open navigation close navigation Menu
EQ Bulletin May 2021

EQ Bulletin – May 2021

Tuesday, 4 May 2021

Welcome to our monthly bulletin of what’s happening within the regulatory environment that impacts the share registration and employee share plans space.

Paul Matthews (1) Paul Matthews CEO - EQ Boardroom

We return from the Early May Bank Holiday with a spring in our step and hope you all managed to enjoy the long weekend.

This month we will see the first wave of AGMs, with a peak of 13 AGMs on the 6th May. Later in the month, aligned with Government lockdown guidelines, we see the return of physical meetings with necessary precautions in place to limit attendance and maintain social distancing.

In this month’s bulletin, we look at the consultation on extension of mandatory climate related financial disclosures, Glass Lewis’s review of UK Corporate Governance Code compliance and much more.

As always, if you have any questions on the content of this month's bulletin, please contact your Client Relationship Lead.

Articles in this Edition cover:

Dates for your diary:

The EQuivalence Forum
Wednesday 9 June and Wednesday 15 September

Did you miss the latest EQuivalence Forum?
We discussed shareholder engagement and proxy solicitation at the time of coronavirus. You can find the webinar on-demand here.

Kathy Cong 800X800 Kathy Cong Managing Director, Prism Cosec

An insight from Prism Cosec

It is clear that climate change remains perhaps the fundamental challenge of modern times, and companies are being asked to play their part in reducing carbon emissions.  Following the introduction of the requirement for Premium Listed companies to report against the Task Force on Climate-related Financial Disclosures (TCFD) from 2021, the Government has issued a consultation which will extend these reporting requirements to all UK listed and large private companies from 2022, albeit on a less onerous basis.  Boards should not underestimate the amount of time it takes to place the necessary structural and data collection procedures needed to comply.  For smaller companies, the Quoted Companies Alliance's latest publication, 'A Practical Guide to ESG', may prove helpful reading to provide a solid basis for ESG reporting generally.

Consultation on extension of mandatory climate-related financial disclosures

The Department for Business, Energy and Industrial Strategy (BEIS) has published a consultation on extending mandatory climate-related financial disclosures to all public quoted companies, large private companies and LLPs.

The scope of the requirements would include:

  • All UK companies that are currently required to produce a non-financial information statement (UK traded companies with more than 500 employees, banking and insurance companies),
  • AIM UK registered companies with more than 500 employees,
  • UK companies which have more than 500 employees and turnover greater than £500m,
  • LLPs with more than 500 employees and turnover greater than £500m.

It will be a mandatory requirement for these companies to disclose climate-related financial information in their Strategic Report in line with the four pillars of the TCFD recommendations. It is proposed that regulations will be made by the end of 2021 with a commencement date of 6 April 2022, applicable for accounting periods starting on or after that date.

The proposed disclosures are based on the TCFD recommendations but are less onerous and include:


  • A description of governance arrangements in place to identify and manage risks and opportunities arising from climate change
  • Identifying who has operational responsibility for climate change
  • If the company has an audit committee, whether that committee considers climate change


  • Brief description of the company’s business model and strategy
  • A description of how the business model and strategy may change in response to effects relating to climate change and trends and factors that affect this change

Risk Management

  • A description of the principal risks and opportunities relating to transition risk, physical risk and regulatory risk arising from climate change which may affect the business and a description of how the company manages those areas of risk and opportunity.

Metrics & Targets

  • A description of the KPIs relevant to the company’s exposure to climate change risk and opportunity and the targets set for those KPIs
  • Scenario analysis will be encouraged but will not be required.

If climate-related financial disclosures are not made, a statement will be required to provide a clear and reasoned explanation for the omission.

BEIS consultation

QCA guide on ESG matters for smaller companies

The Quoted Companies Alliance (QCA) have published a practical guide to Environmental, Social and Governance issues for smaller companies.  The guide sets out how boards and management can approach ESG matters and provide investors with information that they need in smaller companies. The guide is structured around five steps for companies to take:

  • Develop a clear purpose statement
  • Undertake an ESG materiality assessment
  • Be aware of what others are saying and be prepared to respond
  • Understand what data you have and what data you need to gather
  • Take control; decide what to disclose and where; be proactive in your communication.

QCA Guide

Online Modern Slavery Registry is launched

The Home Office has launched the online Modern Slavery Registry on which companies may publish their section 54 modern slavery statements. Although currently voluntary, the Government is strongly encouraging companies to file their statements on the Registry.  This will become mandatory under government proposals to reform modern slavery requirements once legislation has been passed.

Government’s announcement

Gov Guidance

Glass Lewis’s review of UK Corporate Governance Code compliance

Glass Lewis has issued a special report reviewing compliance against the UK Corporate Governance Code (Code). Key highlights are:

  • The majority of FTSE 250 companies complied in full with the Code.
  • Only a minority of small Main Market companies complied in full outside of the FTSE 350.
  • 41% of companies that didn’t fully comply only failed to comply with one provision. However, two companies failed to comply with six provisions.
  • The provisions complied with the least were: chair tenure, independence of the chair on appointment, post-employment shareholding, pension alignment, committee composition, having a Senior Independent Director and board evaluation.

The review considers the provisions complied with least and the reasons given for non-compliance.  It then sets out Glass Lewis’s approach to these provisions.  Glass Lewis state that they will take a holistic view of the board and culture at the company rather than applying a blanket approach to voting recommendations.

Glass Lewis review

Updated guidance on COVID and filings at Companies House

Companies House has published updated guidance in relation to COVID and the filing of accounts.  The extension for filing accounts granted under the Corporate Insolvency and Governance Act came to an end on 5 April 2021.  However, companies may apply for a 3-month extension to their filing deadline and those companies citing COVID as a reason will be granted an extension. However, companies that have already had their accounts deadline extended may not be eligible, as the maximum filing period of 12 months remains.

Companies House has also confirmed that there will be no further automatic extensions for confirmation statement or event-driven filings after 5 April 2021. 

Gov Guidance

Primary Market Bulletin No. 33 published by the FCA

The Financial Conduct Authority (FCA) has issued Primary Market Bulletin No. 33.  Content includes:

  • Audit of financial statements by EEA audit firms. Auditors of traded companies who are from an EEA country need to register with the Financial Reporting Council in time for publication of the accounts for financial years beginning on or after 1 January 2021

  • The FCA's review into total voting rights and major shareholding disclosures highlighting common mistakes companies were making and stressing the importance of these disclosures.

  • Review of payments to governments by companies in extractive industries by the FCA. The review identified a number of issues, including missing or incomplete information in the required disclosures. As a result, the FCA have opened preliminary enquiries into the compliance of a number of companies in relation to these requirements.

  • Feedback on the FCA's Review of Delayed Disclosure of Inside Information. The FCA clarify that the review did not constitute new guidance or challenge market practice. The review intended to highlight areas of poor practice and remind companies of the regulation and technical notes available in this area.

Primary Market Bulletin No. 33

The Parker Review publishes latest progress against ethnicity targets

The Parker Review has published its latest results looking at FTSE companies against its board ethnicity targets.  Key highlights are:

  • 74 FTSE 100 companies had ethnic representation on their boards as at Nov 2020 compared to 52 in Jan 2020
  • 21 FTSE 100 companies had no ethnic representation
  • A further 7 FTSE 100 companies reported they had also appointed a director from an ethnic minority by March 2021

The report shows that progress has been made particularly by FTSE 100 companies.  However, only five ethnic minority directors were in a CEO position, and all of these were men.  This was down from 6 in 2020.

Gov Report