EQ Monthly Bulletin - June 2024

The Financial Conduct Authority has published Primary Market Bulletin 49. This is a wide-ranging bulletin covering several matters including a review of the reporting by premium listed companies of Long-Term Incentive Plans along with reminders on disclosure obligations and proposed changes relating to diversity and inclusion requirements.

Finally, the Institute of Directors has published a consultation paper on its voluntary code of conduct for Company Directors.

In This Edition

• Financial Conduct Authority Primary Market Bulletin 49
• Economic Crime and Corporate Transparency Act 2023
• Department for Business and Trade
• Non-Financial Reporting Review: Simpler Corporate Reporting
• Smarter Regulation White Paper
• Framework and Terms of Reference – UK Sustainability Standards
• Institute of Directors Consultation on a Code of Conduct for Directors

Financial Conduct Authority Primary Market Bulletin 49

This latest bulletin from the Financial Conduct Authority (FCA) covers a range of matters including:

• The results of a review of the reporting by 25 premium listed companies of Long-Term Incentive Plans (LTIPs) in compliance with the Listing Rules and the nature of the metrics and performance conditions tied to the LTIPs. The findings concluded that all 25 companies had complied with LR 9.4.1 R (2); which requires the long-term incentive scheme to be approved by an ordinary resolution of the shareholders of the listed company before it is adopted. Only 10 of the 25 companies released a shareholder circular in accordance with LR 13.8.11 R (1) with either the full text of the long-term incentive scheme or a description of its principal terms. Financial metrics such as total shareholder return, return on capital employed, and earnings per share were the most used LTIP performance metrics.
• A report on Global Depository Receipts (GDRs) to assess whether issuers of the shares underlying GDRs listed on the standard segment of the FCA’s Official List were meeting certain continuing obligations.
• A reminder of issuers’ disclosure obligations for annual financial reports. The FCA noted that in relation to annual financial reports there have been instances of non-compliance in respect of annual financial reports that contain consolidated financial statements which have not been correctly tagged in accordance with DTR 4.1.18R and annual financial reports that have been filed on the National Storage Mechanism in accordance with DTR 6.2.10R but not in XHTML format as required by DTR 4.1.15R.
• Information concerning the proposed changes to align the "Other Ethnic group" reporting category for the purposes of FCA diversity and inclusion requirements with the ONS's revised descriptions of its recommended categories for ethnicity.
• An update on the FCA's timelines for amending its rules to move from TCFD to UK-endorsed International Sustainability Standards Board (ISSB) disclosure standards along with its intention to consult on strengthening its expectations for listed companies' transition plan disclosures, with reference to the Transition Plan Taskforce Disclosure Framework. The FCA notes that companies may wish to start reporting voluntarily against ISSB Standards prior to the conclusion of the UK endorsement process and states that it may explore additional guidance to indicate how reporting based on ISSB Standards can remain consistent with the FCA's existing TCFD-based rules.

The full bulletin can be found at Primary Market Bulletin 49 | FCA

Economic Crime and Corporate Transparency Act 2023

The Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024 and explanatory memorandum have been published and laid before Parliament. These Regulations will come into force on 30 September 2024. The Regulations allow an individual to apply to protect their Usual Residential Address (URA which was formerly a registered office address (“ROA”) placed on the companies register under section 9(5)(a), section 87, or section 854 by virtue of being information required by section 855(1)(a) of the Companies Act 2006.

The Regulation can be found at The Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024 (legislation.gov.uk)

Department for Business and Trade

Progress report on the implementation and operation of Parts 1 to 3 of the Economic Crime and Corporate Transparency Act 2023

The Department for Business and Trade has published a progress report on the first six months of implementation and operation of those parts of the Economic Crime and Corporate Transparency Act 2023 enacted to date. The report details the 13 statutory instruments laid in Parliament since the Act received Royal Assent and a brief description of the effect of these statutory instruments. The report can be viewed at : Progress report on the implementation and operation of Parts 1 to 3 of the Economic Crime and Corporate Transparency Act 2023 (publishing.service.gov.uk)

Non-Financial Reporting Review: Simpler Corporate Reporting

The Department for Business and Trade issued a consultation on non-financial reporting for medium sized companies. The consultation is seeking views on whether the government should proceed with a proposal to increase the employee threshold for medium sized companies to those with 500 employees and exempt those companies from producing a Strategic Report.

The consultation closes on 27 June 2024, the full proposals are available here:  Non-financial reporting review: simpler corporate reporting - GOV.UK (www.gov.uk)

It must be emphasised that this is a consultation only and that there is no timeframe for making any changes currently.

Smarter Regulation White Paper

In response to its October 2023 “Smarter Regulation” consultation, the Department for Business and Trade has published a white paper – “Smarter Regulation: Delivering a regulatory environment for innovation, investment and growth”.

The reform package in the White Paper includes:  

• Defining for the first time what constitutes a business regulator, and introducing a set of guiding principles of smarter regulation that the government expects these regulators to apply in their day-to-day decision making.
• A new "register of regulators", as part of the government's ambition for a "one-stop-shop" of regulatory information so that anyone can find out which regulators and regulations apply to their business.
• Launching a new Regulators Council to improve the strategic dialogue between regulators and government and monitor the effectiveness of policy and strategic guidance issued.
• A new Growth Duty Performance Framework to enhance transparency and accountability, by asking regulators to provide evidence on how they are supporting economic growth.

The White Paper can be viewed here: Smarter regulation: delivering a regulatory environment for innovation, investment and growth (publishing.service.gov.uk)

Framework and Terms of Reference – UK Sustainability Standards

The Department for Business and Trade published a framework and terms of reference for developing UK Sustainability Standards. The Secretary of State for Business and Trade will hold responsibility for endorsing the IFRS Sustainability Disclosure Standards to create UK Sustainability Reporting Standards. The UK Standards will become available for voluntary use by UK companies and will be the basis for any future amendments to UK legislation and regulation.

Further information can be found at Framework and Terms of Reference for the Development of UK Sustainability Reporting Standards - GOV.UK (www.gov.uk)

Institute of Directors Consultation on a Code of Conduct for Directors

The Institute of Directors has published a consultation document on a Code of Conduct for Directors which applies to companies of all sizes. The Code, which is voluntary, is intended to be a practical tool to help directors make better decisions and provide a framework to develop and maintain trust in their business activities. It is not intended for the Code to add an additional layer of compliance for business.

The Code is based around six Key Principles OF Directors Conduct, although the consultation does ask if there should be any additional principles. The principles are:

• Leading by Example – demonstrate exemplary standards of behaviour in personal conduct and decision-making.
• Integrity – act with honesty, adhere to strong ethical values, and do the right thing.
• Transparency – communicate, act, and make decisions openly, honestly, and clearly.
• Accountability – take personal responsibility for actions and their consequences.
• Fairness – treat people equitably, without discrimination or bias.
• Responsible Business – integrate ethical and sustainable practices into business decisions, considering societal and environmental impacts.

The consultation is open until 16 August 2024.The consultation is available from IoD-Code-of-Conduct-for-Directors-draft-v3-60d450ca0caae1ed379e9581cd1fdd54.pdf