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EQ Monthly Bulletin June 2023

EQ Monthly Bulletin - December 2023

Friday, 8 December 2023

Keeping you up-to-date with industry changes and news impacting the world of share registration and employee share plans.

Welcome to our Monthly EQ Bulletin.

Thera Prins Thera Prins CEO - UK Shareholder Services

After a few months of relative inactivity there has been a recent pickup in developments and reports relating to UK Shareholder Services.

The major development has been the Economic Crime and Corporate Transparency Act 2023 receiving Royal Assent. This Act, when fully in force, will have an impact on all companies regardless of size. Provisions being brought into force through the medium of Statutory Instruments, with the first such instrument already having been published, will see certain provisions of the Act into force on 15 January 2024.

There may be a certain feeling of relief following two announcements: One, in that the Department for Business and Trade draft Companies (Strategic Report and Directors' Report) (Amendment) Regulations 2023 have been withdrawn. And two, from the second announcement from the Financial Reporting Council. While there will be an updated UK Corporate Governance Code, the changes will not be as extensive as originally envisaged.

The Quoted Companies Alliance has, however, published an updated version of its own Corporate Governance Code which will apply for accounting periods commencing on or after 1 April 2024.

The Financial Reporting Council has issued its annual review of Corporate Governance Reporting while Glass Lewis have published their 2024 Proxy Voting Guidelines.

The Transition Plan Taskforce has published a consultation covering seven business sectors with comments invited by 29 December 2023.

Finally, the Institute of Business Ethics have published guidance on the development of an ethical business culture.

Economic Crime and Corporate Transparency Act 2023

The Economic Crime and Corporate Transparency Act 2023 (the Act) received Royal Assent on 26 October 2023. When the Act is fully in force it will have an impact on all companies including mandatory verification of directors and company secretaries’ identities and broadening the powers of the Registrar of Companies to become a more active gatekeeper over the creation of companies.

The Act will also introduce a new offence of failure to prevent fraud which will apply to those companies which meet the Companies Act 2006 definition of a large company. A new test for corporate criminal liability will also be introduced which will apply to all companies regardless of size.

Most of the provisions in the Act will be introduced through the passing of Statutory Instruments. Although, two of the provisions will come into force two months after the date of Royal Assent. These being: section 196 relating to the attribution of  criminal liability for economic crimes to certain bodies, and section 213 which relates to reports on the implementation and operation of Parts 1 to 3 of the Act.

There is no current indication as to when the Act will be fully in force.

The full text of the Act is available from

The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023 have also been published. These Regulations will bring certain sections of the Act into force on 15 January 2024, this includes the following:

Section 22 (company names: exceptions based on national security etc).
Section 27 (use of names: exceptions based on national security etc).
Section 67 (exemption from identity verification: national security grounds).
Section 103 (false statement offences: national security etc defence).
Section 147 (national security exemption from identity verification).

The Regulation is available from The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023 (

Withdrawal of draft Companies (Strategic Report and Directors' Report) (Amendment) Regulations 2023

Following concerns raised by companies relating to the imposition of additional reporting requirements, the Department for Business and Trade announced on 16 October 2023 that the draft  Companies (Strategic Report and Directors' Report) (Amendment) Regulations 2023, was being withdrawn. Further details are available from Burdensome legislation withdrawn in latest move to cut red tape for businesses - GOV.UK (

UK Corporate Governance Code Review

As the Kings Speech for the opening of the current parliamentary session did not prioritise plans for the Government to introduce primary legislation to modernise the regulation of audit, corporate reporting and governance the Financial Reporting Council (FRC) issued a policy update statement. In which it announced that only a small number of the original 18 proposals to update the UK Corporate Governance Code (the Code) will be progressed.  In particular:

  • There will be a small number of changes that streamline and reduce duplication associated with the Code that were overwhelmingly supported by stakeholders in the interests of reducing burdens.
  • The main substantive change that will be taken forward concerns revisions to the original proposal on internal controls. The decision has been informed by helpful stakeholder feedback to ensure there is a more targeted and proportionate Code revision. This includes allowing more time for its implementation and ensuring the UK approach clearly differentiates from the much more intrusive approach adopted in the US.
  • The FRC will not take forward the remainder, over half, of the original proposals. These include those relating to the role of audit committees on environmental and social governance and modifications to existing code provisions around diversity, over-boarding, and Committee Chairs engaging with shareholders. A number of other proposals will also not be taken forward as a result of the Government’s recent decision to withdraw its Statutory Instrument relating to an audit and assurance policy, reporting on distributable profits and resilience statement requirements.

The full statement is available from Statement: FRC policy update. It is anticipated that the updated code will be published in January 2024.

Quoted Companies Alliance – New Corporate Governance Code

The Quoted Companies Alliance (QCA)  has published a revised version of its Corporate Governance Code which will apply in respect of accounting periods commencing on or after 1 April 2024. Copies of the updated code are available for free to members of the QCA from the QCA website QCA Corporate Governance Code – The QCA. Any non-member of the QCA will need to pay £450 to the QCA to purchase a copy of the updated code.

Financial Reporting Council Annual Review of Corporate Governance Reporting

The Financial Reporting Council (FRC) has published its annual review of Corporate Governance Reporting. The Report has found that there are ongoing improvements in the quality of reporting against the UK Corporate Governance Code (the Code) but that there are also areas for improvement. Amongst the areas highlighted in the 59-page report are:

  • Disclosures on non-compliance with the Code Provisions should be improved. Reporting on board decisions and their outcomes should reduce boilerplate disclosures and provide the reader with more concise and insightful narrative.
  • Companies should consider culture-related risks and opportunities, and their link with strategy. Good reporting focuses on setting out both the practice and policy along with objectives and progress towards milestones. This includes reporting on what activities helped to achieve the outcome. The Report found that too often culture-related disclosures in the governance report repeat what can be found in the strategic report or wording from the Code.
  • In relation to environmental issues the FRC expects companies to improve their levels of compliance across all 14 recommended Task Force on Climate-related Financial Disclosures (TCFD) disclosures.

The full report can be viewed at

Glass Lewis 2024 Proxy Voting Guidelines

Glass Lewis have published their 2024 Proxy Voting Guidelines which will be effective for general meetings held on or after 1 January 2023. A number of amendments and clarification of existing guidelines are dealt with in the new version and these include:

  • Director attendance. Glass Lewis usually recommends a vote against the re-election of a director who fails to attend either at least 75% of board meetings or an aggregate of 75% of board and applicable committee meetings. Exceptions are typically granted to directors in their first year on a board or when the company discloses extenuating circumstances.
  • Interlocking directorships. The policy has been expanded to specify that it applies to both public and private companies, other types of interlocking relationships are evaluated on a case-by-case basis, and multiple board interlocks among non-insiders are reviewed for evidence of a pattern of poor oversight.
  • Director accountability for climate-related issues. The policy introduced in 2023 will be applied to FTSE 100 companies operating in industries where the Sustainability Accounting Standards Board has determined that companies' Green House Gas emissions represent a financially material risk.
  • Cyber risk. In the event of a company being materially impacted by a cyber-attack, shareholders can reasonably expect periodic updates communicating the company's ongoing process towards resolving and remediating the impact of the attack. Glass Lewis may recommend against the re-election of appropriate directors should it find the board's oversight, response or disclosures be insufficient or not provided to shareholders.

Clarifications to existing guidelines include:

  • On a case-by-case basis, Glass Lewis cold recommend that shareholders vote against proposals to approve or acknowledge a company’s accounts and reports in instances where the auditor did not provide an unqualified opinion on the financial statements.
  • A clarification of certain structural elements in the “Vote on Remuneration Policy,” “Vote on Remuneration Report,” and “Long-Term Incentives — Structure and Duration” sections in the guidelines which Glass Lewis consider to be best practice and specific circumstances which may lead them to recommend a vote against the company’s remuneration policy and/or report.
  • A new section on Executive Shareholding requirements has been inserted which clarifies Glass Lewis’ belief that companies should generally adopt minimum executive share ownership requirements that should apply for the duration of an executive’s tenure, and for a period of time post-employment.

The full guidelines are available from 2024-UK-Benchmark-Policy-Guidelines-Glass-Lewis.pdf (

Transition Plan Taskforce- Sector Deep Dives

The Transition Plan Taskforce has published a consultation which is open until 29 December 2023  on seven sector-specific deep dives providing guidance for those preparing and users of private sector climate transition plans.  The sectors covered are:

  • Asset managers
  • Asset owners
  • Banks
  • Electric utilities and power generators
  • Food and beverage
  • Metals and mining
  • Oil and gas

The key next steps include :

  • The UK government is expected to launch a consultation on transition plan disclosure requirements for large public and private companies before the end of 2023.
  • The FCA plans to consult in 2024 on rules and guidance for listed companies to disclose in line with the UK endorsed ISSB standards and TPT framework.

Further information is available from: Sector Deep Dive - Transition Taskforce

Business Ethics

The Institute for Business Ethics (IBE) has published guidance for board members on developing an ethical business culture. The IBE guidance is intended to provide practical recommendations for boards as they seek to promote an ethical business culture. The recommendations include:

  • Board members and senior management should lead by example and act with integrity.
  • Boards should identify and monitor both leading and lagging indicators of ethical risk.

The guidance is available here: IBE-Guidance-for-Board-members-on-developing-an-ethical-business-culture.pdf

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