The Insolvency Service receives reports on directors’ conduct, in particular of companies entering formal insolvency procedures.

Cases with reports of director misconduct are considered in line with the Insolvency Service’s acceptance criteria. The most serious cases are vetted and where appropriate taken forward for investigation.

Information from Insolvency Service internal management systems shows the number of cases vetted and investigations commenced with a view to director disqualification in the last 5 years. The latter includes a number of cases where the investigation commenced as a result of information from another source.

Companies vetted in any one year may be taken forward for investigation in a later year. The figures in the table relate to the number of companies not the number of directors. An investigation may encompass more than one company.

The first column excludes companies vetted in compulsory liquidation cases prior to January 2020.

Section 172 of the Companies Act 2006 already requires directors to have regard to the impact of their company’s operations on the community and the environment, amongst other things. The Government strengthened this requirement in 2019 by requiring directors to make an annual statement explaining how they have discharged their section 172 duty in practice over the previous reporting year.

The Government believes the most effective way to encourage companies to address environmental and other challenges is through a transparent corporate reporting framework. This month, the UK became the first G20 country to introduce mandatory reporting in line with the recommendations of the Taskforce on Climate-related Financial Disclosures, for economically significant UK companies. This will ensure that businesses consider the risks and opportunities they face on climate change and encourage them to set out their emission reduction plans and sustainability credentials. The Government has also published a landmark Roadmap on Sustainable Investing, the first phase of which will introduce new economy-wide sustainability disclosure requirements.

The directors of a company have a duty to prepare a strategic report and are responsible for its contents and their judgements. The auditor is required to review the strategic report and, based on the work done during the audit of the accounts, to state whether information in the strategic report is consistent with the accounts and has been prepared in accordance with applicable legal requirements. Both the directors and the auditor are accountable to the shareholders of the company for the contents of the strategic report.

The Financial Reporting Council, through its Supervision Committee, reviews the annual reports of public and large private companies for compliance with the law. The FRC’s corporate reporting review work does not duplicate the role of directors or auditors. Directors are responsible for the judgements in the strategic report, not the FRC’s Supervision Committee.

The Government will publish a post-implementation review of non-financial reporting regulations shortly. The post implementation review will cover both the 2013 regulations, which introduced the requirement for a strategic report, and the 2016 regulations requiring reporting on environmental, social and community matters, applicable to large Public Interest Entities.

The Government introduced new obligations under the Companies (Miscellaneous Reporting) Regulations 2018 effective from 1 January 2020. These included new reporting requirements which give shareholders and stakeholders more information with which to hold boards of directors to account and more visibility for good boardroom practice. Alongside the regulations, the Financial Reporting Council (FRC) amended the UK Corporate Governance Code (the Code) to ensure coherence with the Section 172 statement. The Department also worked with the GC100, which issued guidance on the practical application of Section 172 to help companies, available on the GC100 website.

Whilst it is still relatively early days for these changes, the Department and the FRC continue to monitor their effectiveness. Early indications are that provision of this information is helping shareholders and stakeholders but more can and should be done. The FRC continues to report annually on the Code.

The Regulations provide for a review after five years. This will include an assessment of the impact of increased transparency on the quality of engagement between companies, shareholders and wider stakeholders and the extent to which large private companies have adopted good corporate governance principles.

Section 790ZG of the Companies Act 2006 provides a route for people to apply for their personal details to be withheld from the public register of people with significant control information, where the publication of the person’s link to the company would place the person or their immediate family at risk of harm.

The information is held securely by Companies House and can be accessed by specified public authorities on request. The Gambling Commission are one of the specified public authorities listed under schedule 3 of The Register of People with Significant Control Regulations 2016.

UK listed companies are currently required to report on human rights impacts material to their business as part of their annual reports.

Separately, the Modern Slavery Act specifically requires UK large businesses to publish supply chain transparency statements in a prominent place on their website.