Directors' Knowhow is a monthly article which highlights changes and updates of relevance to small and mid-size quoted companies.
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.
ICSA updated guidance about directors’ duties
On 25 August, the Chartered Governance Institute published updated practical guidance for directors of companies about their general duties under the Companies Act 2006. This includes an additional section on the new section 172 reporting requirement.
The guidance covers the key elements of the provisions under the Act and offers practical guidance for directors relating to these provisions. This includes:
- Section 171: Duty to act within powers
- Section 172: Duty to promote the success of the company
- Section 173: Duty to exercise independent judgment
- Section 174: Duty to exercise reasonable care, skill and diligence
- Section 175: Duty to avoid conflicts of interest
- Section 176: Duty not to accept benefits from third parties
- Section 177: Duty to declare an interest in a proposed transaction or arrangement
- Section 182: Declaration of interest in existing transaction or arrangement.
If you wish to view the guidance, please click here.
FCA statement on accounting lease modifications
The FCA has announced temporary relief for issuers who choose to use the amended IFRS 16 during the current coronavirus pandemic. In May, the International Accounting Standards Board (IASB) made an amendment to IFRS 16 (Covid-19-related rent concessions), which provides practical relief to lessees in accounting for rent concessions. The amendment is effective for reporting periods beginning on or after 1 June 2020 in relation to Covid-19-related rent concessions that reduce lease payments due on or before 30 June 2021.
However, the amendment is yet to be formally adopted in line with the necessary EU endorsement procedure, and as such, not available for use by any issuers required by the Transparency Directive to use EU-adopted IFRS.
Despite this, the FCA has confirmed that they will permit issuers to use the modified IFRS 16 rather than the IFRS 16 as currently adopted by the EU on the following two conditions:
· Issuers must apply the accounting treatment to those transactions as foreseen in the IFRS 16 amendment.
· Issuers must disclose their use of the amendment as issued by the IASB in the notes to the financial statements.
The relief applies to all listed companies that are required to comply with DTR 4.1 and DTR 4.2 and that are required to prepare their accounts in accordance with EU-adopted IFRS. This does not include issuers with their securities admitted to AIM or AQSE.
To read the announcement, please click 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
On 10 August 2020, the QCA’s Share Schemes Expert Group and Tax Expert Group contributed to the response to the Office of Tax Simplification’s call for evidence on the principles of Capital Gains Tax.
To view the response, please click here.
The QCA is seeking views on the below consultations:
- FCA: Proposals to improve climate-related disclosures by listed companies
- IASB: Exposure Draft: General Presentation and Disclosures (Primary Financial Statements)
- OTS: Capital Gains Tax review: Technical detail and practical operation of CGT
If you have any comments you wish to contribute on either of these consultations, please get in touch with Jack Marshall, Policy Adviser, firstname.lastname@example.org.
This section provides information on any upcoming events the QCA may be holding or relevant events that members may be interested in.
FRC and IASB outreach event
The FRC and the IASB are jointly holding an outreach event on 7 September 2020, 2.00pm – 4.00pm, to discuss the IASB’s Request for Information: Comprehensive Review of the IFRS for SMEs Standard.
Amongst other things, the review is considering some of the recently issued IFRS Standards that have not yet been reflected in FRS 102. The event will explore the following key topics:
- The IASB’s approach to its Review
- Aligning the IFRS for SMEs Standard with IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases
- Possible future development of FRS 102
The discussion will be held on Microsoft Teams and will consist of an expert panel of:
- Darrel Scott, IASB Board Member
- Francoise Flores, IASB Board Member
- Jenny Carter, FRC Acting Director, Accounting and Reporting Policy
If you would like to attend this event, please contact L.email@example.com.