INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer
which was launched by the previous government towards the end of its term in office. A num - ber of changes have already been introduced which are aimed at, or will have the effect of, reducing the disclosures expected by compa - nies. For example, companies are only subject to certain reporting requirements if they meet prescribed size thresholds, with the effect that the greatest level of disclosure is expected from the companies with the largest employee head - count, turnover and balance sheet totals. From April 2025, the monetary thresholds used for the classification of companies have been increased by approximately 50%, which according to the government will result in up to 132,000 com - panies moving to a smaller size category. This is substantially larger than the increase which was introduced to the equivalent EU monetary thresholds in 2024. Certain disclosures viewed as being unnecessary or duplicative are also being removed from the directors’ report and the directors’ remuneration report which make up part of the annual report and accounts com - panies need to produce each year under the UK reporting regime. It seems to us there is significant scope for further lightening of reporting burdens – the momentum to the removal of regulatory burden in financial services regulation is materially fur - ther progressed than that for wider corporate reporting – if UK Prime Minster Keir Starmer’s commitment to removing 25% of the cost of regulation for businesses is to be achieved in the near future. In Australia, the adoption of the Fifth Edition of the ASX Corporate Governance Principles and Recommendations, which was expected to apply to listed entities in place of the Fourth Edition for financial years commencing on or after 1 July 2025, was cancelled in February
this year. The updated edition would have intro - duced significant changes, including to embrace the importance of a company’s relationship with its shareholders and of board and work- force diversity. Aspects of the draft Fifth Edition were negatively received by certain parts of the governance ecosphere, and ultimately the ASX Corporate Governance Council, the independ - ent body charged with drafting the updated edi - tion, was unable to agree a final text. The Fourth Edition, published in 2019, therefore remains in place as the standard to be applied. The amendments made to the EU monetary thresholds in 2024 lifted a number of companies out of the scope of the Corporate Sustainabil - ity Reporting Directive (CSRD), as well as other EU reporting requirements. However, the EU Commission is proposing amendments to the size thresholds in the Omnibus Package which would have a greater impact on the applicabil - ity of the CSRD and the EU Taxonomy for sus - tainable activities. Amongst the Omnibus pro - posals are measures which would significantly increase the size threshold based on employee numbers for determining applicability of these legislative instruments and would require that the employee number threshold should always be met (under the current approach any two out of the three threshold criteria need to be met to bring an entity in scope). As well as amendments to the thresholds for applicability, the Omnibus package also contains measures to simplify the EU’s sustainability framework (which is highly technical and which many organisations have struggled to implement) and measures have already been passed to postpone the report - ing requirements contained in the CSRD and Corporate Sustainability Due Diligence Direc - tive (CS3D) for certain companies. Whilst the measures are broadly welcomed, proposing changes so soon after the framework has been
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