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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 Lab report on Stakeholders, Decisions and Section 172

The Financial Reporting Lab of the FRC recently published a report on reporting on Stakeholders, Decisions and Section 172. 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, with Section 172 statements being a useful bridge between the two types of information.

The first section of the report highlights that investors view information on a company’s key stakeholders as critical to understanding the company and its prospects. The report outlines how investors want to see information provided on stakeholders’ relevance to the business model and strategy of the company, as well as the strength of stakeholder relationships, and the associated risks and opportunities.

The second section reiterates the desire amongst investors to know more about the strategic decisions that the company has made, how these decisions were made, consideration of how stakeholders were taken into account and the outcomes of those decisions.

The final section of the report addresses better practice Section 172 statements, and highlights that these statements should reflect all aspects of the Section 172 duty to allow a better understanding of how a company is progressing in its pursuit of its purpose and long-term success.

Alongside this, the Lab has also published a summary (available here) of the questions that companies should be considering in determining what information they should report on to stakeholders and the decisions they make to meet investors’ needs.

To view the Lab’s report, please click here.

FRC on board diversity

On 20 July 2021, the FRC, along with the London Business School and the Leadership Institute, published a report on board diversity and effectiveness. The report looks into the developments that have been made in recent years, with boards becoming more diverse than ever before as a result of the Hampton-Alexander Review and the Parker Review.

The report finds that the diversification of boards produces benefits in terms of boardroom culture and performance. The FRC states that to maximise these benefits, companies should recognise that change takes time and that diversity without active inclusion is unlikely to encourage new talent to the board. The main findings of the report include:

  • It is the responsibility of the Chair of a board to drive inclusion.
  • Regulators and companies must focus on collecting more data on the types of diversity, board dynamics and social inclusion.
  • the Nomination Committee itself should be diverse and have a clear mandate to work with search firms that access talent from wide and diverse pools.
  • The greater representation of women in the boardroom is reshaping culture and dynamics and benefiting businesses from a social justice as well as a performance perspective.

To view the report, please click here.

HMG Green Financing Framework

At the end of June, the UK Government announced its Green Financing Framework in order to assist the transition to a green economy, tackle environmental challenges and create green jobs across the UK. The Government has set out its intentions to issue a series of Green Gilts and retail Green Savings Bonds in order to help achieve this. As part of this, the framework lists six types of green expenditures that will be financed across the UK. This includes: clean transportation; renewable energy; energy efficiency; pollution prevention and control; living and natural resources; and climate change adaptation.

The Framework will commit the Government to annual allocation reporting and biennial reporting on environmental impacts and social benefits to ensure transparency for investors and other stakeholders.

To view the Framework, please click here.

FRC publishes list of companies who have been reviewed

At the end of June, the FRC published a list of companies whose annual reports and accounts have been reviewed by its Corporate Reporting Review function.

As a preliminary step towards improving its transparency, the FRC is publishing summaries of its findings of recently closed reviews. This comes as part of the recent BEIS audit and corporate governance reform consultation, which contains a number of proposals for enhancing the regulation of corporate reporting. In particular, one proposal is to give the regulator a statutory power to publish a summary of its findings of its individual reviews of company reports and accounts.  

However, at present, the FRC is only able to publish its summary findings with the consent of the company in questions.

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

CLLS and Law Society documents on changes to the Takeover Code

On 28 June 2021, a joint working party of The City of London Law Society (CLLS) and The Law Society published a document to reflect the changes to the Takeover Code regarding its recent consultation on conditions to offers and the offer timetable, which took effect on 5 July 2021. The note explains:

  • A revised set of offer conditions, setting out an example of the approach that could be taken to the structure and drafting of certain aspects of conditions to a contractual offer.
  • Further terms of the offer, setting out an example of the approach that could be taken to draft further terms of a contractual offer.
  • Proposed wording for an acceleration statement, including setting out an example of a statement that could be included.

To view the document, please click here.

FRC statement on ESG challenges

On 7 July 2021, the FRC published a statement of intent on Environmental, Social and Governance challenges. The paper sets out areas in which there are issues with ESG information and how companies should report in a way that meets the demands of stakeholders, as well as guidance on how to address some of these demands.

In the document, the FRC sets out certain areas where improvement is needed, including:

  • Production – to ensure that better internal information leads to better decisions and better insight for stakeholders
  • Audit and Assurance – so that the reported information is robust and reliable
  • Distribution – so that information is made accessible to interested parties
  • Consumption – to ensure this information leads to better decision making by stakeholders
  • Supervision – so that information and activity is appropriately monitored and requirements are enforced
  • Regulation – as coordinated and coherent regulation leads to efficiency

To view the FRC’s statement, please click here.

Treasury Committee report on Future Regulatory Framework of Financial Services

Following its call for evidence, the Treasury Committee has published a report on the Future Regulatory Framework of Financial Services. The report considers the future of financial services following the Brexit transition period and examines how financial regulation should be set and scrutinised by Parliament.

One of the key areas of the report is concerning the ownership of financial regulation. The Committee agrees that the EU financial services rules that were on-shored during the process of leaving the EU should be moved into the regulator’s rulebooks. This will allow regulators to make changes without requiring Parliament to amend or pass new legislation which is time-consuming and impractical.

In addition, the report also covers regulatory independence, which is one of the key aspects of UK financial services regulation. The Committee states that it does not believe that there is justification to legislate to allow Ministers the right to see regulators’ policy proposals before they are published for consultation, thus keeping them free from political interference.

If you wish to view the full report, please click here.

FCA Business Plan

In the middle of July, the FCA published its Business Plan for 2021/22, which is the first annual plan of Nikhil Rathi’s tenure as the Chief Executive of the FCA. In the Business Plan, the FCA makes a commitment to be a more innovative, adaptive and assertive regulator. As part of this, the FCA is developing plans to make primary and secondary markets work better for participants while maintaining high standards and investor protection.

If you wish to view the Business Plan, you may do so 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.

Chancellor’s Mansion House speech

On 1 July 2021, the Chancellor, Rishi Sunak, delivered his first Mansion House speech, setting out plans for the UK’s financial services industry and the wide set of reforms already underway. As part of this, the Chancellor announced the publication of a new roadmap, detailing the progress being made on capital markets reform and how the Government intends to ensure that the UK financial services sector remains competitive now that it has left the European Union.

The key elements of the speech included topics, such as:

  • Green finance – the Chancellor announced plans to require listed companies, pension schemes and large asset owners and managers to report on the impact they are having on climate change, as well as the risks and opportunities facing their business.
  • Technology and innovation – the Chancellor outlined how the UK is supporting innovation and encouraging the creation of cutting-edge technologies.
  • Competitive marketplace – the Chancellor announced two consultations following the recommendations presented in Lord Hill’s Listing Review, including the Wholesale Markets Review and the UK Prospectus Regime Review. Both reviews will aim to make listing more attractive and raising finance simpler and more effective.
  • An open and global economy – the Chancellor also outlined how the UK will establish and enhance relationships with jurisdictions all around the world.

To read the speech, 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.

GC100 poll

The GC100 recently published a survey for companies on the 2021 AGM season. The purpose of the survey is to seek feedback on how companies have conducted their AGMs so far this AGM season and to gauge views on how they perceive the purpose and future of the AGM.

The survey is particularly pertinent given that the Covid-19 pandemic has necessitated the need for companies to be afforded some flexibility in the way they conduct their general meetings.

The survey also seeks to understand how companies are approaching climate, sustainability and ESG issues, including views on seeking shareholder approval for a company’s climate transition action plan and climate-related disclosures or disclosures under TCFD.

To complete the survey, 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 the BEIS consultation on audit and corporate governance reform.

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. 

  • FCA: Enhancing climate-related disclosures by standard listed companies (Deadline: 10 September)

    • The FCA have published a consultation on enhancing climate-related disclosures by Standard Listed companies. The new disclosures reference the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

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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