Shareholders are true owner of the company and so they are entitled to have maximum information about the company.
Apart from the legally required disclosure company can communicate information voluntarily.
Below things are usually communicated voluntarily through annual report.
- CEO or Chairman’s statement
- Risk disclodure
- Governance
- Social and environmental reporting
- Other
We just have learned AGM. Now AGM is seen as the most important, and perhaps only, opportunity for the directors to communicate with the shareholders of the company.
Shareholders are true owner of the company and so they are entitled to have maximum information about the company.
But according to legal requirement, shareholder receives the information through the Annual Report and Financial statements.
Apart from the legally required disclosure company can communicate information voluntarily also through various other medium of communication also like press note, management forecast, website.
Company sometimes can include voluntary disclosures in the Annual report instead of making any separate disclosure.
Below things are usually communicated voluntarily through annual report.
– CEO or Chairman’s statement
– Risk disclosure
– Governance
– Social and environmental reporting
– Other
‘The lifeblood of the markets is information and any barriers to the flow represents imperfection. The more transparent the activities of the company, the more accurately securities will be valued.’ – Cadbury Report.
Mandatory disclosure examples:
– Statement of comprehensive income (income or profit and loss statement)
– Statement of financial position (balance sheet)
– Statement of cash flow
– Statement of changes in equity
– Operating segmental information
– Auditors’ report
– Corporate governance disclosure such as remuneration report and some items in the directors’ report (e.g. summary of operating position)
– In the UK, the business review is compulsory
– Risk information on capital cover – Basel 11.
Voluntary disclosure examples:
– Risk information
– Operating review
– Social and environmental information
– Chief executive’s review.
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