'Director know how' is a new monthly article which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.
This month the key issues that should be on your radar are the revised financial reporting standards for the UK, Government proposals on narrative reporting and executive pay, and upcoming changes to the UK's venture capital schemes.
What is the future of UK GAAP?
The UK Accounting Standards Board recently released a revised financial reporting framework, following significant negative feedback on the previous proposals. The ASB has proposed significant changes to the framework first released in October 2010, including dropping their proposal to have EU IFRS apply to additional entities that are not required to account this way by EU regulation and introducing accounting treatments permitted under current accounting standards. These revised standards are currently out for consultation and the QCA Financial Reporting Committee is examining them. For more information, read the ASB's press release and a summary from Ernst & Young about the changes.
Government prepares to overhaul narrative reporting and get tough on pay
Most will have caught in the headlines David Cameron's tough words on 'big rewards for failure' and Vince Cable's announcement in parliament on Government's proposals for executive pay. The Government has announced plans to change remuneration reports, introducing binding shareholder votes on pay, require companies to show how they have consulted employees on pay and amendments to the UK Corporate Governance Code. There will be more detail on these plans in a consultation due out the end of February/early March, which will also include the Government's plans to change the narrative reporting framework. The QCA Corporate Governance and Share Schemes Committees will be reviewing this consultation once it is issued.
New limits for EIS/VCT to come into effect from April 2012
The expansion of the Enterprise Investment Scheme and Venture Capital Trusts is due to come into effect as of 6 April 2012, subject to the UK receiving state aid approval from the European Commission. This includes:
Increasing the number of employees from 50 to 250
Increasing the annual investment limit from £2m to £10m
Increasing the gross assets test from £7m to £15m immediately before the investment (and from £8m to £16 million immediately after)
These new limits will apply for shares issued on or after 6 April 2012 (subject to state aid approval).