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Directors' Knowhow is a monthly article which highlights changes and updates of relevance to small and mid-size quoted companies.

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 Remuneration Committee Guide


The QCA released its revised Remuneration Committee Guide. The new guide has been prepared to assist remuneration committee members and chairs to be effective in their roles, and takes account of the interests of shareholders, executives, the wider workforce and other stakeholders in small and mid-sized quoted companies. The Guide sets out good practice and is a companion to the QCA Corporate Governance Code. 


To view the guide, please click here.

QCA/UHY AIM Good Governance Review

The QCA, in conjunction with UHY Hacker Young, has released its AIM Good Governance Review for 2020/21. This is the eighth edition of the review which provides analysis and guidance on corporate governance disclosures for AIM companies. This year has a specific focus on responding to COVID-19, executive remuneration and ESG.

To view the review, 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.

FRC review of corporate governance reporting


At the end of November, the FRC published their review of reporting on the revised UK Corporate Governance Code. The review finds that, whilst some companies have embraced the opportunities to communicate high-quality information about a company’s purpose and strategy, the evidence is mixed. The main issue is with companies continuing to use the Code as a box-ticking exercise, with formulaic reporting and a failure to meaningfully explain why they do not comply with provisions.


The review finds that corporate governance reporting often failed to live up to stakeholder expectations. For instance, many companies stated the importance of diversity and in the succession pipeline, but offered little explanation to set out what measures are being implemented to deliver on these objectives. With this in mind, the FRC has set out its expectations for improvement in the following areas:

  • Providing clear and meaningful explanations of how they achieve good governance standards in line with the flexibility offered by the Code.
  • Clearly showing the impact of engagement with stakeholders, including shareholders, on decision-making, strategy and long-term success
  • Better assessment and monitoring of culture, including consideration of methods and metrics used
  • Demonstrating commitment to diversity and inclusion through actions, such as improved succession planning and recruitment from diverse talent pools.

To view the report, please click here.

FCA Primary Market Bulletin 32


In December, the FCA issued the 32nd edition of their Primary Markets Bulletin. The main focus of the Bulletin is to remind issuers, investors and other market participants of the changes that will take effect when the onshored legislation enters into force. In particular, the Bulletin covers the Prospectus Regulation, Market Abuse Regulation (MAR), Short-Selling Regulation (SSR), Listing Rules and Disclosure Guidance and Transparency Rules (DTR).


At the end of the transition period, MAR will be converted into UK law. UK MAR retains the same scope of financial instruments admitted to trading or traded on UK and EU trading venues. The key changes relate to Article 17 (Public Disclosure of Inside Information) and Article 19 (Managers’ PDMR transactions):

  • Article 17 – any issuer that has requested or approved admission to trading or approved trading of its financial instruments on a UK trading venue will be required to send the notification on delayed disclosure of inside information to the FCA under Article 17(4) of UK MAR.
  • Article 19 – PDMRs within any issuer that has requested or approved admission to trading or approved trading of its financial instruments on a UK trading venue (and persons closely associated with them) will need to send their transaction reports to the FCA under Article 19 of UK MAR.

At the end of the transition period, SSR will be converted into UK law. These requirements are particularly important to market makers. The key messages include:

  • Market making exemption – Under the UK SSR, any firm wishing to use the exemption for transactions for market making activities will be required to join a UK trading venue and notify the FCA of their intention to use the market maker exemption in writing 30 days ahead of their intended use, unless an equivalence decision has been made.
  • Reporting requirements on net short positions – To determine whether a position in shares should be notified, position holders will need to consult FCA FIRDS to see whether a share is traded in the UK. They must then check the UK list of exempted shares to see if the share is exempt. If the share is on FCA FIRDS but not exempt, position holders should send their notification to us via the FCA’s Electronic Submission System.

To read the Bulletin, please click here.

AIM Notice 58


On 10 December, the London Stock Exchange issued AIM Notice 58, which confirms proposed changes to the Exchange’s Primary Market Rulebooks that will apply following the end of the Brexit transition period on 31 December 2020. This includes the AIM Rules for Companies and the AIM Rules for Nominated Advisers.


To view the notice, please click here.

FRC Covid-19 guidance for companies and auditors


On 4 December, the FRC published consolidated guidance for companies and auditors in respect of COVID-19. This guidance supersedes all previous guidance that has been issued by the FRC.


A link to the guidance for companies can be found here.


The guidance includes guidance for companies on corporate governance and reporting. This includes:

  • Management information;
  • Risk management and internal controls systems;
  • Dividends and capital maintenance;
  • Corporate reporting;
  • Strategic report;
  • Viability statement; and
  • Financial statements:
    • Going concern and material uncertainties;
    • Significant judgement and estimation uncertainty;
    • Events after the reporting date;
    • Exceptional or similar items;
    • Alternative performance measures;
    • Leases; and
    • Interim reports.

A link to the guidance for auditors can be found here.


The guidance for auditors includes some new guidance. This includes:

  • In the section on the 'planned audit approach', to give examples of factors that may heighten risks of material misstatement due to fraud or irregularity.
  • In the section on 'compliance with laws and regulations', to identify that improper claims for financial support could result in liabilities for repayment and fines.
  • The section on 'subsequent events' has been edited to reflect the updated guidance for companies and other minor edits have been made in the Bulletin to reflect that this is no longer a 'new' situation.

Launch of rule changes and new market segments (AQSE)


On 14 December, Aquis Stock Exchange (AQSE) announced the adoption of proposed changes to their Growth Market rules and regulations. The changes include the introduction of the two new segments to the Growth Market: Access and Apex. These markets have different levels of admission criteria in order to provide appropriate conditions for a company’s growth and development, with the Access market designed to focus on earlier stage growth companies, while Apex is intended for larger, more established companies.


As of 14 December:

  • New admissions to the Access market can now publish an admission document specifically tailored to small cap companies with proportionate disclosure requirements;
  • The Access market will accept SPACs with a minimum market cap of £700,000;
  • New admissions to the Apex market will be required to publish a growth prospectus, allowing private investor participation in their IPOs; and
  • Companies on the Apex market will be protected from short selling by third parties.

To view the Rulebooks, please click here.

Asset Management Taskforce on stewardship


The Asset Management Taskforce, which is led by HM Treasury, published a series of recommendations in in November concerning sustainable growth and stewardship. The recommendations are to assist market participants, such as investment managers and asset owners, to expand their stewardship activities across different asset classes.


The Asset Management Taskforce is a group that consists of the UK’s leading investment managers, stakeholders and regulators, and is supported by the Treasury and the Investment Association. Their report provides a blueprint for integrating stewardship into the investment process and seeks to cement for the UK as a global centre of excellence in stewardship practice. In light of this, the report has a focus on:

  • Expanding stewardship beyond the traditional focus on equities;
  • Strengthening escalation of stewardship by providing guidance for investment managers;
  • Embedding better stewardship in pension assets;
  • Improving companies’ reporting and disclosure in line with the Taskforce on Climate-related Financial Disclosures; and
  • Widening the adoption of the UK Stewardship Code beyond investment managers to all service providers involved in the investment process.

If you wish to read the report, you may do so here.

New research supports standard for audit committees


Early in December, the FRC issued a new research report on audit committees. The research, which was conducted by YouGov, finds that the development of standards for audit committees would support a more consistent approach to improving audit quality. As part of their research, YouGov held a series of interviews with audit committee chairs on how they carry out their role.


During the interviews, some audit committee chairs expressed a desire to improve their understanding of what makes a good audit and the importance of challenging their auditors over how their planned approach would deliver audit quality. However, challenge was less apparent in relation to auditors’ judgements and findings, with few audit committee chairs mentioning regularly challenging company management or their auditors.


The research also reveals that the key attributes audit committee chairs value in auditors were a good understanding of the business and its sector, the ability to identify key risk areas, good communication skills, along with a focus on timeliness in raising issues and completing work.


To read the report, please click here.

FRC Lab newsletter


The Financial Reporting Lab of the FRC released its final newsletter for 2020 in December. This issue reflects on the guidance produced by the Lab this year to assist companies during the COVID-19 pandemic and provides an update on the Lab’s ongoing projects.


The Lab is continuing its work on reporting on stakeholders and section 172 statements. The Lab have already published a set of tips on how to make section 172 statements more useful, they will continue to look at how companies have reported stakeholder issues, including related KPIs across different communication channels. In their discussions so far, the importance of discussing the strategic relevance of key stakeholder groups to the business model has been highlighted.


The Lab is also continuing its work on reporting on risk, uncertainties and scenarios. So far, participants have identified particular areas of interest, which includes: supply chain, resilience and the reporting of scenarios during times of uncertainty, with an emphasis on the impact of the pandemic.  


To view the newsletter, please click here.

FRC announces its thematic reviews for 2020/21


On 10 December, the FRC announced its corporate reporting and audit quality review programme for 2021/22 alongside its priorities for sector reviews.


The Corporate Reporting Review team will conduct five thematic reviews during 2021, including:

  • Going concern and viability;
  • IAS 37 – Provisions, Contingent Liabilities and Contingent Assets;
  • Climate Risk – Streamlined Energy and Carbon Reporting;
  • Alternative Performance Measures; and
  • Interim Reporting.

The FRC will also conduct reviews with a focus on audit quality, including the COVID-19 impact, estimates, fraud and climate risk. The FRC’s priority sectors for review include travel, hospitality and leisure, retail, property and financial services.


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 is seeking views on the below consultations:

If you have any comments you wish to contribute on either of these consultations, please get in touch with Jack Marshall, Policy Adviser,


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