Are you ready for the biggest governance changes in years? 

Company law and financial reporting are both changing at once. Neither is optional, and neither needs to be a crisis, provided leaders treat it as their problem, not just their finance team’s. 

For most of the last decade, the rules on how UK companies file, report and disclose have stayed largely stable. That’s changing, and the businesses caught out will be the ones that assumed someone else was watching. 

One change affects who can see into your business. The other affects how your numbers are measured. Together, they are the biggest shift in governance and reporting that many leaders will have faced in their careers. 

GETTING READY FOR THE BIGGEST GOVERNANCE CHANGES IN YEARS

A more visible register

Companies House has spent the last two years turning itself from a passive filing archive into an active check on who owns and runs UK companies. Directors and people with significant control now have to verify their identity and register. Businesses once kept privately must now be filed and made visible instead. 

The next stage is bigger. From April 2028, small companies and micro-entities will need to file full profit and loss accounts. A late concession means they’ll be able to opt out of having that P&L published on the public register, even though filing it becomes compulsory either way. Many owner-managed businesses have never had to prepare this information for the public record. Soon, most will, whether or not they use the opt-out. The practical effect: More of your business becomes visible to Companies House and the authorities, and in turn to competitors, lenders and the market too, unless you actively choose otherwise. 

A new duty to prevent fraud

The same legislation introduced a further change worth knowing. Since 1 September 2025, large organisations, broadly, those meeting two of three tests: more than 250 employees, turnover above £36m, or a balance sheet above £18m, can be prosecuted if an employee, agent or subsidiary commits fraud for the firm’s benefit, even if leadership had no knowledge of it. The only defence is having reasonable fraud prevention procedures in place, formally documented, not just assumed. 

It sits alongside a parallel wave of change on the employment side, the Employment Rights Act 2025, and between the two, few areas of compliance are standing still this year. 

FRS 102: a different set of numbers

FRS 102, the accounting standard behind most UK company accounts, is undergoing its biggest overhaul since it was introduced, bringing UK reporting closer to international rules. The most significant change is to leases. 

Under the new rules, most leases, property, vehicles, and equipment move onto the balance sheet as an asset and a liability, rather than sitting as a simple cost. Nothing about the business changes, but the numbers describing it do: EBITDA, gearing and headline profit can all move, sometimes significantly, without a single commercial decision being made. The change applies to accounting periods beginning on or after 1 January 2026, under Financial Reporting Council amendments issued in March 2024. 

That matters well beyond the accounts. Banking covenants are often written around EBITDA or gearing. Bonus schemes are frequently tied to profit metrics. Any business planning a raise, sale or acquisition in the next two years will be judged on numbers that now look different, whether the business has actually improved or not. 

Two reforms, one leadership test.

Everything above is about how the business looks on paper: what’s visible on the public register, and what the numbers say. But it’s only half of what’s changing. At the same time, the Employment Rights Act 2025, described as the biggest change to UK employment law in a generation, is reshaping the other side of the business: how organisations recruit, manage and support their people. We’ve covered what that means for your work environment in a separate article. 

Put the two side by side, and a pattern emerges. Both reforms: 

1. Shift the burden of proof onto the organisation: Reasonable fraud prevention procedures on one side, fair and well-evidenced people processes on the other. 
2. Raise the cost of treating compliance as a document exercise rather than a change in how people actually behave day to day. 
3. Reward the same instinct: Acting early, involving leadership directly, and building the right culture and controls before the deadline forces the issue. 

The businesses that come through both changes well will be the ones already asking two questions: Do our numbers tell an accurate story, and do our people processes stand up to scrutiny? If the answer to either is uncertain, now is the time to find out, not after the event. 

What good preparation looks like

The businesses that handle this comfortably are acting now, not later. They’re mapping their lease and contract exposure so there are no surprises. They’re modelling what the changes do to EBITDA, covenants and any performance-linked pay, so the conversation with the bank or the board happens on their terms. And they’re putting it on the leadership agenda, not leaving it as a line item nobody outside finance reads. Above all, they’re talking to their auditors, lenders and advisers early, while there’s still time to plan, rather than just time to react. 

Getting ahead, not catching up

None of this is a crisis if it’s handled well. Businesses that treat it as routine housekeeping, addressed early, will spend the next two years focused on growth. Those that don’t will spend them catching up, and that difference usually comes down to one thing: Having the right people around the table before the deadline arrives, not after. 

If you require assistance with any of the topics covered in this blog, our Audit, Business Advisory, Office of the CFO, or People specialists are here to help. Please do not hesitate to get in contact with Hugo Hill, Jordan Taylor, Alexandra Wheelan, Louise McCosh, Sean McAuley or your usual AAB contact.