We’ve looked recently at several initiatives to reduce disclosure and compliance obligations for smaller public companies. SEC Chair Paul Atkins returned to the topic in a recent speech:

• One of my highest priorities with respect to the SEC’s disclosure rules is to scale the requirements with the company’s size and maturity. Balancing disclosure obligations with a company’s ability to bear the burdens of compliance is particularly important where Congress has directed the SEC to promulgate a disclosure rule whose costs may have a disproportionate impact on some companies.
• For newly public companies, the SEC should consider building upon the “IPO on-ramp” that Congress established in the JOBS Act. For example, allowing companies to remain on the “on-ramp” for a minimum number of years, rather than forcing them off as soon as the first year after the initial offering, could provide companies with greater certainty and incentivize more IPOs, especially among smaller companies.
• Raising capital through an IPO should not be a privilege reserved for those few “unicorns.” More and more, public investments are concentrated in a handful of companies that are generally in the same one or two industries. Our regulatory framework should provide companies in all stages of their growth and from all industries with the opportunity for an IPO, particularly one that represents a capital raising mechanism for the company, instead of a liquidity event for insiders.

We can no doubt expect some rule-making on that front soon. Getting in on the act, the UK government recently issued a statement: Regulation Action Plan Update, and Modernisation of Corporate Reporting. Here’s some of what’s proposed:

• Firstly, the government will aim to exempt most medium-sized private companies from the need to produce a Strategic Report as part of their Annual Report and Accounts. This means that medium-sized businesses who can benefit from existing exemptions will no longer need to prepare narrative reporting, so they can focus on running their business rather than producing information that is disproportionate to their scale and ownership model.
• secondly, the government will aim to exempt wholly owned subsidiaries from the need to produce a Strategic Report where their disclosure is included in the Annual Report of a UK parent. This will eliminate duplicative reporting within corporate groups.
• thirdly, the government will aim to remove the requirement for any company to produce a Directors’ Report as part of their Annual Report and Accounts. This report is often seen as a cluttered, compliance-driven document that has accumulated numerous disclosures over time, which offers little useful insight for investors…

And then, more broadly:

• Stakeholder engagement over the summer indicated that only reviewing non-financial reporting would fall short of what is needed. Businesses, investors and professional bodies have urged the government to adopt a holistic approach, to consider the Annual Report and Accounts in its entirety.
• The government has listened and expanded the scope of its reforms, now framed as the “Modernisation of Corporate Reporting” programme. A broad consultation will be delivered in 2026. To meet what industry has asked for, we will co-design reforms covering remuneration reporting, corporate governance reporting, the financial reporting framework as well as improving regulatory alignment across reporting frameworks and consider how corporate reporting should function in a digital age.
• This broader initiative reflects a commitment to far-reaching reform, aiming to restore company reporting to its original purpose, providing concise, decision-relevant information for investors and creditors while removing unnecessary burdens on business.

Sally Baker, Head of Corporate Reporting Strategy at the Institute of Chartered Accountants in England and Wales, commented in an article that the current financial reporting regime “now falls under the old adage of ‘trying to keep everyone happy but pleasing no one’.” She went on: “A sharp focus and articulation of the purpose of the report and its users is a critical starting point to any meaningful reform. It’s expected the Government will set out a clear proposition in the consultation: that the purpose of the (annual report and accounts) is to provide decision-useful information for investors and creditors.”

The proposition may be somewhat clear in isolation, but of course there’s no easy test for determining what’s eternally decision-useful and what isn’t. The assertion that for medium-sized companies, almost any form of narrative reporting is “disproportionate to their scale and ownership model,” seems excessive (to take just one example, the financial statements wouldn’t typically provide key information about sales trends, changes in customer and product mix and the like, which might be crucial to drawing appropriate conclusions from changes in reported revenue). Baker thus walks an understandably fine line between boosterism and caution: “While there may be clarity around the target destination being the UK having the most streamlined and proportionate corporate reporting framework, how we get there and how long the journey will take is markedly less clear. The proposed path may also contain some bold and ambitious hurdles, deliberately placed to stimulate debate on the best way forward.” Place your bets now for which jurisdiction ultimately wins the race for best streamlining and proportionality!

The opinions expressed are solely those of the author.