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Section 172 Statements

Section 172 Statements

Practical considerations in developing the ‘section 172’ statement for inclusion in a strategic report.

Matt Chapman

Senior Manager, Better Business Reporting

KPMG in the UK


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Section172 deals with the directors’ duty to promote the success of the company for the benefit of shareholders as a whole, having regard to a number of broader matters including the likely consequence of decisions for the long term, the need to act fairly between members of the company, and the company’s wider relationships. The approach required is sometimes referred to as ‘enlightened shareholder value’.

For periods commencing 1 January 2019, the strategic report must include a statement explaining how the directors have had regard to the matters in s172 in performing their duties. Whilst there is no set structure for the statement, guidance on what may need to be included to meet the Companies Act requirement is available in the FRC’s Guidance on the Strategic Report.

This note looks at the practical considerations in applying the guidance to address each component of s172. It covers:

  • How to approach the statement
  • The role of culture in the statement
  • Consideration of long-term factors
  • Stakeholder considerations
  • The need to act fairly between members
  • Other practical considerations

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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