Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government, further to the Written Answer by Lord Nash on 18 September (HL1398), whether they have plans to review the corporate governance of UK-registered companies operating outside the UK, including through subsidiaries and other connected persons.

UK-registered companies are subject to UK company law, which includes a statutory requirement under the Companies Act 2006 for medium sized and large companies to produce an annual strategic report. Parent companies that prepare group accounts must produce a consolidated strategic report relating to the undertakings included in the consolidation.

In the case of UK-registered quoted companies, the strategic report must include information about the company’s employees, and social, community and human rights issues, including any policies in relation to those matters and the effectiveness of those policies, to the extent necessary to assess the development, performance or position of the company’s business.

Additionally, large companies which are public interest entities that employ 500 or more employees must include in the strategic report a non-financial statement containing information on employees and respect for human rights, to the extent necessary for an understanding of the company’s development, performance and position and the impact of its activities.

As such, where a UK registered company operates outside of the UK, including through subsidiaries, its strategic report will, to the extent required by the reporting requirement, contain information in relation to its activities abroad.

The Government Response to the Corporate Governance Reform green paper consultation, published on 29^th August 2017, announced a number of reforms to further strengthen and improve transparency in corporate governance at UK-registered companies, including to introduce secondary legislation requiring companies of a significant size to explain how their directors comply with the existing duty under Section 172 of the Companies Act to have regard to employee and other stakeholder interests.

The Government has no other current plans to review the corporate governance of UK-registered companies operating in the UK or overseas.