Observations on the Section 172(1) reporting based on a review of over 60 published annual reports and accounts of 31 December 2019 FTSE 350 reporters.
Companies are currently facing unprecedented challenges in light of COVID-19. Many boards are having to make difficult decisions that are critical to the survival and viability of their companies. These decisions are likely to have far-reaching implications for their stakeholders. How directors consider and exercise their Section 172 (s172) duties in these challenging times will be paramount.
We therefore expect reporters with year-ends on, or after, February 2020 to use the new disclosure requirement for a separately identifiable Section 172(1) statement as a platform to explain the choices made by directors.
After all, the very intention of introducing the requirement was to encourage businesses to take the right long-term decisions and help restore the public’s trust by giving a stronger voice to those outside the boardroom.
To help companies respond to this challenge, we have reviewed over 60 published annual report and accounts (ARA) of 31 December 2019 FTSE 350 reporters and summarised our findings. We hope that companies who are still to report - including private companies and subsidiaries of groups – will find these observations useful and practical, supplementing the theoretical framework we proposed in September 2019 in our Deconstructing the Section 172(1) statement publication.
Download the full report here