Companies Act 2006 · Consultation
Modernising corporate reporting: what the consultation proposes
Modernising corporate reporting is the government’s consultation on simplifying reporting under the Companies Act 2006, published by the Department for Business, Innovation, Science and Trade on 7 September 2026.
It restates the planned end of the directors’ report, proposes a leaner strategic report and wider exemptions for medium-sized companies, and asks whether a new “very large” category is needed.
On UK SRS it says only that the government “will consider” how the standards should be reflected in company law.
Status
A consultation, not a change in law
The consultation covers almost every part of the annual report: company size categories and exemptions, financial reporting, the strategic report, sustainability-related disclosures, corporate governance, remuneration, digital reporting and a “Reporting Gateway” to vet future requirements.
It was published by the department that, until 20 July 2026, was the Department for Business and Trade, which is why the BIST organisation page is new and the consultation’s contact email is still a businessandtrade.gov.uk address.
Its starting point is the programme set out in written statement HCWS973 on 21 October 2025, titled “Regulation Action Plan Update, and Modernisation of Corporate Reporting”.
The October 2025 package itself — no directors’ report, and no strategic report for most medium-sized private companies and many wholly-owned subsidiaries — is announced policy that the consultation restates in Annex A, with statutory instruments to be laid “in due course” (¶7).
Annex A itself says those changes are “subject to the legislative process” and “still in an early stage of drafting”.
Everything else in the document is a proposal or a question.
For what binds a company today, see the legislation behind UK SRS reporting.
How it got here
- 21 Oct 2025Programme announced
Written statement HCWS973: the directors’ report to go, strategic report exemptions, and a broad consultation in 2026.
- 25 Feb 2026UK SRS S1 and S2 published
Department for Business and Trade, for voluntary use.
- 20 Jul 2026Department renamed
Business and Trade becomes Business, Innovation, Science and Trade (BIST).
- 6 Sep 2026Announced
A BIST news story trails the consultation.
- 7 Sep 2026Consultation opens
Twelve weeks; 60 questions.
- 30 Nov 2026Consultation closes
11:59pm.
- Within 6 monthsOutcome — an aim, not a deadline
The government “aims to publish a consultation outcome within six months of the close”.
Chapter 3
Company size categories and the “very large” question
Chapter 3 asks whether the Companies Act’s categories, thresholds and exemptions should be simplified (¶37).
This is the current law it starts from.
| Category | Turnover | Balance sheet total | Employees | Statute |
|---|---|---|---|---|
| Micro-entity | Not more than £1m | Not more than £500,000 | Not more than 10 | s.384A(4) |
| Small | Not more than £15m | Not more than £7.5m | Not more than 50 | s.382(3) |
| Medium-sized | Not more than £54m | Not more than £27m | Not more than 250 | s.465(3) |
| Large | Above the medium limits | Above the medium limits | Above the medium limits | ¶41 — everything not qualifying above |
Size is not the whole test: plcs, Public Interest Entities and certain financial services firms are treated as large whatever their size (¶43), and Annex B sets out every exclusion.
These are accounting categories, and they are not thresholds for UK SRS.
No government document proposes a UK SRS threshold or date for private companies — the point our guide to UK SRS for private companies starts from.
¶56 also asks whether companies should be able to count full-time equivalent employees instead of headcount, which “could bring some companies into smaller size categories” (Q12).
The “very large” category has no figures
¶57 records that “there is no single definition of a ‘very large’ company in the Companies Act 2006”, because each top-end non-financial duty uses its own test.
The consultation’s Table 3 lists them: 500 or more employees for traded companies, banks and insurers under the non-financial and sustainability information statement; turnover over £500 million with 500 or more employees for a “high turnover company” under the climate-related financial disclosure rules; and 2,000 employees, or £200 million turnover and a £2 billion balance sheet, for the statement of corporate governance arrangements.
¶58 asks whether to fold these into a single “very large” category, and says “The government has an open mind on how to proceed”.
It proposes no turnover, balance sheet or employee figure, and says there are “no plans to introduce this threshold for requirements relating to the financial statements”.
It did not come from this consultation.
Q13 asks respondents how the threshold should be defined and which disclosures it should carry.
Chapters 3 and 4
SMEs: a wider regime and a question over audit
¶44: “The government is considering removing the distinctions between small and medium-sized (SME) companies in corporate reporting, giving medium-sized companies the ability to access a wider package of exemptions.”
The proposed framework would let SMEs report under an SME accounting standard, drop the cash flow statement, and exempt SME-sized groups from consolidated accounts (¶61).
It would also extend the small company audit exemption to all SMEs, supported by a new voluntary assurance standard “pitched at a level designed to give lenders confidence in SME accounts” (¶61).
But the government says it wants to “explore this question thoroughly before making any decision on requirements” (¶46), and Q10 asks the question directly.
Most medium-sized private companies are already due to lose the strategic report under the October 2025 package, which Annex A limits to companies that qualify as medium-sized under sections 465 to 467.
None of this touches voluntary sustainability reporting by smaller firms — see sustainability reporting for SMEs.
Chapter 5
The strategic report: five baseline areas
¶128: “We propose to remove most existing strategic reporting requirements and replace them with a core set of baseline narrative disclosures.”
| Baseline area | What it would cover (Table 4) |
|---|---|
| Business model | How the company generates value, giving context to the rest of the annual report. |
| Performance review | Context for the financial statements and the wider matters affecting performance, including non-financial KPIs. |
| Resources and relationships | What matters to long-term success and how it is managed — replacing the section 172(1) statement. |
| Company strategy | Main aims and plans, key objectives and the principal actions to achieve them. |
| Risks | Principal risks and uncertainties, with flexibility on how their management is described. |
Three sets of provisions would go (¶133): section 414C(7)(b), most of section 414CB, and the section 172(1) statement.
With them go the explicit topic requirements for environmental matters, employees, social matters, community matters, respect for human rights, and anti-corruption and anti-bribery matters (¶134).
¶135 says companies should still report on those topics where they are financially material, and may use UK SRS or the TNFD framework to do so if they wish.
The sex breakdown of directors, senior managers and employees under section 414C(8)(c) is also proposed for removal (¶137).
Key performance indicators and “main trends and factors” would stop being explicit requirements, with companies expected to use material metrics throughout (¶¶129–130).
The report’s audience would widen from “members of the company” to existing and potential investors and creditors (¶123, Q18).
The climate limbs of section 414CB — subsections (A1), (2A) and (4B) — are carved out of every removal (¶133 and footnote 22).
¶132 refers to “(A1), (2B) and (4B)”; every other reference says (2A), so we read (2B) as a slip in the document.
Scope
Who would have to report
¶140 proposes “a single threshold for reporting baseline strategic information”, and says consultation feedback “will inform what the threshold should be”.
Q23 puts three options, and the document does not choose between them:
- publicly listed companies and large private companies;
- companies above a “very large” threshold, still to be defined;
- publicly listed companies only.
On private companies generally, ¶32 says the government “is not proposing any specific regulatory changes and has an open mind on whether to retain or remove non-financial reporting requirements that apply to this group”.
The reasoning offered is that private companies often have a closer relationship with their investors, which may reduce the value of public disclosure (¶31).
“Very large” recurs twice more: as a possible scope for a new cyber risk disclosure (¶171, Q29) and in the question of who should report on corporate governance (¶193).
Corporate governance reporting itself would move from company to group level (¶194).
None of this alters who must comply with UK SRS today, which as a matter of law is nobody: the standards are voluntary.
SECR and ESOS
The directors’ report, SECR and ESOS
The requirement to prepare a directors’ report is to be removed, with some contents dropped and others relocated (¶6).
A large unquoted company’s energy and carbon report sits in the directors’ report today, under Schedule 7, Part 7A of SI 2008/410.
¶149: “The location of SECR disclosures will be moved because of the removal of the directors’ report from the annual report.”
Companies would be free to place it “in any area or section of the first half of the annual report they feel is most appropriate”, and supplier payment reporting would be treated the same way (footnote 26).
Annex A marks SECR “Retain” and records its current scope as “Quoted and previous definition of large (£36 million turnover)” — the SECR size test did not move with the April 2025 uplift.
The substantive review of SECR is for a different department: ¶150 says DESNZ “intends to hold a consultation on SECR and the Energy Savings Opportunity Scheme (ESOS) later in 2026”.
That consultation would build on DESNZ’s SECR evaluation of 29 January 2026 and an ESOS evaluation “currently underway”.
ESOS is otherwise mentioned only as an example of portal reporting (¶¶227, 241), and nothing in this consultation changes it.
Q26 asks which areas of energy and carbon reporting DESNZ should prioritise.
How the two regimes fit with UK SRS today is covered at SECR and UK SRS and ESOS alongside UK SRS.
Where the report sits: proposed to change.
Who reports, and what: not proposed to change.
When: nothing moves until the regulations are laid and in force.
Sustainability-related financial disclosures
What the modernising corporate reporting consultation says about UK SRS
UK SRS S1 and S2 were issued by the Department for Business and Trade on 25 February 2026 for voluntary use, and they remain voluntary.
¶155, in full: “Looking ahead, the government will consider how UK SRS should be reflected in the Companies Act 2006, taking into consideration feedback to this consultation, the CFD PIR and related processes.”
That is the whole of it: there is no proposal, mechanism, scope or date.
The existing climate-related financial disclosure requirements are left alone — ¶147 says the consultation “does not include proposals regarding the future of the CFD requirements” — pending a post-implementation review due by spring 2027 (¶148).
On duplication, DBT had already confirmed in its February 2026 consultation response that UK SRS S2 is a national reporting framework for section 414CB(6).
¶158 adds that, subject to the outcome of the FCA’s consultation, “the government will make clear that UK SRS is a national reporting framework for these purposes”.
¶164 proposes that companies may put climate and other sustainability information anywhere in the strategic report, integrated or in a separate section.
¶165 asks about placing it outside the strategic report, and says the government would then “seek to expand the legal protections for directors under section 463”.
Our reading, not the document’s: once the directors’ report goes, whether section 463 still covers SECR placed outside the strategic report is a question worth raising in a response.
Transition plan reporting is left to a separate process (¶166), following the DESNZ transition plan consultation, which closed on 17 September 2025 with no outcome published as at 26 September 2026 — see transition plans under UK SRS.
UK SRS and company law
- 25 Feb 2026Standards published
Voluntary; no effective date.
- 7 Sep 2026“Will consider”
¶155 — no proposal, scope or date.
- 30 Nov 2026Consultation closes
Feedback is one input to the decision.
- Spring 2027CFD review due
Post-implementation review of the climate disclosure regulations (¶148).
- LaterFurther consultation
Any change to the CFD requirements “would also be subject to further consultation” (¶147).
Assurance
No plans to require assurance “at this stage”
¶178: “the government does not have any plans to introduce new requirements for reporting companies to obtain assurance over future UK SRS reporting at this stage, or for other strategic reporting topics.”
It gives the reasons as “the associated costs and nascency of the market”.
¶179 states the preferred approach: decisions on external assurance of strategic reporting “remain with the reporting entity”.
What the government is exploring is transparency — whether assurance was obtained, the opinion reached, whether the provider was independent, the standards applied, and whether it was reasonable or limited (¶180).
¶182: “we do not intend transparency to drive additional assurance activity unless there is a net benefit.”
The background is the assurance oversight consultation, in which stakeholders “broadly agreed that assurance over sustainability reporting was a desirable long-term goal” but raised cost and practicality concerns (¶177).
The oversight regime the government has announced for sustainability assurance practitioners is voluntary (¶179).
For what assurance means in practice for UK SRS reporters, see UK SRS assurance.
Not proposed, for UK SRS reporting or other strategic reporting topics (¶178).
Whether companies should have to say what assurance, if any, they obtained (Q31).
Two regimes
How it differs from FCA CP26/5 and the final rules
The two consultations are often run together, but they have different owners, different legal homes and different populations.
| Modernising corporate reporting | FCA CP26/5 → final rules (PS26/19) | |
|---|---|---|
| Owner | Department for Business, Innovation, Science and Trade | Financial Conduct Authority |
| Legal home | Companies Act 2006 and its regulations | UK Listing Rules |
| Who | UK companies of every size, from micro-entities up | Companies listed under UKLR 6, 14, 15, 16 and 22; CP26/5 estimated around 600 affected |
| UK SRS | Will “consider” how UK SRS is reflected in the Act (¶155); no proposal | UK SRS on a comply-or-explain basis for periods beginning on or after 1 January 2027 |
| Assurance | No plans to require it “at this stage” (¶178); asks about transparency | Not required; where obtained, name the provider, the disclosures assured and the standards used |
| Status | Open until 30 November 2026 | CP26/5 closed 20 March 2026; final rules published 30 September 2026 |
¶156 summarises FCA CP26/5 and says final listing rules “are expected to be published in autumn 2026”.
The FCA published them on 30 September 2026: its final rules require listed companies in scope to report against UK SRS on a comply-or-explain basis, not the mandatory UK SRS S2 CP26/5 had proposed.
A listed company can be caught by both: by the FCA’s rules through the Listing Rules, and by the Companies Act through its strategic report.
The listed-company rules are set out in detail at UK SRS and the FCA, and the earlier consultation on the standards themselves at the UK SRS consultation.
Responding
How to respond
The GOV.UK consultation page gives three routes: the online survey, which the government “strongly encourages”; email to mcr.review@businessandtrade.gov.uk; or post to the Company Law and Governance Directorate, Old Admiralty Building, London SW1A 2AY.
The deadline is 11:59pm on 30 November 2026.
Responses are “most useful if … framed in direct response to the questions posed”, which are listed in Annex D; there are 60 in all.
Say whether you respond as an individual or for an organisation, and send email responses in a machine-readable format rather than images or PDFs that are not machine-readable.
Responses will be shared with the FRC unless you ask otherwise, and you may supply a redacted version for that purpose.
The government will publish a summary of responses, naming responding organisations but not individuals, and aims to publish an outcome within six months of the close.
The consultation document is 70 pages; the paragraph numbers on this page are its own.
| Question | What it asks |
|---|---|
| Q13 | How a “very large” threshold should be defined, and what it should carry |
| Q22 | Whether to remove the s.414CB and s.414C(7)(b) topic requirements |
| Q23 | Which companies should produce the baseline strategic report |
| Q26 | What DESNZ should prioritise in energy and carbon reporting |
| Q27 | Where sustainability and climate information should sit |
| Q31 | Whether companies should be transparent about assurance |
In practice
What it means, by company type
Final rules plus a consultation
UK SRS obligations arrive through the FCA’s final rules (PS26/19) and the Listing Rules — comply or explain from 2027. This consultation reshapes the strategic report around them, proposes removing the CEO-employee pay ratio and the annual advisory vote on the remuneration report, and keeps the climate limbs of s.414CB.
The scope question is yours
Whether you produce a baseline strategic report at all turns on Q23. Your climate-related financial disclosures stay as they are pending the spring 2027 review, and UK SRS remains voluntary for you.
The biggest proposed change
Most medium-sized private companies are already due to lose the strategic report. This consultation asks whether they should also access the small-company regime and drop the statutory audit (Q9, Q10).
Clarity rather than cuts
The directors’ report goes for small companies too. The micro-entity “true and fair presumption” would be replaced by a requirement to follow the micro-entities standard, which ¶67 says would not change the obligations’ effect.
What to watch, as at 30 September 2026
- The first accounting periods under the FCA’s final rules — those beginning on or after 1 January 2027, with first reports in 2028.
- The statutory instruments for the October 2025 package — to be laid “in due course”.
- DESNZ’s SECR and ESOS consultation — promised for later in 2026.
- The CFD post-implementation review — due by spring 2027.
- The outcome of this consultation — aimed for within six months of 30 November 2026.
Frequently asked
Modernising corporate reporting — frequently asked
What is the Modernising corporate reporting consultation?
It is the government’s consultation on reforming reporting under the Companies Act 2006, published by the Department for Business, Innovation, Science and Trade on 7 September 2026. It covers company size categories and exemptions, financial reporting, the strategic report, sustainability-related disclosures, corporate governance and remuneration reporting, digital reporting, and a Reporting Gateway for future requirements. It contains proposals and questions only; nothing in it is law.
When does the modernising corporate reporting consultation close?
At 11:59pm on 30 November 2026. You can respond through the online survey linked from the GOV.UK consultation page, by email to mcr.review@businessandtrade.gov.uk, or by post to the Company Law and Governance Directorate, Old Admiralty Building, London SW1A 2AY. The government aims to publish an outcome within six months of the close.
Does the consultation make UK SRS mandatory for private companies?
No. Paragraph 155 says only that the government will consider how UK SRS should be reflected in the Companies Act 2006, taking into account feedback to the consultation, the post-implementation review of the climate-related financial disclosure regulations and related processes. It proposes no scope, threshold or date, and UK SRS remains voluntary for every UK company outside the FCA’s listing rules.
What counts as a “very large” company under the proposals?
Nothing yet. Paragraphs 57 and 58 ask whether the existing top-end non-financial reporting tests should be consolidated into a new “very large” category, say the government has an open mind, and seek views on how it should be defined. No turnover, balance sheet or employee figure is proposed, and there are no plans to use the category for the financial statements.
Is the directors’ report being abolished?
The government announced in October 2025 that it will remove the requirement to prepare a directors’ report, and the consultation restates this in Annex A, which says the changes remain subject to the legislative process. Statutory instruments are to be laid before Parliament in due course. Some contents, including SECR and supplier payment reporting, would move elsewhere in the annual report rather than disappear.
Does the consultation change SECR or ESOS?
It proposes to change where SECR sits, not who reports or what they report: with the directors’ report removed, companies could place SECR anywhere in the first half of the annual report. ESOS is not changed. The Department for Energy Security and Net Zero separately intends to consult on SECR and ESOS later in 2026.
Will companies need their sustainability reporting assured?
Not under this consultation. Paragraph 178 says the government has no plans to require assurance over future UK SRS reporting, or over other strategic reporting topics, at this stage. It asks instead whether companies should be required to be transparent about any assurance they do obtain.
How is it different from FCA CP26/5?
CP26/5 is the Financial Conduct Authority’s consultation on Listing Rules for listed companies. Its final rules, PS26/19 of 30 September 2026, require listed companies in scope to report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027. The Modernising corporate reporting consultation concerns Companies Act 2006 reporting by UK companies generally and makes no UK SRS proposal.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- Department for Business, Innovation, Science and TradeModernising corporate reporting — consultation page
Published 7 September 2026; closes 11:59pm on 30 November 2026. Response routes.
- Department for Business, Innovation, Science and TradeConsultation on modernising corporate reporting to support long-term economic growth (PDF, 70 pages)
The document this page describes. Every ¶ reference on this page is to it.
- Department for Business, Innovation, Science and TradeAnnex A: October 2025 legislative changes (PDF)
Directors’ report abolition and strategic report exemptions; SECR marked “Retain”.
- Department for Business, Innovation, Science and TradeAnnex B: the exemption frameworks (PDF)
Which companies are excluded from the size-based exemptions.
- Department for Business, Innovation, Science and TradeAnnex D: list of consultation questions by chapter (PDF)
Q1 to Q60.
- Department for Business, Innovation, Science and TradeNews story: business reporting overhaul, 6 September 2026
The announcement. This page does not rely on its headline savings figure.
- GOV.UKDepartment for Business, Innovation, Science and Trade — organisation page
The department’s current name, in use from 20 July 2026.
- UK ParliamentWritten statement HCWS973: Regulation Action Plan Update, and Modernisation of Corporate Reporting (21 October 2025)
The programme and the October 2025 package.
- legislation.gov.ukCompanies Act 2006, s.384A — micro-entities
Micro-entity limits: £1 million, £500,000, 10 employees.
- legislation.gov.ukCompanies Act 2006, s.382 — small companies
Small company limits: £15 million, £7.5 million, 50 employees.
- legislation.gov.ukCompanies Act 2006, s.465 — medium-sized companies
Medium-sized limits: £54 million, £27 million, 250 employees.
- legislation.gov.ukCompanies Act 2006, s.414C — contents of the strategic report
Includes s.414C(7)(b) and (8)(c), proposed for removal.
- legislation.gov.ukCompanies Act 2006, s.414CZA — section 172(1) statement
Proposed to be replaced by “resources and relationships”.
- legislation.gov.ukCompanies Act 2006, s.414CB — non-financial and sustainability information statement
The climate limbs (A1), (2A) and (4B) are carved out of the proposals; (6) is the national-framework route.
- legislation.gov.ukCompanies Act 2006, s.463 — liability for false or misleading statements
The directors’ safe harbour the consultation would extend if disclosures move outside the strategic report.
- legislation.gov.ukSI 2008/410, Schedule 7, Part 7A — energy and carbon report (large unquoted companies)
Where SECR sits today, inside the directors’ report.
- Financial Conduct AuthorityCP26/5: Aligning listed issuers’ sustainability disclosures with international standards
The listed-company consultation this one is distinct from; finalised by PS26/19 on 30 September 2026.
- Financial Conduct AuthorityPS26/19: Aligning listed issuers' sustainability disclosures with international standards
First published 30 September 2026. The final rules: listed companies in scope report against UK SRS on a comply-or-explain basis for accounting periods starting on or after 1 January 2027, first reporting in 2028.
- Department for Business and TradeUK Sustainability Reporting Standards: UK SRS S1 and UK SRS S2
Published 25 February 2026 for voluntary use.
- Department for Business and TradeUK SRS exposure drafts — consultation response (PDF)
Chapter 3 confirms UK SRS S2 as a national reporting framework for s.414CB(6).
- Department for Business and TradeDeveloping an oversight regime for assurance of sustainability-related financial disclosures — government response
The voluntary oversight regime for assurance practitioners.
- Department for Energy Security and Net ZeroStreamlined Energy and Carbon Reporting (SECR) regulations: evaluation
Published 29 January 2026; the evaluation DESNZ’s promised SECR and ESOS consultation will build on.
- Department for Energy Security and Net ZeroClimate-related transition plan requirements — consultation
Ran 25 June to 17 September 2025; no outcome published as at 26 September 2026.
Continue reading
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