By David McBain, Partner, Johnston Carmichael Chartered Accountants

The Department for Business, Innovation, Science and Trade (DBIST) consultation, titled Modernising Corporate Reporting to support long-term economic growth, was launched on 7 September 2026. With the focus apparently on corporate entities governed by the Companies Act 2006, rather than building societies falling under the Building Societies Act 2006, one could easily be forgiven for thinking there is limited application to societies. However, a closer look reveals a number of key provisions and themes that may well significantly shape the future of corporate reporting for the building societies sector.  

It is important to note that this process is only at a consultation phase and there is no guarantee that the suggested changes will be implemented. However, the potential key primary impacts centre around the following areas:

1. Scope Expansion to Non-Corporate Entities

Although the baseline proposals target corporate entities, the government explicitly notes that it would consider relevant changes to reporting requirements for other types of entities in due course. Historically, UK building society reporting legislation has heavily mirrored corporate accounting frameworks and therefore any major alterations would be likely to trickle down to the framework building societies use. As a result, and as a minimum, the new proposals give a significant steer on the future direction of travel for building societies.

2. Streamlining Narrative and Strategic Reporting

A core pillar of the proposed new framework would be moving from a rules-based to a principles-based framework.

• Focus on Materiality: If the principles are applied to building societies they can expect to see a shift where prescriptive disclosure lists are replaced by a core set of baseline disclosures (covering business model, strategy, principal risks, and key relationships). Greater flexibility would be given to directors to decide what is financially material to their business.
• Reduction in Administrative Burden: Building societies that operate within a larger group structure, or those holding mid-sized subsidiary businesses, stand to benefit from proposed relaxations around producing separate strategic and directors' reports.

3. Digital-First Communications and Virtual AGMs

The consultation places heavy emphasis on building a framework that is "fit for the future" through digital overhaul.

• Default Electronic Communication: The proposals seek to make electronic communications the default option for interacting with shareholders/members, eliminating the need to gain prior permission before sending out digital annual reports. For building societies with vast member bases, this could significantly cut print and postage costs.
• Virtual General Meetings: The consultation proposes legislative clarity that would make it easier for societies to provide virtual-only AGMs.
• Structured Data: There is a planned greater emphasis on using iXBRL and machine-readable data formatting for online reporting.

4. Simplified Governance and Remuneration Disclosures

The government aims to simplify and relocate corporate governance and remuneration reporting. Many building societies voluntarily elect to apply the UK Corporate Governance Code so may see a shift of certain corporate governance reporting requirements from the company to the group level, and moving minor disclosures out of the primary annual report onto corporate websites or digital portals.

5. Dividend and Solvency-Based Capital Changes

For building societies that issue Core Capital Deferred Shares (CCDS) or other distributable items, the proposed shift from rigid, complex capital maintenance rules to a solvency-based distribution regime would change how Boards evidence distributions. Boards would likely have to make a formal statement confirming that a distribution does not impair the entity's status as a going concern.

Summary

The DBIST consultation remains open for stakeholder feedback until 30 November 2026. Building societies may wish to engage with the consultation recognising that their future corporate reporting regime is likely, as a minimum, to be heavily influenced by any changes concluded on via this consultation.

A formal outcome of the consultation is expected by May 2027.