introducing extra requirements and that existing rules on company reporting are still being digested. Following the economic crisis, BIS is reviewing the regime for narrative reporting, the reporting of non-financial information in company reports that is intended to provide a broad picture of a company’s business, market position, strategy, performance and prospects. The government wants to replace the existing ‘business review’ with a more onerous ‘operating and financial review’ (OFR), to ensure that companies report on their social and environmental duties, and that risks to the company are better disclosed. ‘Our robust view is that now is not the time to introduce yet further change,’ the GC100 said in its response. ‘Our member companies disclose those risks which their internal reviews identify as the most important. We note that there is a risk of liability if material risks are omitted which later result in losses. Some of our members are also concerned that the disclosure of more detail about risks and uncertainties could give a misleading impression of a company’s position. ‘The general experience of our members is that there is no noticeable demand on the part of investors for more detailed reporting from the companies in which they invest. We believe that the current principles-based and flexible reporting regime creates competitive advantage for the UK, while driving standards of corporate reporting which are among the best in the world. ‘We cannot see how the introduction of an OFR will, of itself, improve the way that social and environmental duties are addressed. ‘UK businesses have had to cope with constant [rule] changes over the past four years. More change will inevitably cost businesses more, in terms of internal resources and external fees, and erode national competitiveness.’ The BIS consultation ran from 2 August to 19 October. The government will publish its conclusions at the end of the year.last_img read more