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Directors' Knowhow is a monthly article which highlights changes and updates of relevance to small and mid-sized quoted companies.

QCA publications


This section of the Directors’ Knowhow features all of the publications produced by the QCA over the last month.


QCA/Thomson Reuters members’ poll on MAR


The Quoted Companies Alliance, together with Thomson Reuters Practical Law, surveyed QCA members to find out how small and mid-size companies, as well as their advisers, have found the Market Abuse Regulation (MAR) in practice. 

The results of the poll show the following key findings since MAR came into effect on 3 July 2016:

  • Delaying disclosure of inside information. 57% have delayed disclosure of inside information.
  • Copy of insider list to FCA. 14% have been asked by the FCA for a copy of their insider list.
  • Dealing code. 79% have adopted a code that is largely based on or is similar to the ICSA/GC100/QCA code or have adopted such code pretty much wholesale, with minimal amendments, and 21% have adopted a completely bespoke code.


To read the full article, please do so here.


How small- and mid-cap quoted companies make a substantial contribution to markets, employment and tax revenues


Hardman & Co. have recently published a report in cooperation with the QCA that analyses the contribution made by small and mid-size quoted companies. The key findings of the report are as follows:

  • Small and mid-size companies account for 93% of all companies on UK public equity markets, but just 20% of market capitalisation;
  • They employ over 3 million people – an estimated 11% of total UK private sector employment; and
  • Contribute over £26bn in taxes – about 5% of total UK tax take.


The report highlights the vast difference in size between the largest 100 companies, who account for 80% of total market capitalisation, and the other 1,249 small and mid-size quoted companies, who account for the remaining 20% of total market capitalisation. This demonstrates that the small and mid-size companies that make up the majority of the UK’s public equity markets are disproportionately impacted by legislative and regulatory action as they lack both the capacity and resources of their larger counterparts.


To read the full report, please do so 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.



FCA produce new listing rules checklist and Prospectus Rules cross-reference lists


The FCA have produced new checklists for issuers to help them demonstrate how they have complied with the applicable disclosure requirements when submitting documents for approval under the Listing Rules.


If you wish to see the new listing rules checklist, please do so here.


The FCA have also produced new Prospectus Rules cross-reference lists. The cross-reference lists are for issuers to show the FCA how they have complied with the applicable disclosure requirements when submitting documents for FCA approval under the Prospectus Regulation.


If you wish to see the Prospectus Rules cross-reference lists, please do so here.


Extension of the senior managers and certification regime


The Senior Managers & Certification Regime (SM&CR) is being extended to all firms authorised under the Financial Services and Markets Act 2000. It replaces the approved person’s regime and therefore applies to almost all financial services firms. The extension will come into effect on 9 December 2019.


The new individual accountability regime will apply a baseline of requirements for all companies. This consists of three parts:

  • Senior managers regime – this requires all senior managers to be approved by the FCA;
  • Certification regime – this covers employees who are not senior managers, but whose jobs have a big impact on customers, markets or the firm; and
  • Conduct rules – these are high-level standards that will apply to almost every person that works within the financial services industry.

The SM&CR has been extended in a way that is proportionate to the size of the firm. There are three tiers under the regime:

  • Core – firms in this tier will have to comply with the baseline requirements;
  • Enhanced – this will apply to firms whose size, complexity and potential impact to customers or markets warrants more attention; and
  • Limited scope – this applies to firms who already have exemptions under the Approved Persons Regime.

​​​​​​​For more information, please click here.


FCA & ICAEW guide to help smaller listed companies improve financial reporting


A new guide to help smaller listed and AIM quoted companies has been published by the FRC and the ICAEW. The guide provides practical tips, as well as questions for audit committees to consider, with the aim of increasing the quality of financial reporting within the small and mid-size company community.


'Smaller Listed and AIM Quoted Companies – A Practical Guide for Audit Committees on Improving Financial Reporting' is designed to encourage smaller quoted companies to reflect on their current practices and consider areas for improvement. The guide refers to the QCA Corporate Governance Code for companies to find information on the role and responsibilities of the audit committee, as well as referring to the QCA Audit Committee Guide, which includes a suggested schedule for meetings and describes what should be discussed within these meetings.


If you wish to read the guide, please do so here.


Amendment to FRS 102


On 24 May, the FRC announced amendments to FRS 102 – multi-employer defined benefit plans. The amendments come as a response to a current financial reporting issue relating to where to present the impact of an employer’s transition from defined contribution accounting to defined benefit accounting.


The amendments are effective for accounting periods beginning on or after 1 January 2020.


Please see the amendment here.


Accounting and auditing if there is a no-Brexit deal




If the UK leaves the EU without a deal, there will be some changes to accounting and the UK’s corporate reporting regime that will affect certain companies. There may be actions that UK incorporated companies, as well as EEA companies, need to take if the UK leaves the EU without a deal. The changes fall under the following categories for UK incorporated companies:

  • Preparing annual accounts using International Accounting Standards;
  • Operating as a UK company with cross-border presence in the EEA;
  • Operating as a UK public company with UK listing;
  • Operating as a UK public company with EEA listing;
  • Audit committees; and
  • Appointing auditors.


To read the full guidance, as well as see the actions EEA companies may need to take, please do so here.




Rules for auditing UK companies operating solely in the UK will not change if the UK leaves the EU without a deal. However, there will be additional requirements for audits of UK companies operating within the EEA. The guidance is for both UK and EEA auditors, auditors with UK and EEA qualifications and UK and EEA audit firms. The changes fall under the following categories for the UK audit community:

  • Recognition of UK audit qualifications in EEA states;
  • UK audit firms auditing EEA companies;
  • Third-country auditors of non-EEA firms listed on EEA-regulated market;
  • Business treated as public interest entities; and
  • Group auditors.


To read the full guidance, as well as see the actions the EEA audit community may need to take, please do so here.


Shareholder votes on dividends


This month, the Investment Association has called for companies to improve the transparency of their approach to paying dividends. The IA wants companies to publish a ‘distribution policy’ which would set out their approach to paying dividends to shareholders, as well as other ways of returning capital to shareholders. The IA believes this will help promote a more transparent, long-term approach.


The call for companies to improve the transparency of their approach to dividend payments by the IA has been conducted on behalf of the Department for Business, Energy and Industrial Strategy.


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


Inside AIM article relating to Nomads and QE status


On 28 May 2019, London Stock Exchange issued Inside AIM articles relating to Nominated Adviser Staffing and the status of Qualified Executives. The article sets out answers to some of the frequently asked questions in relation to Nomads and QEs, taking into account wider market conditions and trends.


The key points are as follows:

  • QE status is considered in the context of a firm and is not an individual qualification, which means that QE status is not automatically transferable when a QE in an existing firm changes or joins another firm.
  • If a QE applicant is unable to demonstrate that all the required Relevant Transactions have been completed, ongoing supervision may be required.  
  • The maintenance of standards across the market is the key objective.
  • Firms may consider individual working arrangements, such as part-time or other forms of flexible working for their QEs.
  • AIM company clients must have ongoing access to QEs that have full knowledge of the company in a real-time market environment. This means that if part-time or flexible working arrangements are in place, then clients should have access to more than one QE with the requisite knowledge of the company.


To read the full article, please do so here.

Articles and news


This section features relevant news, articles and publications for small and mid-size quoted companies that has been published in the last month.


AIM research surge nears FTSE 250 coverage


On 15 May, Hardman & Co. published a report detailing the research coverage on AIM. The report finds that for the average AIM stock with a market cap in excess of £600m, there is research coverage from an average of just over six analysts. This figure is up by 20% since the introduction of MiFID II in January 2018 and matches the coverage of FTSE 250 stocks of the same size.


Despite this, total research output across the market has struggled to grow since MIFID II and brokers now require each analyst, often in a more junior position, to cover more companies than in the pre-MiFID II period.


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



FRC sets out its plan and budget


On 23 May, the FRC published its Plan & Budget for the coming year. The document sets out the FRC’s transition pathway, with a commitment to make the transition into the new regulator, the Audit, Reporting and Governance Authority (ARGA), as quickly as possible.


The transformation into ARGA is already progressing; BEIS is currently consulting on 48 of Sir John Kigman’s recommendations. The FRC’s work programme will also run in parallel with other reviews, such as the CMA review into audit competition and the Brydon Review into the quality and effectiveness of audit.


The FRC’s priorities for 2019/20 include:

  • Supporting the transition into ARGA;
  • Drive a step-change in audit quality;
  • Increase the number of corporate reporting reviews;
  • Use its enforcement resources to manage caseloads; and
  • Promote high quality corporate governance and investor stewardship.

Bloomberg article on AIM


On 16 May, Bloomberg published an article which describes the AIM market in its current context. The article infers that AIM can no longer be seen as a stepping stone for smaller companies wanting to list on the exchange’s main market, as the likes of fashion retailers ASOS, which has grown year-on-year, choose to remain on the growth market.


The article highlights that a greater proportion of companies listed on AIM are profitable, due, in part, to the types of companies that reside on AIM. For instance, AIM has attracted companies from a wide range of sectors, including consumer, health care and industrials. As bigger companies, such as ASOS and Fevertree, decide to remain on AIM, valuations have been pushed up and the overall reputation of the market has improved.


To read the full article, 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.


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.


In addition to the survey, Risk Control are running a series of structured interviews with additional stakeholders from national associations and any small and mid-caps interested in sharing their views and experiences. If you wish to participate, please do inform EuropeanIssuers so they can arrange an interview.


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


If you wish to read the questions before undertaking 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 April 2019, the QCA’s Financial Reporting Expert Group contributed to the response to the FRC’s consultation on the Business Reporting of Intangibles: Realistic Proposals. See the response here.


As well as this, the QCA’s Corporate Governance Expert Group contributed to the response to the FCA & FRC’s consultation on Building a Regulatory Framework for Effective Stewardship. See the response here.


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

  • FRC: Consultation on stronger Going Concern standard for auditors
  • BEIS: Independent Review of the Financial Reporting Council: Initial consultation on the recommendations
  • Independent Review into the Quality and Effectiveness of Audit

If you have any comments you wish to contribute on any of these consultations, please get in touch with Jack Marshall, Policy Adviser,

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