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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 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 Building Better Boards Forum


As part of our Building Better Boards theme for 2019, we held our Annual Forum on Tuesday 11 June 2019 at Haberdashers’ Hall in London, with over 70 guests from across the small and mid-size quoted company community in attendance.


This year’s forum builds upon our work on corporate governance and is aimed at helping smaller quoted companies build effective boards and develop good practices and behaviours that will drive improved performance and help stimulate their growth.


Please click here for highlights of our keynote speaker, Andrew Kakabadse.


Please click here for highlights from our first panel session on creating the right board, featuring:

  • James Ashton, Business Writer
  • Nick Naylor, Chief Executive, Allenby Capital
  • Judith Mackenzie, Partner and Head of Public Equity, Downing LLP
  • Tim Hammett, Managing Partner, Norman Broadbent Executive Search

Please click here for highlights from our second panel session on board evolution, featuring:

  • Tracy Brady, Managing Director, Company Matters, Link Asset Services
  • Annette Nabavi, Non-Executive Director, Maintel Holdings PLC
  • Hugh Cawley, Chief Executive Officer, Real Good Food PLC
  • Chris Hodge, Policy Advisor, ICSA: The Governance Institute 

ISS event with Rachit Gupta


On 13 June, the QCA held an event with Institutional Shareholder Services (ISS) Deputy Head of U.K. Research & Head of Small-cap Research, Rachit Gupta. The event took place at Deloitte and was an opportunity for QCA members to raise any concerns or speak about issues they have encountered when engaging with ISS.


Rachit began by giving an overview of how ISS formulate their policy, which they do on an annual basis. The key points on how ISS formulate their policy were as follows:

  • ISS take a market specific and market relevant approach, as opposed to a one size fits all approach.
  • They receive year-round feedback from investors and issuers.
  • They conduct a formal annual policy survey.
  • They host in-person discussions forums and roundtables.
  • Their proxy voting guidelines aim to strike a balance between shareholder interests and economic practicality.
  • They engage with issuers.

Following this, Rachit explained ISS’s approach to policy in the UK. The key points were as follows:

  • ISS has a formal relationship with PLSA
  • Their first standalone UK policy was published in 2015
    • The foundation principals were extracted from the PLSA and market guidance from the IA principles of remuneration.
  • For AIM-listed companies, the QCA Corporate Governance Code forms the underlying basis for ISS policy.

Finally, Rachit spoke about engaging with ISS. The key points were:

  • ISS approach to engagement
    • Clarify and explain proxy voting guidelines
    • Do not provide a commitment on vote recommendations; and
    • Do not consider confidential information in reports.
  • Draft reports are provided in certain markets only:
    • Drafts are provided to all FTSE All-Share companies
    • Drafts are provided to Fledgling and Aim companies on a best-effort basis.

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.


AIM Notice 56


On 20 June 2019, London Stock Exchange published AIM Notice 56. AIM Notice 56 consists of updates to the AIM Rulebooks in line with the Prospectus Regulation and is intended for AIM companies and Nominated Advisers. The updates to the AIM Rulebooks will apply once the new Prospectus Regulation (EU) 2017/1129 comes into effect on 21 July 2019. The AIM Rulebooks include references to the FCA Prospectus Rules, and in particular, the required contents of an AIM admission document. Amendments have been made to the AIM Rules for Companies, the AIM Note for Investing Companies and the Aim Note for Mining, Oil and Gas Companies.


Some of the amendments to the AIM Rules for Companies include:

  • Amendments to the information that must be disclosed in an admission document; and
  • Amendment to include a reference to the EU Growth Prospectus.


To view AIM Notice 56, please click here.

Delegated Regulation amendments to MiFID II

On 21 June 2019, Delegated Regulation (EU) 2019/1011 amending Delegated Regulation (EU) 2017/565 was published in the Official Journal of the EU. The amendments alter certain registration conditions to promote the use of SME growth markets.


The Delegated Regulation supplements the MiFID II Directive and includes requirements an SME issuer must meet to qualify as an SME for its securities to be traded. The requirements were considered to be too restrictive and have, as such, been amended through the Delegated Regulation to address this.


Please see the amendment here.

FCA 2018/19 perimeter report


On 19 June 2019, the FCA published its first perimeter report. The perimeter report aims to provide clarity on what the FCA does and does not regulate, as well as outlining the FCA’s role and explaining its response to certain issues that have arisen in the last year. The report focusses on the most contentious issues – those that are most likely to cause harm to UK consumers and markets – and explains what actions the FCA has taken to mitigate this harm. The FCA intend to publish the report on an annual basis.


Andrew Bailey, Chief Executive of the FCA, comments that the FCA perimeter is particularly important for three reasons, they are as follows:

  • The firms operating on the fringes of the perimeter have caused damage to the public trust in the regulated financial services sector;
  • Technology and the use of data are being used more frequently, which is likely to pose challenges to the perimeter; and
  • The perimeter is an essential part of the FCA’s work on the future of regulation in order to help determine the post-Brexit UK financial services framework.

If you wish to see the report, please do so here.

Companies Regulations 2019 FAQs

On 14 June, BEIS published a document outlining how companies will be affected by the new requirements in the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019. The document sets out how and when companies will be affected by the new reporting requirements in the Companies Regulations 2019 which apply to UK-registered quoted companies. The regulations implement what is commonly known as the Revised Shareholder Rights Directive. The Regulations were implemented on 22 May 2019 and apply to company reporting on financial years starting on or after 10 June 2019.


The document gives a useful overview of the new company reporting regulations which have been implemented under Articles 9a and 9b of European Council Directive 2017/828/EC (the revised Shareholder Rights Directive), as well as providing answers to some FAQs. The revised Directive introduces a number of new provisions intended to strengthen shareholder rights and includes:

  • The reporting of directors’ remuneration at traded companies;
  • New transparency requirements on asset managers and institutional investors;
  • New transparency requirements on proxy advisors;
  • Additional disclosure requirements on traded companies concerning related party transactions; and
  • New provisions to enhance further facilitation of shareholders’ information and voting rights.

To view the document, please click here.

Improving shareholder engagement and increasing transparency around stewardship


At the end of May, the FCA introduced new requirements to improve shareholder engagement and increase transparency around stewardship, which came into effect on 10 June 2019. The rules, which have emerged as a result of the FCA’s consultation on proposals to improve shareholder engagement, implement the provisions of the amended Shareholder Rights Directive (SRD II).


One of the main new provisions is that issuers will need to make new disclosures regarding their related party transactions (RPTs). The FCA have reduced the materiality threshold at which issuers are required to disclose their RPTs and have them approved, a move that will give investors greater transparency. They have also reduced the cost for certain issuers in meeting the new requirements.


The other main provision is the requirement for asset managers and life insurers to disclose their policies on how they engage with each other and the companies they invest in, as well as how their strategies create long-term value.


To read the document, please do so here.

Changes to align the FCA Handbook with the EU Prospectus Regulation


At the end of May, the FCA set out the rules on the changes they plan to make to the Handbook in order to align it with the EU Prospectus Regulation. The Prospectus Regulation outlines the information issuers need to disclose to investors through a ‘prospectus’ when they are raising capital in order to ensure that investors have the requisite information to make a decision about a potential investment. The rule changes apply to UK and overseas issuers with UK-listed securities or those considering a UK listing of their securities, as well as issuers and other persons who make public offers of transferable securities.


To read the statement in full, please do so here.

Employee share schemes: annual returns deadline is 6 July 2019


The deadline for filing annual share schemes returns for 2018-19 is 6 July 2019. Companies must have already registered the share scheme through ERS online and then must file the annual returns online by the above date. Schemes already in operation for 2017-18 should already be registered, but any new schemes must be registered before an annual return for that scheme to be filed.


If a company fails to register a tax-advantage scheme by the required date, this will affect the tax treatment in the future, as well as participants, in the case of company share option plans (CSOP). Separate returns must be filed for each individual tax-advantage scheme and HMRC must be notified if any amendments to a key feature of a tax-advantaged CSOP, SAYE option scheme or share incentive plan has been made and specify whether the scheme has ceased to meet the legislative requirements.


Companies with non-tax-advantaged arrangements have the choice of whether to file separate returns for each arrangement or one single return covering all arrangements. Companies with non tax-advantaged arrangements can choose whether to file separate returns for each arrangement, or a single return covering them all.

Climate benchmarks and benchmarks’ ESG disclosures


The EU Technical Expert Group on Sustainable Finance has publish a report on benchmarks in relation to ESG and climate-related disclosures. As a result of an agreement reached by European co-legislators as part of the European Commission’s Action Plan on Financing Sustainable Growth, two measures regarding investment benchmarks have been created. The first was the creation of two types of climate benchmarks, and the second is the definition of Environmental, Social and Governance (ESG) disclosure requirements that will apply to all investment benchmarks.


The two climate benchmarks created are the EU Climate Transition Benchmark (EU CTB) and EU Paris-aligned Benchmark (EU PAB). A climate benchmark is defined as an investment benchmark with specific objectives related to greenhouse gas emission reductions and the transition to a low-carbon economy. The main objectives of these two benchmarks are to:

  • Allow a significant level of comparability of climate benchmark methodologies;
  • Provide investors with an appropriate tool aligned to their investment strategy;
  • Increase transparency on investors’ impact; and
  • Decentivise greenwashing.

The TEG recommends disclosures that provide investors with insights into whether (i) the benchmark administrator has factored ESG and climate-related consideration in the index methodology; (ii) the benchmark administrator has measured ESG and climate-related risks and opportunities associated with the index.


To find any further information, please click here.

ESMA updates the CSDR Q&As


On 18 June, ESMA updated its Questions and Answers regarding the implementation of the Central Securities Depository Regulation (CSDR). This new version provides answers to questions regarding practical issues on the implementation of the new CSDR regime, as well as aiming to clarify the process applicable to the provision of notary or central maintenance services in other member states, passporting procedures.


For more details, please click here.

PLSA guidance on ESG & Stewardship


This month, the Pensions and Lifetime Savings Association published new ESG and stewardship guidance for pension fund trustees to help increase compliance with new environmental, social and governance requirements that come into effect on 1 October 2019. In the guidance, the PLSA use case studies and propose questions that trustees should be asking of themselves, their advisers and their asset managers. The guidance uses an approach that addresses the regulations in a practical way so that trustees can implement policies in a straightforward manner.


Under the new requirements, if trustees disregard long-term financial risks or opportunities from ESG, climate change and stewardship factors, they will need to justify why this does not harm investment returns or outcomes for their members.


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

EC guidelines on reporting climate-related information


On 18 June 2019, the European Commission published new guidelines on climate reporting in addition to its existing non-binding guidelines on non-financial reporting. The new guidelines propose climate-related disclosures for each of the five reporting areas in the Non-Financial Reporting Directive:

  • Business model, policies and due diligence processes;
  • Outcomes;
  • Principal risks and their management; and
  • Key performance indicators.

For each area, the guidelines identify a limited number of recommended disclosures that companies should consider using to the extent necessary for an understanding of their performance and impact of their activities. In addition to the recommended disclosures, further guidance is provided for each reporting area. Although the guidelines are intended for use by large listed companies that fall under the scope of the Non-Financial Reporting Directive, they may also be useful for other companies that wish to disclose climate-related information.


To read the guidelines, please click here.


Accountancy Europe report on corporate governance and a sustainable economy

On 12 June 2019, Accountancy Europe published a report that produces 10 ideas to make corporate governance a driver of a sustainable economy. The report recognises that corporate governance is instrumental to change how businesses are run and can be a main driver of a sustainable economy. The 10 ideas are as follows:

  1. Recognise the public interest responsibility to make business sustainable.
  2. Transform the business model.
  3. Make board composition fit for (renewed) purpose.
  4. Regularly (re)assess functioning and progress.
  5. Think in an integrated way.
  6. Transcend the business' boundaries.
  7. Rethink the role of regulators.
  8. Move from shareholder protection to stakeholder protection.
  9. Create a European regulatory framework for corporate governance in the single market.
  10. Ensure consistent and effective enforcement.

To read the full report, please 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.


EuropeanIssuers vision 2019-2024


At the end of June, EuropeanIssuers published their vision for the years 2019-2024. The report outlines their commitment to the 8,000 companies across all sectors that they represent to the EU institutions.The report provides an overview of EuropeanIssuers key objectives, which include:

  • Attract companies to capital markets and retain existing ones by simplifying the regulatory environment.
  • Attract investors to the market, promote equity culture and remove national barriers to cross-border investments.
  • Integrate competitiveness in the assessment of the sustainability requirements.
  • Improve access to finance for small companies and elaborate proportionate rules.
  • Integrate, adopt and follow a Better Regulation approach.
  • Develop a harmonised and simplified EU tax system.

To read the report, please click here.  

ESMA Chair speech on data and reporting


On 18 June 2019, Stephen Maijoor, ESMA Chair, delivered a speech on developments in data and reporting. Within the speech, he comments on ESMA’s data strategy, as well as the ongoing work on reporting. The highlights from the speech include the following:

  • ESMA seeks to ensure the highest levels of transparency and data quality in the EU, while simultaneously reducing the reporting burden on market participants.
  • There is considerable work needed to ensure that high-quality data is achieved.
  • Cross-border data exchanges are now available which has helped supervisory convergence between EU member states.

If you wish to read the speech, please do so here

New independent institute launched


A new independent institute, the Impact Investing Institute, has been launched to make it easier for investors to have a positive social impact. The institute will look for effective ways to combine financial returns with a social purpose to help benefit communities and society.


The Institute is due to be launched this Autumn and will be supported by private firms and foundations, along with the Department for Digital, Culture, Media and Sport, the Department for International Development and the City of London Corporation.


Please click here to view the website.

FCA speech on diversity in business


Nausicaa Delfas, Executive Director of International, delivered a speech at City and Financial: Women in Finance on 6 June 2019. The speech outlined the progress that has been made on gender diversity, evidenced by more women in senior positions. However, she emphasised that there is still further to go as only around 17% of approved positions across regulated firms and around 25% of women are in Senior Manager functions.


To read the full speech, please click here.

ESMA 2018 Annual Report


In June, the European Securities and Market’s Authority (ESMA) published its 2018 Annual Report. The report outlines ESMA’s achievements against its objectives. In so doing, the report highlights ESMA’s work in relation to Brexit, MiFID II and MiFIR and fund management.


To read the annual report, please do so here.

Surveys and questionnaires


This section features surveys or questionnaires submitted by industry bodies or regulators that are relevant to small and mid-size quoted companies.  


Perceptions of non-financial information survey


EuropeanIssuers is currently seeking individuals to participate in a survey on the relevance of non-financial indicators and business model disclosures which could be relevant to the European Financial Reporting Advisory Group’s work. The purpose of the survey is to investigate both users’ and preparers’ perceptions of the non-financial information included within the annual report. The survey specifically looks at two concepts which are increasingly important, namely non-financial indicators and business models. The deadline to respond to the survey is 31 July 2019.


Please click here if you would like to take the survey.

Study of the impact of MiFID II on investment research on SMEs

The QCA’s European counterpart, EuropeanIssuers, is encouraging equity and bond issuers to reply to an online survey published by advisory firm, Risk Control Limited, in conjunction with the European Commission. The online survey forms part of an extensive study into the impact of MiFID II rules on SMEs and fixed-income on investment research. The deadline for the survey is 15 July 2019.


The survey is directed at both SMEs and issuers of corporate bonds, and the survey focuses on questions such as:

  • How has MiFID II affected the liquidity of bond issues by corporate bond issuers?
  • How has MiFID II affected the cost of issuing bonds?
  • How has MiFID II impacted the liquidity of share for SME issuers?
  • How has MiFID II affected the cost of equity financing for SME issuers?

The survey should take no more than 30 minutes, if you wish to take the survey, please do so 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


At the end of May 2019, the QCA submitted a response to the NEX Exchange consultation on the Amendments to the NEX Exchange Growth Market Rules for Issuers. See the response here.


As well as this, the QCA submitted a response to three other consultations at the beginning of June, they are as follows:


Sir Donald Brydon’s Independent review into the quality and effectiveness of audit, which the QCA’s Financial Reporting Expert Group contributed towards. See the response here.


On 11 June, the QCA’s Corporate Governance Expert Group, Financial Reporting Expert Group and Legal Expert Group contributed to the response to BEIS on the Independent Review of the Financial Reporting Council: Initial consultation on the recommendations. To view the response, please click here.


On 14 June, the QCA’s Financial Reporting Expert Group contributed to the response to the FRC’s consultation on stronger Going Concern standard for auditors. See the response here.

Additionally, the QCA is currently seeking member input on the following consultations:

  • ICSA: Review of the effectiveness of independent board evaluation in the UK listed sector
  • BEIS: Corporate Transparency and Register Reform

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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