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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. #

Lord Hill: UK Listings Review

On 5 January, the QCA submitted its response to Lord Hill’s call for evidence on the UK Listing’s review. The call for evidence sought to examine how we can encourage deeper capital markets and improve the flexibility and proportionality of our regulatory system in order to support growth and innovation.

We recognised the review as a unique opportunity to put forward new ideas about how the UK’s markets should function. In so doing, our response advances some comparatively radical proposals that seek to revitalise the UK’s public equity markets and reverse the troubling de-equitisation crisis that has stemmed from burdensome listing requirements, increased regulation, the availability of private equity and the relative attractiveness of foreign markets.

Our solution is to reinvent the seldom used Standard Listing segment of the Main Market. We believe that it is this market that should be the place for a more flexible approach on policies such as free float requirements, dual class share structures and track records. In doing so, the interests of those who want reforms and lighter requirements to attract fast growth companies and those who want to maintain the existing gold-plated standards on the Premium List are served.

In order to take our proposals forward, we will be attending several roundtables with Lord Hill over the coming weeks.

To view our response, please click here.

2021 Budget Representation

Every year, the QCA submits its Budget Representation to HM Treasury where we outline the fiscal priorities of our members and put forward proposals for taxation reform. With the UK’s withdrawal from the EU and the continuing impact of the Covid-19 pandemic being felt by all, this year’s Budget will likely be distinct from previous ones when the Chancellor delivers it on 3 March.

In our submission, we highlighted that smaller, growing companies are indispensable to the future health of the UK economy. It is these companies that can generate the growth, employment and tax take in order to help drive improved economic performance.

For this reason, we put forward that the tax system should be reformed and centred on three central pillars: competitiveness, simplicity and certainty. It is imperative that the tax regime incentivises and enables smaller companies to raise long-term capital more efficiently, and that the length and complexity of the existing framework is reduced to ease the administrative burden. All of this should then be underpinned by certainty to give businesses the confidence to effectively plan for their future development.

To read the response, 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.

Joint regulators statement and updated guidance

On 27 January 2021, the FRC and FCA issued a statement for companies, auditors and users of financial accounts. The statement included updated guidance for companies and auditors to ensure that high quality financial information continues to flow to users to support decision-making.

As the pandemic continues, with remote working and travel restrictions having a significant impact on the preparation of accounts as we approach the busiest time of year for finalising company accounts, it is important that the quality of financial information remains high. The guidance encourages preparers and auditors to allow more time to publish their financial accounts and make use of the available flexibilities.

In addition to this, the FRC and FCA are encouraging investors and other users of financial statements to take into account the unique set of circumstances being encountered as a result of Covid-19.

The measures that the FRC and FCA are encouraging companies to make use of covers:

  • Corporate reporting for listed companies;
  • Extended period for filing accounts at Companies House;
  • Delaying or adapting AGMs; and
  • Extension of reporting deadlines for public sector bodies.

If you wish to view the guidance, please click here.

Inside AIM

On 27 January 2021, AIM Regulation issued an Inside AIM article in respect of the continued temporary measures for financial reporting deadline in light of the COVID-19 pandemic.

The article highlights the temporary measures issued by the London Stock Exchange in March and June of 2020 concerning the reporting deadlines in relation to the publication of audited annual results and half-yearly reports that are required by the AIM Rules. The article confirms that the temporary measures remain available for AIM companies.

An AIM company can seek an extension of its reporting deadline for its annual audited accounts pursuant to AIM Rule 19 and can apply to AIM Regulation for an extension of three months through their nominated advisor. An AIM company can also utilise the additional one-month period for its half yearly report and must notify its intention to do so, via a RIS, prior to its reporting deadline under AIM Rule 18 and the company’s Nomad must inform AIM Regulation separately.

If you wish to view the Inside AIM article, please click here.

ICSA review of board evaluation

On 20 January 2021, ICSA (The Chartered Governance Institute) released its findings of its review into the effectiveness of independent board evaluation in the UK listed sector. The review, which was carried out at the request of BEIS, examined the quality of board evaluations and identifies a number of ways in which they may be improved.

The review finds that, while there is no evidence of widespread market failure, there is potential scope for broader adoption of good practice and better transparency by board reviewers and companies. In so doing, ICSA has put forward a series of recommendations and various measures which will be considered BEIS.

These measures include:

  • A voluntary code of practice for providers of external board performance reviews to FTSE 350 companies based around four broad topics: competence and capacity; independence and integrity; client engagements and client disclosure. Reviewers are asked to commit publicly to the standards in the code by becoming signatories;
  • Voluntary good practice principles for listed companies. Companies are encouraged to apply these principles when engaging an external board reviewer. The Institute considers that the principles reflect existing good practice; and
  • Guidance for listed companies when reporting on their annual board performance review. The guidance is designed to assist companies with their reporting obligations under the UK Corporate Governance Code.

The idea behind these measures is that they will develop into a market-based mechanism for increasing standards and improving accountability without the need for regulatory intervention.

To view the report, please click here.

IVIS shareholder priorities for 2021

In January, the Investment Association published a report which sets out is shareholder priorities for listed companies in 2021. In addition to this, the paper assesses the progress made by companies against the four issues identified in 2020 as they key issues. These include responding to climate change, audit quality, stakeholder engagement, and diversity.

For 2021, the key issues include a greater focus on capital management and accounting for climate-related matters, COVID-19 specific stakeholder engagement, and a focus on companies’ plans to meet the Parker Review targets for ethnic diversity on boards. More details of the key issues can be found below.

IVIS (Institutional Voting Information Service), which is the Investment Association’s corporate governance research service has set out the adjustments to the approach it will take to assess companies about its expectations on the key issues.

This includes:

  • Capital management and accounting for climate-related matters – IVIS will give companies in a high-risk sector that do not address all four pillars of the Task Force for Climate-related Financial Disclosures requirements (TCFD requirements) an amber top on the ESG report. IVIS will also highlight where companies have linked their capital management plans to their strategy and how they are committing to reducing their emissions to net zero emission by 2050.
  • COVID-19-related stakeholder engagement – this involves an expectation that companies make quality disclosures outlining their approach to communicate with their stakeholders during the pandemic, such as how the board reflected the views of stakeholders in key decision making.
  • Parker Review targets for ethnic diversity on boards – IVIS will amber top any FTSE 350 companies that do not disclose the ethnic diversity of their board or outline the actions they are taking to achieve the Parker Review targets.

The approach set out by IVIS will apply to all companies with year-ends on or after 31 December 2020.

To view the report, please click here.

FCA response to climate-related disclosures consultation

Late in December, the FCA published a Policy Statement in response to their consultation on proposals to enhance climate-related disclosures by listed issuers. The Policy Statement confirmed that the FCA will introduce a new Listing Rule that will require all Premium Listed companies to state in their annual report, on a comply or explain basis, whether they have made disclosures pursuant to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The Rule will be introduced as part of the UK’s plans to be fully aligned with the TCFD by 2025 in order to help support net-zero emissions ambitions. In creating the new rule, the FCA hopes that the implementation of the TCFD-aligned disclosures will pave the way for an established international standard for corporate reporting.

The new rule and guidance applies for accounting periods beginning on or after 1 January 2021. The rule will be accompanied by guidance aimed at helping companies determine whether their disclosures are consistent with the TCFD recommendations.

The FCA will monitor the outcomes of the new rule, including the extent to which companies are following the new requirements, monitoring the quality of disclosures, and gathering views from asset managers on how well investee companies are reporting. In addition to this, the FCA intends to consult, in 2021, on introducing a TCFD-aligned rule for a wider scope of companies.

To view the Policy Statement, please click here.

HMRC updated guidance on the TRS

On 12 January 2021, HMRC updated its guidance on managing information about a trust on the Trust Registration Service (TRS). This included updating the trust details to clarify that the trustee who registered the trust must answer questions about the people associated with the trust before then can view or amend the details on the trust register. The update also clarifies that of all parties are removed from the register, the trust will be treated as closed.

In addition, the updated guidance included changes to closing a trust. This confirmed that where a trust comes to an end after 28 August 2020, the trust must be closed using the online service and it will not be possible to notify HMRC that the trust has ended only in writing.

Finally, the updated guidance set out the procedure for registering an agent to view or make changes to the trust’s registration details.

To view the guidance on the TRS, please click here.

CMA information on sustainability agreements

On 27 January 2021, the Competition and Markets Authority published information to help businesses achieve environmental sustainability goals whilst staying on the right side of competition law.

The document sets out some of the key points that businesses and trade associations should consider when cooperating on environmental sustainability initiatives, including:

  • an overview of key legal considerations businesses should be aware of when entering into sustainability agreements; and
  • a summary of more detailed, technical information which businesses should discuss with a legal adviser who is familiar with competition law.

If you would like to view the information, please click here.

Glass Lewis approach to executive compensation

On 22 January 2021, proxy advisors Glass Lewis published its approach to executive compensation in the context of the current pandemic. While the pandemic has not changed their approach to executive pay, the document provides guidance on the application of its policies to executive remuneration under certain scenarios.

Broadly, Glass Lewis will have a key focus on:

  • Dividends – if a company has cancelled or reduced dividends, it would expect executive pay to be affected.
  • Employees – in their remuneration report, companies should explain how the board made any significant redundancies, furloughs or salary cuts to the workforce and take that in account when adjusting salaries for executives.
  • Stakeholders – if stakeholders publicly express concern over pay polices, a company should provide an explanation of how it has taken into consideration those perspectives.
  • Share price – where share price has been significantly affected and not recovered to pre-pandemic levels, a company should make adjustments to mitigate the effect of any potentially significant windfall gains.

When assessing a board’s decision on executive remuneration for the 2020/21 period, Glass Lewis will review year-on-year variations in total pay and expect lower outcomes for companies that have been impacted by the crisis.

To view the paper, please click here.

Articles, news and speeches

This section features relevant news, articles and publications for small and mid-size quoted companies that has been published in the last month.

UKEB website launch

The UK Endorsement Board (UKEB) – the body in the UK that will influence, endorse and adopt international accounting standards issued by the IASB for use by UK companies – has launched its website.

The UKEB will consult publicly with stakeholders that have an interest in financial reporting in the UK so that it can develop and represent evidence-based UK views with the aim of acting as the UK voice on IFRS financial reporting.

To view the website, 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

The QCA responded to Lord Hill’s call for evidence on the UK’s Listing Review.

To view the response, please click here.

The QCA’s Legal Expert Group contributed to our response to the Takeover Panel’s consultation on conditions to offers and the offer timetable.

To view the response, please click here.

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, 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.

FCA events on MAR

The FCA’s Primary Market Oversight Department are hosting two virtual events on 23 February and 23 March 2021 on navigating the public disclosure regime as an SME. The sessions will be suitable for executive functions (e.g. CEO, CFO, head of compliance), company secretaries, in house legal counsel, investor relations officers and SME advisors, such as sponsors and nomads.

These events will assist firms in navigating the regulatory landscape as a small to medium sized issuer (SME), particularly with regard to the application of the Market Abuse Regulation (MAR). The FCA will cover the risk of unlawful disclosure of inside information and the MAR provisions which allow for delayed disclosure of inside information, including an insight into the delayed disclosure notifications we receive. Drawing on practical examples from our compliance monitoring, the second session will focus on the importance of culture, governance and control when meeting your continuous disclosure requirements. During this session, we will also introduce the new climate related disclosure framework in the UK.

For more information, including on how to register, please click here.

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