Skip to main content

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 Board Performance Review

On 3 June 2021, the QCA published its Board Performance Review Report and accompanying Guide. The Report and Guide, which were produced in collaboration with Downing LLP and Henley Business School, are useful documents for small and mid-sized quoted companies to use to help inform their board performance reviews.

Board performance reviews are an important element of corporate governance. It is therefore necessary to better understand how small and mid-sized quoted companies undertake them, how they differ between companies of different sizes & stages of development, and what can be learnt to develop good practice for the mid-cap ecosystem.

The Board Performance Review Report analyses the current approaches to board performance reviews at various organisations. Using a framework of proactive and reactive boards, the research shows a variety of formal and informal approaches.

The Board Performance Review Guide builds on principle 7 of the QCA Corporate Governance Code, providing further detail. The Guide contains 6 key applications for an effective board review process. It is intended as a practical tool which outlines how a board can realise further value from a regular review of its performance. It may not entail formalising an informal approach, but does look at increasing board effectiveness.

To view the Report or Guide, 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.

BEIS report on executive pay and investment in the UK

In June, the Department for Business, Energy and Industrial Strategy published a report on executive pay and investment in the UK. The report explores the relationships between CEO performance targets, the pay incentives associated with those targets and firm investment for companies listed on the FTSE All-Share Index from 2013 to 2019.

The study had 3 overarching objectives. Namely, to:

  • explore the prevalence of different performance targets in UK executive pay contracts, with a view to better understanding the use of different target types and whether they are calibrated effectively to incentivise target achievement.
  • examine the evidence for whether CEOs influence firm investment decisions to improve performance against specific targets in their pay contracts.
  • examine the evidence for whether there is a systematic relationship between the presence and size of specific performance targets and firm investment.

To view the report, please click here.

HMT establish new group to stop greenwashing

On 9 June 2021, HM Treasury announced that it had established The Green Technical Advisory Group (GTAG) in order to oversee the Government’s delivery of a “Green Taxonomy”. The Green Taxonomy is a common framework setting the bar for investments that can be defined as environmentally sustainable.

As part of this, the GTAG and the Green Taxonomy will seek to clamp down on greenwashing – unsubstantiated or exaggerated claims that an investment is environmentally friendly. The intention is to make it easier for investors, consumers and other stakeholders to understand how a company or firm is impacting the environment.

GTAG will be chaired by the Green Finance Institute and made up of financial and business stakeholders, taxonomy and data experts, and subject matter experts drawn from academia, NGOs, the Environment Agency and the Committee on Climate Change.

To read more about this, please click here.

FRC extends COVID-19-related rent concessions

On 9 June 2021, the FRC announced an extension to the application period for accounting requirements covering COVID-19-related rent concessions. The requirements, originally introduced into FRS 102 and FRS 105 in October 2020, apply to rent concessions that reduce only lease payments originally due on or before 30 June 2022, provided the other conditions for applying the requirements are met.

The amendments respond to the continuing impact of the pandemic and help to ensure the concessions are accounted for consistently.

To view more information, please click here.

Investor Forum on Governing for Growth

At the beginning of June, the Investor Forum published a white paper on Governing for Growth. The paper aims to identify a series of indicators for when a company is reaching a stage in its maturity where it becomes important to build more resilience and potentially adopt greater governance structures. The intention is to ensure that the growth of these companies does not outpace the robustness of their governance and produce negative outcomes.

The indicators of growing maturity include:

  • Scale:

    • A change in the shareholder register;
    • Increasing in size to the extent that the company begins to cross certain thresholds; and
    • Market capitalisation increases beyond £1 billion.

  • Operational:

    • A shift from management based on personal relationship to management processes;
    • Central management no longer has a clear line of sight to all operations; and
    • Business complexity increases and the range of challenges expands.

  • External perspectives:

    • Change in the nature of expectations from institutional investors;
    • Pressure from other stakeholders increases; and
    • Nomad or broker recommends change.

As part of this, the Investor Forum has developed a series of steps that may be taken by companies in order to provide additional safeguards. The Investor Forum’s response to enhance governance include:

  • Position:

    • Regularly seek an understanding of expectations of leading institutional shareholders; and
    • Deliver formal board evaluation process, and respond appropriately.

  • People:

    • Appoint an executive director with larger UK public company experience;
    • Appoint a company secretary (with UK public company experience);
    • Appoint a Senior Independent Director with larger UK public company experience;
    • Encourage the executive team to seek NED roles on other boards, or coaching; and
    • Appoint an independent chair.

  • Processes:

    • Put audit out to tender;
    • For related party transactions, constrain activity and offer an independent shareholder vote;
    • Develop an internal audit function;
    • Seek approval for new remuneration schemes and offer an annual vote on remuneration; and
    • Consider changing form of listing.

The QCA fed into the white paper both in writing and during a series of roundtables held by the Investor Forum in late 2020.

To view the paper, please click here.

Report on re-imagining regulation

The Prime Minister recently established the Taskforce on Innovation, Growth and Regulatory Reform (TIGRR). In a recent report issued by the TIGRR, there is a recommendation to “mandate a new Proportionality Principle”. The Proportionality Principle is described as absolutely vital to a new framework, with “one of the longstanding issues with traditional regulation is that it has a disproportionate negative impact on smaller businesses”.

In his letter in response to the report, the Prime Minister specifically states that the UK “can lead the world in the economy of the future, creating new opportunities and greater prosperity”, but that this can only be achieved “if we clear a path through the thicket of burdensome and restrictive regulation that has grown up around our industries”.

We agree with the Prime Minister and the “Proportionality Principle” proposed in the TIGRR’s paper. It is essential that any new regulatory or legislative action is proportionate in its approach, having regard to the smaller size and more limited resources of these companies, as well as balancing the subsequent costs and benefits of these developments. 

To view the report, 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. 

FCA Climate Adaptation Report – Net zero survey

In H2 2021 the FCA will publish its inaugural Climate Adaptation Report. The Report will provide an overview of the FCA’s climate change strategy and examine climate change risks and opportunities across regulated sectors.

The Report will also specifically consider how regulated firms are aligning their activities with the transition to ‘net zero’ carbon emissions, including the role of alliances, tools and targets, and any challenges faced by firms. This is in line with the FCA’s latest remit letter from the Treasury, which formally brought consideration of net zero into the FCA’s remit as a financial regulator.

To support their Report, and shape their approach to respective policy and supervisory strategies regarding firms’ net zero commitments, the FCA is seeking information on the current status of progress towards net zero in the issuers sector.

The FCA notes the efforts underway across the industry to align firms’ activities with the transition to net zero. To assist their analysis of the current status of such efforts, the FCA has developed a survey. Importantly, the survey should not be read as a formal supervisory information request. Nor should it be read as setting any new supervisory expectations regarding firms’ net-zero-aligned activities. We encourage firms to complete the survey and return responses to the QCA by 2 July 2021. Responses will then be passed to the FCA.

Survey responses will not be published, and individual firms will not be named in the final Report. Any supporting information included in the Report will be anonymised and aggregated.

To complete the survey, please click here.

Once you have completed the survey, please email it to


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’s Primary Markets Expert Group and Secondary Markets Expert Group contributed to our response to the FCA’s consultation on changes to UK MiFID’s conduct and organisational requirements

To view the response, please click here.

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

  • BEIS: Restoring trust in audit and corporate governance

    • On 18 March, BEIS published its consultation on the three audit-related reviews, Restoring trust in audit and corporate governance. The consultation distils the 155 recommendations included within Sir John Kingman’s review of the FRC, Sir Donald Brydon’s review of the quality and effectiveness of audit and the CMA’s market study on statutory audit. The QCA are concerned that some of the proposals will do significant damage to small and mid-caps. We are working on a comprehensive response which contains data from surveyed company directors. (Deadline: 8 July)

  • IASB: Third Agenda Consultation

    • 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

    • 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. (Deadline: 27 August)

  • FCA: Enhancing climate-related disclosures by standard listed companies

    • 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). (Deadline: 10 September)

If you have any comments you wish to contribute to the above consultation(s), please get in touch with Jack Marshall, Senior Policy Adviser,

Powered By MemberPress WooCommerce Plus Integration