Directors' knowhow is a monthly article, which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.
New AIM Rules come into force
As you will no doubt know, the changes regarding corporate governance made to the AIM Rules for Companies come into force today – 28 September 2018.
The rules mean that all AIM companies are now required to disclose details of the recognised corporate governance code they have decided to apply. They will then have to explain how they comply with their chosen corporate governance code and, where they depart from the code, explain the reasons for doing so.
To ensure that your company is prepared, you can find the following resources:
- AIM Rules for Companies
- An explanation of the changes to the AIM Rules
- QCA Corporate Governance Code (free for members)
- July 2018 edition of Inside AIM – explaining how to prepare for the corporate governance changes; and
Government publishes advice for citizens and businesses for if there is a ‘no deal’ Brexit
The UK government has published a collection of technical notices setting out how businesses and citizens should prepare, if Britain is unable to negotiate a deal to leave the European Union before 29 March 2019 – the so-called ‘no deal’ scenario.
You can find the full collection of notices here.
One technical notice of particular interest to small and mid-size quoted companies concerns state aid (the European Commission approved under EU state aid rules the prolongation of Enterprise Management Incentives (EMI) until 6 April 2023 in May 2018).
The government states that EU state aid rules will be transposed into UK domestic legislation in any event and will apply to all sectors. The Competition and Markets Authority (CMA) would then be responsible for enforcing and supervising the UK state aid regime.
To prepare, all companies should then be able to:
- Receive state aid from UK public authorities in accordance with the UK state aid rules; and
- Make complaints about unlawful aid or the misuse of aid to the CMA.
The CMA will also publish guidance on the new UK state aid regime in early 2019.
FRC research indicates that companies should treat diversity as part of their business strategy
Research conducted by the University of Exeter for the Financial Reporting Council (FRC) has found that although the majority of the UK’s largest companies have adopted policies on boardroom diversity, their reporting to stakeholders needs to improve.
The report ‘Board Diversity Reporting’ assessed the current extent and manner of reporting by FTSE 350 companies on diversity at board and senior management levels in their annual reports and explains how diversity reporting has evolved over time.
The key findings were:
- 98% of FTSE 100 and 88% of FTSE 250 companies have a policy on board diversity.
- Yet just 15% of FTSE 100 companies report against all four measures stated within provision B.2.4 of the current UK Corporate Governance Code.
- Some companies are embracing the spirit of diversity in their narrative reporting but many need to develop a clearer strategy to drive greater diversity at senior management level.