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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 Retail Investor Survey

At the end of September, the QCA released the results of a survey, in conjunction with YouGov, on retail investment in small and mid-size quoted companies. The report, which surveyed over 500 retail investors, investigates the investment habits of retail investors, and includes practical questions for companies to ask themselves to encourage retail investment in their stocks.

Some of the key findings include:

  • UK retail investors are typically resilient and in it for the long-term, taking a measured approach.
  • Two-thirds of retail investors have changed their investment strategies as a result of the impact of the COVID crisis on the economy.
  • Only 5% of retail investors think corporate governance has no impact on share price. It is viewed as having a positive influence on company management and resulting performance.

If you wish to view the 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.

FRC guidance on section 172 statements


On 14 October, the FRC Lab published a set of tips in order to help companies consider what they should include in a Section 172 statement, as well as how to present it and facilitate the process of preparing the statement.


In order to produce the tips, the Lab held discussions with investors and other stakeholders about what information would be most useful and how these matters can be presented the most effectively. In addition to this, the Lab also spoke to companies to understand their processes and challenges in preparing the statement.


Some of the key tips on building in useful content, include:

  • The section 172 statement should not just be a compliance exercise and should reflect how the company met the requirements, explaining what is relevant to it
  • Explaining the board’s reasoning
  • Discussing how matters are considered strategically and how they are relevant to the business model
  • Reflecting on the board’s oversight on how management engages with stakeholders
  • Including material KPIs on key stakeholders
  • Addressing future consequences and planned actions.

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

FRC review of corporate governance and AGMs


On 6 October, the FRC issued a review which considered the different ways companies held AGMs during the first half of 2020 in light of the pandemic and whether the approaches taken best served the interests of shareholders.


The key findings from the review, include:

  • 80.7% of FTSE 350 companies held closed meetings, requiring voting in advance via proxy.
  • Of the 163 companies that held closed meetings, 81.6% made some arrangements to allow for shareholder Q&As with the board.
  • Of the 30 companies that held open meetings, 60% were facilitated through webinar or audiocast with live voting capabilities.
  • 30 companies appear to have not made any arrangements for shareholders to ask questions to the board prior to or during the AGM.

The FRC found that shareholder rights are best served by the companies which provide effective and clear communication before, during, and after the meeting, as well as allowing the participation of all shareholders who wish to attend.


If you wish to see the review, you may do so here.

OTS report on simplifying tax claims and elections


The Office of Tax Simplification has released a report that explores ways of simplifying the process of making claims and elections across the tax system. At present, the UK has approximately 1,190 tax reliefs, with almost all of these requiring the taxpayer to make a claim to receive the relief. The report explores ways in which the administrative processes for making claims could be simplified across Income Tax, Corporation Tax, Capital Gains Tax and VAT.


The report makes 15 recommendation that would help to improve the operation of claims and elections across the tax system. These recommendations seek to increase the functionality of the personal and business tax account.


To view the report, please click here.

FRC annual review of corporate reporting


In October, the FRC released a review of corporate reporting that reveals areas in which company reporting needs to improve. The intention of the review is to indicate areas where improvements to reporting quality are needed so users of accounts have a clearer understanding of company performance and position.


The top ten areas of corporate reporting that the FRC has indicated need to improve includes:

  • Judgement and estimates;
  • Impairment of assets;
  • Revenue and contracts with customers;
  • Financial instruments;
  • Alternative Performance Measures;
  • Strategic report;
  • Statement of cash flows;
  • Provisions and contingencies;
  • Fair value measurement; and
  • Business combinations.

The review includes information on how to address the above issues and make improvements.


To read the review, please click here.

ISS benchmark policy changes


In October, Institutional Shareholder Services (ISS) released  their proposed benchmark policy changes for 2021.


The key changes for the UK and Ireland have been outlined below:

  • ISS will recommend against the Chair of the nomination committee (or other directors) if the board of a company in the FTSE 350 does not constitute at least 33% women. 
  • ISS will recommend against the Chair of the nomination committee (or other directors) if the company does not have at least one woman on the board, this includes companies on:
    • FTSE SmallCap 
    • ISEQ 20
    • Listed on AIM with a market cap over £500 million 
  • ISS proposes a policy change to recommend support for share issuance requests when trusts provide an explicit commitment that shares will only be issued above net asset value, in alignment with the PEG.
  • Regarding director accountability, significant risk oversight failures related to environmental and social concerns may trigger vote recommendations against board members.

The QCA has since responded to the consultation, which you can view below in the Policy section.

FRC update reporting guidance


The FRC’s Financial Reporting Lab recently released two short guides, which look at reporting in times of uncertainty. As a result of the current pandemic, many companies will be facing a challenging year-end. The reports look back at key elements highlighted in the Lab’s previous work, considers current practice and takes a look forward at how reporting is developing. Details of the two guides can be found below.


Covid-19: Resources, action, the future – a look forward


The key areas within the report include:

  • Resources – this section relates to how much cash the company has, the level of debt the company is holding and the cash and liquidity the company can obtain. This information is useful for investors in helping them to understand more about the availability of cash.
  • Actions – this section relates to the management of expenditure and cash outflow in the short-term, as well as how the company can ensure viability.
  • The future – this sections relates to how decisions made during the current crisis will ensure the sustainability of the company and impact the company’s stakeholders. Investors would like to see how the company is protecting its key assets and value drivers.

Covid-19: Going concern, risk and viability – a look forward


The key points contained within the report include:

  • Going concern – investors recognise that the level of uncertainty is significant and, to a large extent, out of the company’s control and expect them to report many areas of uncertainty and estimations. It is important that companies disclose how they are managing the current situation.
  • Risk – the best risk disclosures should consider the issues raised by the pandemic with reference to its impact on the company relevant to its specific circumstances.
  • Viability – a viability statement with realistic scenarios and clear assumptions will allow a company to appropriately communicate their longer-term prospects, despite their being uncertainty in the short-term.

HMRC ERS Bulletin


At the end of October, HMRC published an Employment Related Securities Bulletin. This Bulletin concerns Enterprise Management Incentive (EMI) schemes, Save As Your Earn (SAYE) extended holiday and the continued impact of the coronavirus pandemic on employee share schemes.


Regarding EMI, we are pleased to see that the schemes will continue to be available for use following the end of the transition period. EMI schemes were approved by the European Commission as required under the State aid rules. However, the schemes will continue to be available under UK law.


In addition to the above, HMRC has exercised its discretion to ensure that EMI option-holders who found they no longer met the working time commitments, as a result of the pandemic, can maintain the tax advantages and reliefs, as if they’d continued to work for their employer as per their employment contract.


In terms of SAYE, HMRC have confirmed that employees working less than their usual hours and who will be eligible for the scheme will be treated as being part furloughed for the purpose of SAYE. For now, the extended payment holiday will continue to apply to these participants who miss contributions whilst receiving payments under the new Job Support Scheme.


If you wish to read the Bulletin, please click here.

FRC Lab newsletter


On 26 October, the FRC released its third newsletter for 2020. This issue includes an update on the Lab’s ongoing projects and its recently released reports, such as its report on Video in corporate reporting.


Also included within this edition of the Lab’s newsletter is a section on Covid-19-related reporting guidance. The outbreak of the pandemic resulted in the publication of a significant amount of guidance from the regulators. The Lab has collated some of the key elements of the guidance and provided it in their newsletter.


If you wish to read the newsletter, 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.


New FRC Chair


On 15 October, the Secretary of State for Business, Alok Sharma, announced the appointment of Keith Skeoch as Interim Chair of the Financial Reporting Council (FRC).


Mr Skeoch was previously a non-executive of the FRC and will now lead the regulator in its transformation into ARGA.


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. 

Survey on stock price and liquidity


Exane BNP Paribas has launched a corporate survey on stock price and liquidity as part of market discussions at European level to improve the liquidity of listed companies post Covid-19.

The questionnaire provides you with the opportunity to express your concerns regarding liquidity and transparency.


If you wish to take 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


On 30 September 2020, the QCA’s Accounting, Auditing and Financial Reporting Expert Group responded to the IASB’s consultation on Primary Financial Statements.

To view the response, please click here.


On 1 October 2020, the QCA responded to the FCA’s consultation on proposals to enhance climate-related disclosures.


To view the response, please click here.


On 20 October 2020, the QCA responded to the PIRC’s consultation on executive pay.


To view the response, please click here.


On 26 October 2020, the QCA responded to the ISS consultation on their proposed benchmark policy changes for 2021.


To view the response, please click here.


The QCA is seeking views on the below consultations:

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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