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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/Peel Hunt Mid and Small-Cap Investor Survey

The QCA/Peel Hunt annual Mid and Small-Cap Investor Survey was published at a launch event on 25 January 2022. The QCA’s report presents the results of surveys with 126 small and mid-cap fund managers and 118 small and mid-sized quoted companies, conducted by YouGov and produced in partnership with Peel Hunt.

This year, the report’s most notable finding was how investors perceived the UK’s markets as much more attractive to companies than companies did. The other key topics were:

  • The difference in perception of attractiveness of the UK’s markets from companies and investors;
  • Corporate governance and the impact of ESG funds on good governance;
  • How market participants define “small-caps”;
  • How important retail investors are to smaller companies;
  • The quality and quantity of research produced on smaller companies; and
  • Investor priorities and companies’ biggest challenges.

If you wish 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.

UK PRR summary of responses

In December, HM Treasury published a summary of the responses it received in relation to its UK Prospectus Regime Review consultation which closed in September 2021. The report outlines the nature of responses in relation to the consultations proposals and sets out HM Treasury’s next steps in taking the proposals forward.

In total, HM Treasury received 54 responses to the consultation, with the Treasury also conducting meetings with multiple stakeholders, including the QCA. Overall, the Treasury states that the responses it received to the consultations proposals were broadly positive. In particular, there was strong agreement from respondents that reform of the Prospectus rules would bring about tangible benefits due to the current regime being overly prescriptive, costly and inflexible.

A summary of the responses in relation to each of the specific questions is set out below:

  • Question 1 (separation of admissions to trading from public offers) – respondents agreed with the proposals, noting that this could address the unnecessary duplication of the existing regime.
  • Question 2 (HM Treasury’s objectives on Prospectus reform) – there was widespread support for the key objectives of reform, with particular emphasis on the importance of the participation of retail investors.
  • Question 3 (the underlying purpose of a prospectus when seeking admission to trading on a regulated market) – most respondents agreed with the statement of purpose.
  • Question 4 (granting the FCA discretion to set the rules on when a further issue prospectus is required) – broad support, but some raised concerns that the FCA would use its discretion to maintain current arrangements and some stated that the requirement for a prospectus for further issues should only be maintained in limited circumstances given the exiting disclosure requirements public companies make.
  • Question 5 (the recognition of prospectuses in other jurisdictions) – general support, with respondents noting that this would support a policy of openness.
  • Question 6 (the “necessary information” test) – broad agreement, including that the standard of preparation for a prospectus should remain in statute.
  • Question 7 (granting the FCA discretion to set rules on the review and approval of prospectuses) – mixed responses, including that the FCA should maintain a proportionate approach to their rulemaking and that they should streamline their processes.
  • Question 8 (the FCA’s ancillary powers) – responses were broadly supportive of the ancillary powers the review considered.
  • Question 9 (proposal to change the prospectus liability regime for forward-looking information) – respondents broadly welcomed the proposal, agreeing that it could help to encourage more forward-looking statements and consequently make prospectuses more relevant to investment decisions.
  • Question 10 (forward-looking information) – respondents generally believed that this change would strike the right balance between ensuring that investors have the best possible information, and investor protection.
  • Question 11 (options for addressing companies whose securities are or will be admitted to trading on MTFs) – greater support for option 2 regarding reform to the public offering regime and for recognising MTF admission documents as a form of prospectus.
  • Question 12 (a new exemption from the public offer provision for offers directed at existing shareholders) – broad agreement with the proposals, noting caution from some respondents that it may reduce investor protection for existing shareholders.
  • Question 13 (the 150-person threshold for public offers of securities and the “Qualified Investors” exemption) – the feedback suggested that the current exemptions operated effectively.
  • Question 14 (public offers to employees, former employees, directors and ex-directors) – most respondents suggested this works effectively.
  • Question 15 (options for public offers by private companies) – support for change amongst the feedback received, with respondents clearly favouring Option 2 in order to accommodate the right of private companies to offer securities to the public. Respondents also suggested the €8 million threshold was not appropriate.
  • Question 16 (options for public offers by overseas companies) – respondents supported option 2 in relation to a new regulatory regime.

In terms of next steps, the Government states that it intends to set out its next steps in due course.

If you wish to view the summary, you may do so here.

FCA Policy Statement on enhancing climate-related disclosures

Towards the end of December 2021, the FCA released a Policy Statement in relation to its recent consultation on enhancing climate-related disclosures for Standard Listed companies. The Policy Statement confirms that the FCA are extending the application of its climate-related disclosures to companies on the Standard List segment of the Main Market by creating a new Listing Rule (LR 14.3.27R). The FCA also released a Technical Note regarding the disclosures in relation to ESG matters, including climate change.

The new rule requires in-scope companies to include a statement in their annual financial report setting out:

  • Whether they have made disclosures consistent with the TCFD’s recommendations and recommended disclosures in their annual financial report;
  • Where they have not made disclosures consistent with some, or all, of the TCFD’s recommendations and/or recommended disclosures, an explanation of why, and a description of any steps they are taking or plan to take to be able to make consistent disclosures in the future, and the timeframe within which they expect to be able to make those disclosures;
  • Where they have included some, or all, of their disclosures against the TCFD’s recommendations and/or recommended disclosures in a document other than their annual financial report, an explanation of why; and
  • Where in their annual financial report (or other relevant document) the various disclosures can be found.

In terms of timeline, the new rules will apply for accounting periods beginning on or after 1 January 2022. That means that the first annual financial reports subject to the new rule will be published in early 2023. Companies affected by the new Listing Rule are encouraged to familiarise themselves with the rule and associated guidance.

To view the Policy Statement, please click here.

To view the Technical Note, please click here.

FRC Plan & Budget 2022/23

On 18 January 2022, the FRC set out its draft 3-year plan and budget for 2022-2025, which includes its preparation for the transition to the Audit, Reporting and Governance Authority. The draft plan contains a breakdown of the FRC’s intended expenditure for 2022-2023 and a summary of the expected trajectory costs and headcount for the following two years.

The FRC is still awaiting the Government’s response to its consultation on audit and corporate governance reform, which will, depending on the outcome of the consultation, grant the FRC increased regulatory powers and place its funding on a statutory footing. The plan therefore reflects the FRC’s views and expectations on the likely operation impact of the change in the FRC’s status.

In 2022/23 overall costs are expected to increase by £9.1m. The FRC anticipates similar growth in 2023/24, which will be the year the FRC is expected to transition into ARGA and the first year of statutory funding, followed by a period of stability and consolidation from 2025 onwards.

To view the draft plan, please click here.

UKEB 2022/23 regulatory strategy

Following the UK Endorsement Board’s inaugural year where the Board was appointed in March 2021 and it received its delegated powers in May 2021, the UKEB has published its regulatory for 2022-2023.

The UKEB’s strategic objectives include:

  • Influencing – the UKEB will take a principles-based, proactive and pragmatic approach to influencing the IASB and other global players, to help ensure the development of high-quality financial reporting standards that promote transparency and comparability of financial information, and the smooth functioning of capital markets.
  • Adoption of standards for use in the UK – the UKEB will aim to assess all new and amended international standards for adoption in the UK on a timely basis.
  • Operations framework – a robust operations framework is key to ensuring the level of support to achieve the influencing and adoption objectives above.

To view the regulatory strategy, 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 has recently submitted responses to the following consultations:

  1. HM Treasury: UK Secondary Capital Raising Review (Submitted: 16 November 2021)

The consultation was published following Lord Hill’s recommendation to consider how to improve the efficiency of further capital raisings by listed companies. The consultation reconsidered the 2008 Rights Issue Review Group’s outstanding recommendations, particularly in terms of capital raising models in other jurisdictions and in light of technological advances. The aim of conducting the review is to facilitate a quicker and more efficient process of raising capital for existing listed companies and more easily involve retail investors.

In our response, we stressed the need for the rights issue process to become more time and cost efficient, as well as highlighting several fundraising models used in Australia that could be adopted here in the UK. Furthermore, we also mentioned the need to improve the system of intermediated securities to ensure that companies have easy access to their shareholders and vice versa.

The QCA held a roundtable with Mark Austin (the Chair of the Review) earlier in January to discuss the current findings of the review and again highlight the viewpoints of small and mid-caps. The QCA will be submitting a further supplementary letter following the conversation.

To view our response to the consultation, please click here.

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

  1. HM Treasury: Future Regulatory Framework Review (Deadline: 9 February 2022)

This consultation sets out the Government’s response to the initial review, making a series of proposals to deliver the intended outcomes of the FRF Review and build on the UK’s existing framework. The FRF Review includes a proposal to add new growth and international competitiveness objectives for the FCA, as well as a proposal for the principle of sustainable growth to be updated to reference climate change and net-zero economy.

  1. Takeover Panel: Miscellaneous Code Amendments (Deadline: 18 February 2021)

The Takeover Panel published a consultation on Miscellaneous Code Amendments. The consultation seeks views on proposed changes to various provisions of the Takeover Code. Some of the key proposed amendments include:

  • Requiring a publicly identified potential offeror to announce any minimum level it is obliged to offer to offeree company shareholders.
  • Restricting a mandatory offeror from obtaining additional interests in shares in the offeree company in the 14 days up to and including the unconditional date and the expiry of the acceptance condition.
  • Introducing a new Note 5 on Rule 9.5 to clarify the application of the look-back period for determining the minimum price of a mandatory offer.

  1. HM Treasury: Financial Promotion Exemption for High-Net-Worth Individuals and Sophisticated Investors (Deadline: 9 March 2022)

This consultation proposes to retain the Financial Promotion exemptions for high-net-worth individuals and sophisticated investors, but to update them in light of significant economic, social and technological changes. This includes the development of the online retail investment market, price inflation and pensions freedoms, which have eroded the value of the high-net-worth individual exemption thresholds over the last twenty years. This has resulted in a significant number of additional consumers who did fall in scope of the exemptions when they were first created in 2001 or when they were last updated in 2005. In light of this, HM Treasury is proposing that the exemptions are updated through the following means:

  • Increasing the financial thresholds for high-net-worth individuals;
  • Amending the criteria for self-certified sophisticated investors;
  • Placing a greater degree of responsibility on firms to ensure individuals meet the criteria to be deemed high-net-worth or sophisticated;
  • Updating the high-net-worth individual and self-certified sophisticated investors statements; and
  • Updating the name of the high-net-worth individual exemption.

  1. FRC: Draft Strategy, Plan and Budget 2022-25 (Deadline: 1 March 2022)

On 18 January 2022, the FRC set out its draft 3-year plan and budget for 2022-2025, which includes its preparation for the transition to the Audit, Reporting and Governance Authority. The draft plan contains a breakdown of the FRC’s intended expenditure for 2022-2023 and a summary of the expected trajectory costs and headcount for the following two years.

  1. UKEB: Regulatory Strategy 2022-23 (Deadline: 1 March 2022)

The UKEB has also released its Draft Regulatory Strategy for comment. The document sets out the UKEB’s strategic objectives and how it will measure its success. 


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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