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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/Hardman & Co. report on job creation

In August, Hardman & Co., in collaboration with the QCA, published a report that explored the relationship between initial public offerings (IPOs) and job creation. The report, “Good jobs come to those who IPO”, found an especially positive correlation between companies listing and increasing their workforce.

As there is an increasing demand amongst investors and stakeholders alike for businesses to not only maximise profits, but to contribute to broader Environmental, Social and Governance (ESG) goals, the report provides interesting insight into the “Social” aspect of ESG and how public companies contribute to social mobility and wealth distribution. Prior to the official release of the report, we used the data to inform our response to the BEIS audit and corporate governance reform consultation. In our response, we highlighted the need to maintain the attractiveness of our markets by introducing highly burdensome regulation so that companies continue to list and create jobs.

The key findings of the report include (in the first 12 months after coming to market):

  • Companies with a market capitalisation at listing of less than £1bn, on average, grew employee numbers by between 17% and 32%
  • In year two, this increased by a further 10% to 22%
  • Companies that started with a market capitalisation below £500m, on average, grew employee numbers by between 20% and 34%
  • In year two, this increased by a further 11% to 22%.
  • Longer-term perspectives show that the workforce doubles by year four

This demonstrates the important role that our public markets play in creating jobs following an IPO.

To view the report, please click here.

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.

FCA change to Listing Rule for SPACs

At the end of July, the FCA published a policy statement on its proposed changes to the Listing Rules for certain special purpose acquisition companies (SPACs), which includes the final amendments to the Listing Rules and its technical note. The changes to the FCA’s proposed amendments to the Listing Rules include the removal of the presumption that it will suspend the listing of a SPAC when the SPAC identifies a potential acquisition target, provided that it meets certain criteria.

The key proposed amendments include:

  • Lowering the minimum amount a SPAC would need to raise through its initial listing from £200 million to £100 million.
  • Introducing an option to extend the proposed 2-year time-limited operating period (or 3-year period if extended with shareholder approval) by 6 months, without shareholder approval. However, this extension is only available when:

    • shareholder approval of a reverse takeover has been obtained but the takeover has not completed;
    • a general meeting to obtain shareholder approval has been convened;
    • the shell company has announced that a general meeting will be convened for a date specified in the announcement, and that a notice to convene the meeting will be sent within a specified time; or
    • an agreement for a reverse takeover has been entered into but not completed and the company has not made an announcement in accordance with the above point.

The FCA has also made modifications to its supervisory approach to state that it will work with issuers to provide advice prior to admission that they are within the guidance disapplying the presumption of suspension.

The changes to the Listing Rules and note came into force on 10 August 2021.

To view the policy statement, please click here.

FRC Lab newsletter

The FRC’s Financial Reporting Lab (the Lab) recently published its second newsletter for 2021. In this issue, the Lab provides an update on the recent work it has completed and on its ongoing and future projects.

In terms of its projects, the Lab provides updates on its:

  • Reporting on stakeholders and section 172 statements – the report, which was published in July, builds on the tips on Section 172 statements that the Lab published last year. The report highlights that information on stakeholders and on decisions can help investors understand how a company is progressing in fulfilling its purpose and achieving long-term success. Section 172 statements can then be a helpful bridge between the two types of information.
  • Reporting of risks, uncertainties, opportunities – the Lab has completed its engagement with companies, investors and other stakeholders relating to the project and it will be released in the autumn. The Lab’s engagement showed that an increased focus on risk during the pandemic has enhanced some of the external reporting of risks, opportunities and scenarios, and highlighted some areas where this is possible.
  • Environmental, Social and Governance (ESG) – in the autumn, the Lab will be launching an ESG data project which will explore the production and consumption of ESG information.
  • Sustainability Accounting Standards Board (SASB) in the UK – in 2020, the Lab undertook some work looking into SASB reporting in the UK and will be looking at this area further in the future.
  • ESEF reporting – the Lab is currently reviewing a set of the digital filings that companies will be required to prepare for their 2021 reports. A best practice report will be published in the autumn.

To view the newsletter, please click here.

FRC Enforcement division

The FRC recently published its third Annual Enforcement Review. The report reveals that the FRC’s Enforcement division has grown by 44% in the last year in order to improve the effectiveness of the resolutions of cases and to combat the increase in investigations being opened.

The report highlights the FRC’s commitment to improve the quality of audit, with a record number of cases being resolved through engagement (up from 31 to 48). In matters which have been subject to enforcement action, 28 non-financial sanctions have resulted. These have included requirements for audit firms to undertake root cause analysis to ensure the underlying reasons for any failures are swiftly addressed and for training programmes to be implemented. Financial sanctions also play a significant role, with the total value of sanctions increasing from £16.5 million to £16.7 million.

The review also considers the challenges for preparers and auditors of financial statements

To view the FRC’s Annual Enforcement Review, please click here.

FRC Future of Corporate Reporting feedback

At the end of July, the FRC published its feedback statement following the publication of its paper on the Future of Corporate Reporting. In total, there were over 75 responses to the consultation, including the QCA’s (available here).

Overall, the FRC states that the majority of respondents were welcoming of their initiative. There was broad support for:

  • a model accommodating the interests of investors and other stakeholders
  • the concept of a reporting network
  • a model that puts digital first; and
  • standardisation of non-financial reporting.

However, there was concern raised, throughout the responses received, over the practical challenges of implementing the proposals. In particular, concerns were raised over the level of audit and assurance that would be required over the different reports within the network. There is also reference in the report of the need to engage small and medium-sized entities on any new model that will be implemented.

To view the feedback statement, please click here.

ERS Bulletin

On 17 August, HMRC published its Employment Related Securities (ERS) Bulletin 39. ERS Bulletins provide information and updates on developments relating to employments related securities, including the tax-advantaged employee share schemes.

This particular edition provides information on:

  • Contacting HMRC
  • ERS online service – in terms of submitting annual ERS returns
  • Annual returns – these should be submitted on or before 6 July in order to avoid late filing penalties being issued
  • Ceasing a scheme no longer operating or registered in error
  • Net settlement and annual reporting requirements
  • Non-Statutory Clearance (NSC) process
  • HMRC’s contact details for share schemes enquiries.

If you wish to view the ERS Bulletin 39, please click here.

FRC Illustrative Auditor’s Report

On 24 August, the FRC published an updated version of its bulletin on illustrative auditor’s reports on private sectors financial statements, clarifying that the bulletin is applicable to UK financial statements for periods commencing after 1 February 2020, with filing after 31 December 2020. 

To view the updated bulletin, 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. 

IASB and UKEB field testing Disclosure Pilot

The UK Endorsement Board (UKEB) in conjunction with the International Accounting Standards Board (IASB) are seeking UK companies to field-test the proposals contained in ED/2021/3 Disclosure Requirements in IFRS Standards – A Pilot Approach (the Disclosure Pilot).  This exposure draft proposes to replace mandatory disclosure requirements with an objectives based regime, and proposes amendments to the disclosure requirements in IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits. Field testing provides the opportunity to test the proposals, identify any issues specific to UK companies, and influence the further development of these proposals by the IASB. The UKEB will use the results of field testing to prepare the UKEB Comment Letter to the IASB, and all results of the field testing will be shared with the IASB.

The IASB has recently extended the deadline for the Disclosure Pilot until 12 January 2022, so they are now able to offer a wider and more convenient range of dates for field testing.

Field testing involves testing the IASB’s proposals, by either:

  • preparing mock disclosures applying the proposed requirements for IFRS13 and/or IAS 19; and/or
  • completing a questionnaire about the mock disclosures including questions about application; and/or
  • discussing with UKEB/IASB staff the process or impact of preparing the mock disclosures.

The UKEB are keen to understand the impact of the proposals on companies of all sizes, and are happy to be flexible to find a scope of field testing that fits with your ability to participate.

Please contact the UKEB on if you are interested in participating or would like to learn more about the field tests.


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 responded to the BEIS consultation on audit and corporate governance reform.

To view the response, please click here.

The QCA also responded to the Best Practice Principles for Shareholder Voting Research stakeholder survey.

To view the response, please click here.

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

  • HM Treasury: UK Prospectus Regime Review (Deadline: 24 September 2021)

    • HM Treasury published the review following the recommendation within Lord Hill’s Listing Review. The matters which HM Treasury are seeking views on, amongst other issues, include:

      • its overall approach to reform, including that admissions of securities and the public offer rules are dealt with separately;
      • proposed new rules on admissions to trading on regulated markets, including whether the FCA should be granted discretion to set rules on whether or not a prospectus is required when securities are admitted to trading;
      • prospectus content and ancillary powers for the FCA, including on the potential removal of the requirement to review prospectuses;
      • how HMT can encourage the inclusion of more forward-looking information;
      • how a revised regime would impact companies trading on MTFs;
      • and the revised scope of the UK’s public offering rules.


  • FCA: Primary Markets Effectiveness Review (Deadline: 14 September 2021)

    • The consultation includes a series of proposed reforms to improve the effectiveness of UK primary markets, alongside a discussion of how the FCA might continue to develop and reform the listing regime to ensure the UK remains competitive and dynamic. Some of the key proposals include: changes to dual class share structures; free float requirements; market capitalisations thresholds; and changes to certain rules and regulations. In addition to this, the FCA is seeking views on four potential models for the structure of the UK listing regime.


  • HM Treasury: Wholesale Markets Review (Deadline: 24 September 2021)

    • The consultation was released following the Lord Hill Review and proposed changes to the UK’s wholesale markets. Regarding SME markets, the Government is exploring a new class of trading venue with regulatory requirements tailored for smaller SMEs. To do so would require amendments to MAR, a new offering document regime and the creation of eligibility criteria for a smaller subset of SMEs within the current MiFID II definition. The key regulatory change would be the reduction of company disclosure requirements.


  • IASB: Third Agenda Consultation (Deadline: 27 September 2021)

    • The consultation is seeking views on what the Board’s priorities should be over the next five years. In particular, they would like to hear views on: the strategic direction and balance of the Board’s activities; the criteria for assessing the priority of financial reporting issues that could be added to the work plan; and new financial reporting issues that could be given priority in the Board’s work plan.


  • HM Treasury: Power to block listings on national security grounds (Deadline: 27 August)

    • HM Treasury have released a consultation proposing to give the Government the power to block listings on the basis of national security concerns. The rules are intended to align with the existing listing process, but will require companies to make certain additional disclosures. This includes: information about the issuer; business overview; management; major shareholders; and the offer. 


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

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