DBT: Draft Companies (Directors' Remuneration and Audit) (Amendment) Regulations 2025

On 5 March 2025, the Department for Business and Trade (DBT) published in draft the Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025, together with a draft Explanatory Memorandum. These are now being considered under the “sifting” process set out in the Retained EU Law (Revocation and Reform) Act 2023.

The draft Regulations have two purposes:

• Most requirements relating to the reporting of directors’ remuneration by quoted companies that were added in 2019 to implement part of the revised Shareholder Rights Directive are being repealed because they overlap considerably with directors’ remuneration reporting requirements that the UK introduced before 2019 and which remain, in force.
• Changes are being made to the existing audit regulatory framework to address some gaps or inconsistencies which arose during the process of assimilating relevant EU audit legislation within the UK’s legislative framework, following the UK’s withdrawal from the EU.

The Explanatory Memorandum notes that these changes form part of wider action being taken by the Government to streamline the UK’s non-financial reporting framework, as part of a Review of Non-Financial Reporting launched in May 20234. Other reform measures are being implemented in The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 that were laid on 10 December 2024 and come into force on 6 April 2025.

Changes to directors’ remuneration reporting requirements

Key changes include the following:

• Amendments to Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008: Information about matters such as the following will no longer be required: comparison of each director’s annual pay change with average employee pay change (para 19); the requirement to disclose each director’s total fixed pay and total variable pay (para 5); information on any changes to exercise price or date for any share options awarded to directors (para 14); information about any vesting or holding periods for share-based awards:(para 26 (ba)); information on any deferral periods related to the award of directors’ performance pay (para 26(b));  protection of sensitive personal data, including ethnic origin and political opinions (para 2(2A); information on the duration of directors’ service contracts (para 30A); and information about the remuneration policy decision-making process (para 24(1A)).
• Amendments to Part 10 Companies Act 2006 (CA 2006):  These relate to payments to directors outside a company’s remuneration policy: The legislation reverts to the prior (pre-2019) provision that payments not consistent with a remuneration policy must first be approved by shareholders (rather than the company being required to amend the remuneration policy and get that amendment authorised by shareholders) by amending sections 226A, B, C, D and E CA 2006. It was felt that the requirement that the remuneration policy be changed to accommodate any one-off payment, was unduly bureaucratic.
• Amendments to Part 15 CA 2006: These remove the requirements for a company to put certain additional information about a shareholder vote on the remuneration policy on its website and to make the remuneration report available on a website for 10 years. These requirements overlap with similar requirements elsewhere.
• “Unquoted companies”: These are being removed from the directors’ remuneration reporting requirements contained in Schedule 8 to the 2008 Regulations and in the CA 2006. Unquoted traded companies are companies with shares trading on a regulated market but whose shares are not quoted on the Official List of the Financial Conduct Authority and there are very few of such companies.

Changes to audit regulations

The draft Regulations also make some changes to the Statutory Auditors and Third Country Auditors Regulations 20136 and to the Statutory Auditors and Third Country Auditors Regulations 2016, to correct some inconsistencies or gaps that have been identified by the Government and the Financial Reporting Council (FRC) relating to the FRC’s role in regulating audits of Public Interest Entities and of non-UK incorporated companies that trade securities on UK regulated markets.

(DBT, Draft Companies (Directors' Remuneration and Audit) (Amendment) Regulations 2025, 05.03.2025 and Explanatory Memorandum)

DBT: Duty to report: Guidance to reporting on payment practices and performance updated

On 5 March 2025, the Department for Business and Trade (DBT) published updated Guidance on the duty on the UK’s largest companies and limited liability partnerships (LLPs) to report on a half-yearly basis on their payment practices, policies and performance during their financial year.

A number of changes to the reporting requirements have recently been made and further changes will become effective shortly. Broadly these are as follows:

Changes from January 2025

Under the Reporting on Payment Practices and Performance (Amendment) Regulations 2024, new reporting requirements have been introduced for companies in scope of the reporting requirement, which will apply in relation to each financial year of a company beginning on or after 1 January 2025.

These new requirements relate to:

• the sum total of payments made during the reporting period
• the percentage of payments that were paid during the reporting period which were not paid within agreed terms because of a dispute

Changes from March 2025

Under the Reporting on Payment Practices and Performance (Amendment) Regulations 2025, new reporting requirements have been introduced for companies in scope of the reporting requirement which use qualifying construction contracts. These new requirements will apply in relation to each financial year of a company beginning on or after 1 April 2025.

The requirements relate to retention practices, policies and performance where retention clauses are included in a qualifying construction contract.

These include:

• a statement on whether the payment practices and policies of the business include or do not include retention clauses
• where a business makes a statement that retention clauses are included in their construction contracts, further information must be submitted

Changes from April 2025

Under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, the thresholds defining a medium-sized company are changing. This change affects the thresholds for reporting payment practices, since this definition is used to determine which businesses are in scope of the regulations.

From 6 April 2025, the thresholds for reporting payment practices are:

• £54 million annual turnover (up from £36 million)
• £27 million balance sheet total (up from £18 million)
• 250 employees (unchanged)

Businesses that meet 2 or all 3 of these criteria will be in scope to report their payment practices.

The Guidance covers who needs to report, what needs to be reported, where the information needs to be reported and the reporting time period.

(DBT, Duty to report: Guidance to reporting on payment practices and performance updated, 05.03.2025)

DBT: The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 (SI 2025/231)

The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 were made on 24 February 2025 and have been published with an explanatory memorandum.

The regulations have two main purposes:

• to expand the category of individuals who can apply to Companies House to have their information protected in a case where it may be disclosed under the Register of Overseas Entities (ROE) regime; and
• to allow trust information on the ROE that is currently restricted from public inspection to be accessed by application, subject to meeting certain requirements.

Part 2 of the regulations expands the ROE protection regime by enabling anyone whose information could be published or disclosed by the Registrar under the ROE to make an application for protection. This is due to Part 3 of the regulations which will allow information about trusts to be disclosed which could not otherwise be disclosed. Previously, a protection application could only be made by a registrable beneficial owner or managing officer if they, or anyone they live with, would be at serious risk of intimidation or violence if the information about them is published. Now those connected with a trust (including beneficiaries, settlors, grantors and other interested parties) will be able to make a protection application. These provisions came into force on 28 February 2025.

Part 3 of the regulations provides a mechanism by which anyone can apply to the Registrar for disclosure of trust information although applicants have to demonstrate they have a legitimate interest, set out in regulation 4(3)(f), if they want to make a bulk application or if the information relates to minors. Currently, the only information displayed publicly on the register in relation to a trust is the name of the registrable beneficial owner who is a trustee. However, the Registrar can disclose trust information to other public bodies such as HMRC and law enforcement agencies. During the passage of the Economic Crime and Corporate Transparency Act 2023, the Government introduced a regulation making power to make information on trusts available to individuals on application and this is the purpose of Part 3 of the regulations. These provisions will come into force on 31 August 2025.

Companies House published guidance in relation to this on 28 February 2025. “Apply to protect your details on the Register of Overseas Entities” explains what protection is, how to apply for it, and how the application process works.

(The Register of Overseas Entities (Protection and Trusts) (Amendment) Regulations 2025 (SI 2025/231) and Explanatory Memorandum, 24.02.2025)