UK Government publishes proposals on audit and corporate governance reform (March 2021)
On 18 March 2021, the Department for Business, Energy & Industrial Strategy published a consultation paper on its proposals for significant reform to UK audit and corporate governance. The proposals are centred on reforms to further the public interest in audit and corporate reporting and the establishment of the previously announced new regulator - the Audit, Reporting and Governance Authority, replacing the Financial Reporting Council. The aim of the proposals includes to deliver more effective governance, reporting and audit of the UK's largest businesses in order to increase the reliability of the information on which investors base their decisions. The proposals would extend a range of new obligations to Public Interest Entities (PIEs) - the definition of which would be extended to cover large UK private companies and certain AIM listed companies. The proposals also envisage additional responsibilities and liabilities for directors of PIEs, including when declaring dividends, the potential for bonuses to be clawed-back in the event of serious director failings, and additional responsibilities for members of audit committees of FTSE 350 companies.