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QCA publications and policy updates

This section of the Directors’ Knowhow features all of the publications produced by the QCA and any relevant updates that have occurred over the last month.

QCA Practical Guide to ESG

On 15 April 2021, the QCA held an online launch event for the release of the new QCA Practical Guide to ESG. The new QCA guide provides practical steps that small and mid-sized quoted companies can take to develop how they examine and disclose their approach to the ESG issues that matter most to them. The Guide outlines an approach that is proportionate to the resource constraints of smaller companies, whilst giving investors and other stakeholders the information they require.

The guide sets out 5 steps that company boards and senior management can take in order to take ownership of ESG and start positive conversations with investors. These are:

  1. Develop a clear purpose statement – this describes the overarching reason that the company exists, how it conducts itself and the impact it has on who it is serving. Companies use purpose statements to help drive their mission and corporate goals.
  2. Undertake an ESG materiality assessment – to understand which environmental or social issues pose opportunities and risks to the business model, today and in the future.
  3. Be aware of what others are saying and be prepared to respond – undertake a review to understand where your company may be being rated and assessed, and what this is saying.
  4. Assess what data you have and understand what data you will need to gather – once you have identified what issues you must discuss and what it is you want to be known for – those for which your business has a comparative advantage – the next step is to identify whether you can substantiate your story.
  5. Take control: decide what to disclose and where; be proactive with your communication – companies communication with stakeholders in many different ways, all of which may be appropriate for incorporating ESG information.

In addition to the above, the guide also include a list of useful sources of information.

To view the new guide, please click here.

QCA/YouGov BEIS consultation survey

As was mentioned in our Monthly Policy Update email, the QCA, in conjunction with YouGov, will shortly be releasing a survey on the BEIS audit and corporate governance reform consultation. The survey will ask company directors and investors some key questions about their attitudes towards the proposed reforms, such as the extension of the definition of a Public Interest Entity (PIE) and the introduction of a UK-style Sarbanes-Oxley internal controls regime. The survey will be used to feed into our response to the consultation and provide evidence to reinforce the concerns we raise about the potentially negative impact that the reforms will have on the growth of companies.

The survey will be relatively comprehensive and thus longer than our usual surveys. However, given the significance of the consultation, we would greatly appreciate the extended time respondents will have to take to complete it, and we would be grateful if you could also get your colleagues to complete it.

The survey results will go a long way to provide the evidence to help protect the interests of our members.

There is further information on the consultation in the policy section below. We will invite you to take part in the survey shortly.

Reports, guides and regulation

This section features some of the key legislative/regulatory developments and changes, as well as any new reports or guidance issued by industry bodies or regulators, over the last month.

FRC approach to audit supervision

At the end of March, the FRC published a new report on the regulators approach to audit supervision. The report sets out what firms can expect from the FRC in the course of supervision with a focus on audit quality and firm resilience. The report sets out the FRC’s current supervisory activities under existing powers, rather than those proposed in the BEIS audit and corporate governance reform consultation.

The report states that, as the UKs audit regulator, the FRC:

  • issues ethical, audit and assurance standards and guidance;
  • inspects the quality of audits performed at public interest entities (PIEs);
  • sets eligibility criteria for auditors and oversee delegated regulatory tasks carried out by professional bodies such as qualification, training, registration and monitoring of non-public interest audits; and
  • brings enforcement action against auditors, if appropriate, in cases of a breach of the relevant requirements.

The regulator has three supervisory teams: Audit Firm Supervision team; Audit Market Supervision team; and Audit Quality Review team.

To view the report, please click here.

FRC outlines new approach to corporate reporting reviews

Towards the end of March, the FRC announced a new approach to publishing its corporate reporting reviews. As part of this, the FRC has, for the first time, published summaries of its corporate reporting reviews, which it conducts to assess whether company reports and accounts comply with the relevant accounting and reporting requirements.

The decision to publish its corporate reporting reviews follows Sir John Kingman’s recommendation in his review of the FRC. At present, the FRC can only publish the summaries of its reviews if it has the consent of the individual company. However, the Government is currently consulting to potentially allow the regulator to publish summaries without the consent of companies, once safeguards around confidentiality have been put in place.

To view the summaries of the companies in the FRC’s corporate reporting reviews, please click here.

FCA Primary Markets Bulletin

On 29 March 2021, the FCA published the 33rd edition of its Primary Market Bulletin. The key points contained in the bulletin include:

  • The FCA’s response to the feedback it received on its review of the delayed disclosures of inside information notifications under Article 17.4 of the Market Abuse Regulation.
  • The FCA’s findings of the 2020 review of UK issuers’ announcements of changes to total voting rights and the effect of major shareholding notifications. This review assessed whether the expected notifications were made in accordance with the requirements of DTR 5 (vote holder and issuer notification rules). The review found that a significant number of shareholding notifications had not been submitted. The FCA reminds issuers to report on changes to total voting rights clearly and on time as required by DTR.
  • The outcome of the FCA’s 2019 review of disclosures by UK issuers on the requirements set out in DTR 4.3A.
  • A reminder to investors of their notification and disclosure obligations under the Short Selling Regulation.
  • Information on the FCA’s new online portal for submitting major shareholding notifications.

To view the Primary Markets Bulletin, please click here.

FRC publishes its strategy

After a period of consultation, the FRC has published its Strategy, Plan and Budget for 2021/22. The FRC states that it received broad support for its transition towards the new Audit, Reporting and Governance Authority (ARGA). The FRC’s plan takes into account the Government’s proposals in its recently released consultation on audit and corporate governance reform, as well as outlining the steps towards the growth that will be required to deliver new and enhanced regulatory activities.

The QCA responded to the FRC’s Draft Strategy, Plan and Budget (available here), where we expressed the need for proportionality in the regulators work, and highlighted our concern over the increases to the preparers levy.

The FRC has since revised down the preparers levy and reduced its overall cost increase from £6.8 million to £6.1 million.

To view the Strategy, Plan and Budget, please click here.

Takeover Panel response to consultation

Following its consultation on conditions to offers and the offer timetable (which the QCA responded to (available here)), the Code Committee of the Takeover Panel published its response on the proposed changes. The Code Committee has adopted the amendments that were proposed within the initial consultation, but has made a few amendments.

The key changes to the Code that have been adopted are summarised below:

  • Various changes to the operation of the offer timetable in order to simplify it to accommodate the potentially lengthy timeframes that may be required to satisfy regulatory clearances and official authorisations.
  • The introduction of a single date by which all of the conditions to an offer must be satisfied. This has removed the distinction between the date the acceptance condition needs to be satisfied and the date by which other conditions need to be satisfied.
  • The removal of special treatment given to conditions and pre-conditions relating to the clearance of an offer by the Competition and Markets Authority or the European Commission. 
  • The introduction of a mechanism for an offeror or the offeree to request that the Panel suspends the offer timetable if one or more conditions relating to an official authorisation or regulatory clearance have not been satisfied by the date which is two days before Day 39.
  • The introduction of acceptance condition invocation notices.
  • The introduction of an ability for offeree company shareholders to withdraw their acceptance at any time prior to the satisfaction of the acceptance condition.
  • A requirement for an offeror to set a “long-stop date” for a contractual offer.

The changes to the Code will come into force on 5 July 2021 and will apply in relation to all firm offers announced on or after that date.

If you wish to view the Takeover Panel’s response, you may do so here.

Chancellor statement on the Listing Review

After the Treasury published Lord Hill’s report on the UK Listing Review, the Chancellor issued a statement setting out the Government’s intentions in response to the recommendations in the review. As part of this, the Government has made commitments in relation to all of the recommendations in Lord Hill’s report. This includes an agreement for the Chancellor to present an annual report on the State of the City to Parliament, which will begin in 2022.

In addition, the statement includes a commitment to undertake a fundamental review of the UK’s prospectus regime, as well as the Treasury considering an additional “growth” or “competitiveness” objective for the FCA. This compliments the FCA’s commitment to bring forward a series of consultations on changes to it rules, including on dual class share structures, free floats and SPACs.

In order to improve the efficiency of further capital raisings by listed companies, HM Treasury agrees that there is a need to bring together expertise in this area and intends to convene a group on this technical area.

Finally, the Chancellor confirmed that BEIS will be taking forward the Listing Review’s recommendations on how technology can be used to improve retail investors involvements.

The QCA will continue to work with HM Treasury, BEIS and the FCA in order to ensure that the recommendations are taken forward in a timely manner and that they take account of the interests of the small and mid-cap community.

To read the statement, please click here.

Surveys, projects and questionnaires

This section features surveys or questionnaires submitted by industry bodies or regulators that are relevant to small and mid-size quoted companies. 

QCA/YouGov Sentiment survey

The QCA’s bi-annual sentiment survey – which provides insight into the outlook of small and mid-sized quoted companies – is currently in the field and we would like to invite you to take the survey. The survey provides us with valuable information that we share with companies, investors and policymakers, such as the Government and regulators.

For this survey, we have a particular focus on:

  • How this year has gone for your organisation and your outlook for 2021
  • How you are preparing for employees returning to the workplace as lockdown restrictions lift
  • How much companies are paying for Directors & Officers (D&O) liability insurance and how this has changed over the last 12 months

The survey should only take a few minutes of your time and can be found here.


This section provides an update of any recently submitted QCA consultation responses, as well as the consultation responses the QCA is currently drafting.

QCA policy consultation responses

The QCA’s Accounting, Auditing and Financial Reporting Expert Group contributed to our response to the FRC’s Draft Strategy, Plan and Budget 2021/22.

To view the response, please click here.

The QCA is seeking views on the below consultation(s):

  • BEIS: Restoring trust in audit and corporate governance

    • On 18 March, BEIS published its consultation on the three audit-related reviews, Restoring trust in audit and corporate governance. The consultation distils the 155 recommendations included within Sir John Kingman’s review of the FRC, Sir Donald Brydon’s review of the quality and effectiveness of audit and the CMA’s market study on statutory audit. (Deadline: 8 July)

  • BEIS: Consultation on requiring mandatory climate-related financial disclosures by publicly quoted companies, large private companies and Limited Liability Partnerships (LLPs)

    • This consultation builds on the expectation set out in the government’s 2019 Green Finance Strategy, that all listed companies and large asset owners should disclose in line with the Task Force on Climate-related Financial Disclosure (TCFD) recommendations by 2022. (Deadline: 5 May)

  • HM Treasury: Enterprise Management Incentives

    • In the Budget 2021, the Chancellor announced that HM Treasury had published a call for evidence on Enterprise Management Incentives (EMI). The consultation will explore whether and how more companies should be able to access the scheme to ensure it provides support for companies to recruit and retain the best talent so they can scale up and grow. (Deadline: 26 May)

  • FCA: Changes to UK MiFID’s conduct and organisational requirements

    • This consultation covers two areas of the conduct and organisational rules in UK MiFID: research and best execution reporting. The proposed changes aim to reduce compliance costs without compromising high standards of investor protection. As part of the consultation, the FCA is proposing to create an exemption for SME research below £200m provided the research is offered on a rebundled basis or for free, as well as a proposal to establish an industry-led initiative to fund research for SMEs.  

If you have any comments you wish to contribute to the above consultation(s), please get in touch with Jack Marshall, Senior Policy Adviser,


This section provides information on any upcoming events the QCA may be holding or relevant events that members may be interested in.

QCA Share Plan event

The QCA is holding an event, Share Plan Considerations for Smaller Quoted Companies, which is due to take place on Wednesday 19 May 2021, 9.00am – 10.00am. The webinar will outline and explain the share schemes available to small and mid-sized quoted companies, as well as highlighting the issues these companies may face when implementing their own share plans.

Members of the QCA’s Share Schemes Expert Group will share their views on topics, including:

  • What is the company seeking to achieve by implementing a share plan?
  • What are the main types of plans to consider?
  • What are the legal considerations when establishing and operating share plans? 
  • What are the general constraints?
  • The administrative aspects of operating a share plan. 

Further details, including on how to book, can be found here.

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