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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.

QCA/Peel Hunt Mid and Small-Cap Survey

On 9 March, the 2021 edition of the QCA/Peel Hunt Mid & Small-Cap Survey, Unlocking Growth After Lockdown, was published. The findings of the report are based on surveys conducted by YouGov with 103 UK-based fund managers, and 141 mid or small-sized quoted companies in late 2020.

The key findings in the report include:

  • 77% of investors think that the temporary actions taken by the UK’s financial regulators and policymakers to help companies access finance through the pandemic were helpful.
  • 72% of investors and over 52% of companies have been engaging with each other in different ways due to the pandemic. This is most predominantly online engagement in place of face-to-face meetings and most companies and investors believe this has been a positive development.
  • Despite these successes, optimism for the future of the UK’s public equity markets is low and decisive action needs to be taken to protect and build on our mid & small-cap markets. Only 21% of investors and 5% of companies think the number of companies listed on UK markets will rise in the future.

To view the full 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.

BEIS consultation: restoring trust in audit and corporate governance

On 18 March, the Secretary of State for Business, Kwasi Kwarteng MP, published the long-awaited consultation on the three audit-related reviews (available here), which will run for 16 weeks. The consultation proposes a major overhaul of the UK’s audit and corporate governance regimes in the wake of some significant corporate failures in recent years.

The consultation has been published following the three audit-related reviews (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) and combines the 155 recommendations put forwarded within these reviews.

We highlight the following proposals as specific areas of interest to QCA member companies:

  1. The expansion of the definition of Public Interest Entities (PIEs) to include some AIM-quoted companies;
  2. Increasing the accountability of directors through new requirements in relation to internal controls (Sarbanes-Oxley) and dividends and capital maintenance;
  3. New reporting requirements through a Resilience Statement and Audit and Assurance Policy;
  4. Giving the new regulator more power to direct changes to company reports and accounts;
  5. Giving the new regulator greater enforcement powers against directors of PIEs and strengthening malus and clawback provisions;
  6. Increased director responsibilities regarding the detection and prevention of fraud
  7. Increasing audit committee oversight and engagement with shareholders.

We highlight the following as specific areas of interest to our accountancy firm members:

  1. The expansion of the definition of PIEs;
  2. Changes to audit purpose and scope; and
  3. Shared audit, operational separation and increased regulator monitoring powers.

The QCA has produced an initial brief that provides an analysis of the key recommendations relevant to small and mid-sized quoted companies. To view the brief, please click here.

The QCA has already held a Finance Director roundtable with key civil servants from BEIS, as well as representatives from the FRC. On the whole, BEIS were open to hearing about our members concerns with the proposed reforms and the potential unintended consequences of such reforms. In particualr, the key points raised included: the increasingly overburdensome level of regulaotion; the expansion of the definition of PIEs and whether the reforms should be limited to the FTSE 350; and the possible imbalance between the costs and benefits of the proposals. 

If you have any thoughts on the consultation, or would like to be involved in helping to formulate the QCA’s response, please do contact and

Lord Hill Listing Review report published

The UK Listing Review report by Lord Hill was published on Wednesday 3 March 2021, which can be accessed here. The review proposes some significant reforms to the rules that govern how companies raise finance on public markets to ensure that the UK remains an attractive location for companies to list and grow.

The QCA submitted a detailed response to the review and engaged with Lord Hill on several occasions. Broadly, we welcome the findings and recommendations contained in the report as they take forward our proposals and take into account our concerns. 

We have produced a short brief which includes information on the background to the review, a summary of the QCA’s response to the call for evidence, an overview of the recommendations, the QCA’s position on the recommendations and a comparison table of our response and Lord Hill’s report. If you wish to view the brief, please click here.

We will continue to work with HM Treasury, the FCA and LSEG as the recommendations are taken forward in order to ensure that they are in the interest of the small and mid-sized quoted companies we represent. 

Budget 2021

On 3 March 2021, Rishi Sunak delivered his second Budget (available here) as Chancellor of the Exchequer, announcing the Government’s plans for the economy. As expected, many of the measures outlined in the Budget were concerned with providing businesses and individuals with the support they need during the ongoing pandemic. However, the QCA welcomes, having put forward suggestions in our Budget Representation, the announcements concerning the EMI consultation and the review of Research & Development tax reliefs. 

We have produced a short note which highlights the main areas of interest for small and mid-sized quoted companies, including: 

  • Lord Hill’s Listing Review report;
  • EMI call for evidence;
  • Tax consultations; and
  • New super deductions.

To view the note, please click here.

FRC Lab newsletter

In March, the FRC’s Financial Reporting Lab published its first newsletter for 2021. In the newsletter, the Lab provides an update on its ongoing projects, as well as reflects on the work and guidance it produced last year during the pandemic.

The Lab’s two main projects currently being undertaken are in relation to the reporting of stakeholders and section 172 statements, and the reporting of risks, uncertainties and scenarios.

In addition, the Lab also discuss their most recent report that was released in February. Their Virtual and Augmented Reality report was the final report in the Digital Future series and can be accessed here.

To view the newsletter, please click here.

FRC on reporting against the UK Code

At the end of February, the FRC released a report on companies reporting against the UK Corporate Governance Code. The report provides advice for companies on how to report transparently and effectively when departing from certain provision of the UK Code.

The report finds that, while companies had claimed full compliance with the Code, many had failed to demonstrate this in their reports. The general emphasis is that companies need to provide more information when they do not comply with certain provisions. The FRC sets out its expectation in relation to compliance with some specific provisions within the Code.

To view the report, please click here.

Kalifa Review of UK fintech

At the end of February, the independent review led by Ron Kalifa, issued its report which sets out a strategy to ensure the UK retains its global leadership in fintech. The report aims to help the UK’s financial technology companies to scale up, grow and deliver better financial results.

The key recommendations in the review include:

  • Introducing a new ‘fintech scale up’ visa route for specialists from around the world;
  • Implementing a ‘scale box’ to provide regulatory support for growing firms;
  • Improving UK listings rules with free float reduction and dual class shares;
  • Creating a £1 billion-pound fintech ‘growth fund’ to help firms grow independently; and
  • Establishing a private sector-led Centre for Finance, Innovation and Technology to support national coordination and growth in fintech across the UK.

The report, which runs alongside Lord Hill’s review of the UK Listing Regime, will help to ensure the UK is an open and dynamic destination to do business.

If you wish to view the report, please click here

PLSA strengthens stewardship and voting guidelines

In March, the Pensions and Lifetime Savings Association issued strengthened stewardship and voting guidelines to reflect the pandemic and climate change. The new guidance warns that pension fund investors, during this AGM season, must be careful to assess how companies have responded to the pandemic and how it has impacted their governance and workforce practices.

Whilst the PLSA states its support for virtual AGMs during the pandemic, they have concerns over how this format may reduce investor engagement. As such, the PLSA advises voting against any motion that would make virtual AGMs permanent, rather than specifically linked to Government policy.

In terms of remuneration, the new guidelines say that significant pay discrepancies between a company’s executives and its wider workforce, as well as those based on gender and ethnicity, can be a symbol of wider issues within the company’s culture and processes. They also highlight that this has become predominant issue during the pandemic where companies have had to make difficult decisions relating to their workforce.

On climate change, the new guide has been strengthened to reflect the Taskforce on Climate-related Financial Disclosures (TCFD) reporting requirements for Premium List companies, which will also encompass smaller companies in the future.

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

UKEB members

Towards the end of March, the UK Endorsement Board (UKEB) announced the appointment of its Board members. In total, 10 members have been appointed to the Board by the Chair of the UKEB, Pauline Wallace.

The UKEB has been established as the body to endorse and adopt new or amended international accounting standards in the UK.

To view the list of appointments, please click here.

Parker Review update

In the middle of March, the Parker Review Committee published its 2021 update report, which sets out its survey results of FTSE 100 companies on the ethnic diversity of their boards. The key results of the survey include:

  • 74 FTSE 100 companies reported they have a director from a minority ethnic group on their board.
  • 21 FTSE 100 companies reported that they do not have any directors from a minority ethnic group on their board. Two companies reported that their current board composition was unknown at the time of the survey, while three companies did not respond to the request to submit their data.

FTSE 250 companies are expected to be surveyed by the end of 2021 and have at least until 2024 to appoint at least one ethnic minority director on their boards.

To view the most recent updates, 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.

FCA speech on market abuse

In March, the FCA published a speech by Mark Steward, Executive Director of Enforcement and Market Oversight, on the FCA’s recent work to tackle market abuse. The key highlights from the speech include:

  • While the FCA witnessed an increase of 34 per cent in transactions and transaction reports in 2020, it saw a reduction in suspicious transaction and order reports (STORs) during this period. However, after the end of the first Covid-19 lockdown, STORs have returned to normal levels and the regulator is not concerned that total volumes for the year are lower than previous years.
  • The FCA has increased its market monitoring activities during 2020 due to the pandemic and introduced a new approach to short selling reporting that enables short positions to be reported on its Electronic Submission System (ESS). This system speeds up validation and introduces automated alerts that enable it to more readily identify delayed notifications or other issues.
  • The FCA has been particularly focussed on its enforcement activities and the speech highlights some recent market abuse and insider dealing cases.

If you wish to see the full speech, 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’s Accounting, Auditing and Financial Reporting Expert Group contributed to our response to the FRC’s Draft Strategy, Plan and Budget 2021/22.

To view the response, please click here.

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

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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