7th December 2022
Welcome to the current edition of Capital Markets Update, the monthly briefing from the Corporate Group at Walker Morris rounding up the previous month’s regulatory developments within the equity capital markets and looking ahead to future developments.
On 3 November 2022, the Financial Reporting Council (FRC) published its third annual Review of Corporate Governance Reporting. The review sets out key findings from an analysis of how a sample of FTSE 350 and Small Cap companies have reported during the year under the UK Corporate Governance Code.
On 3 November 2022, the Financial Conduct Authority (FCA) published information on changes to its standard turnaround times for reviewing and processing listing transactions between 19 December 2022 and 3 January 2023 inclusive.
On 4 November 2022, the FRC issued, on behalf of the Pre-Emption Group, a new Statement of Principles together with some template resolutions. The Statement of Principles has been revised with immediate effect in line with the recommendations of the UK Secondary Capital Raising Review published earlier this year.
On 4 November 2022, Institutional Shareholder Services (ISS) published its 2023 benchmark policy consultation, seeking views on its proposed amended voting policies for 2023. ISS expects to announce its final 2023 benchmark policy changes by the first week of December 2022 and apply the revised policies to shareholder meetings on or after 1 February 2023.
On 4 November 2022, the FCA published an update on its civil proceedings against the former CEO and CFO of Globo Plc for alleged market abuse. The FCA alleges the former directors made misleading statements that caused the company’s shares to be traded significantly above their true value before the company’s total collapse in November 2015.
On 8 November 2022, the FRC launched a consultation on its draft proposal for a minimum standard for audit committees. The draft standard will apply to audit committees of all UK incorporated companies with a premium listing, and which are included within the FTSE 350 index. The consultation will run until 8 February 2023.
On 9 November 2022, the Investment Association (IA) published its annual Principles of Remuneration setting out its members’ expectations in relation to executive pay for 2023. The IA has also published a Letter to remuneration committee chairs of FTSE 350 companies, outlining key areas of focus for investors during the upcoming AGM season.
On 10 November 2022, the European Parliament adopted the new Corporate Sustainability Reporting Directive (CSRD). The CSRD seeks to make businesses more publicly accountable by creating new rules requiring them to regularly disclose information on their societal and environmental impact. Non-EU companies with substantial activity in the EU will be among the companies caught by the CSRD.
On 14 November 2022, the FRC published a set of general Principles that it will use as it transitions to the Audit, Reporting and Governance Authority (ARGA). The Principles will be used to assess whether the public interest is best served by carrying out regulatory, supervisory and enforcement work that is outside of its primary regulatory perimeter.
On 14 November 2022, the International Organisation of Securities Commissions (IOSCO) published a statement emphasising issuers’ need for fair, transparent and timely disclosure about impacts of economic uncertainty.
On 17 November 2022, Glass Lewis published its 2023 proxy voting policy guidelines for the UK. The policy guidelines set out Glass Lewis’ approach to assessing all topics on the annual general meeting agenda, covering everything from director elections, executive compensation, boards and balance sheet management to ESG issues.
On 23 November 2022, the FRC published a report which provides an explanation of its regulatory role and approach, funding, and how it complies with the Regulators’ Code. The report also considers the impact of its planned transition to become the Audit, Reporting and Governance Authority.
On 24 November 2022, the FRC published its annual review into stewardship reporting which analyses how signatories to the UK Stewardship Code 2020 reported against it in 2022 and sets out the FRC’s reporting expectations for the 2023 assessment year.
On 28 November 2022, the Council of the European Union announced that it had adopted the proposed Corporate Sustainability Reporting Directive (CSRD) which seeks to make businesses more accountable by requiring them to disclose information on sustainability. The directive is drafted to enter into force 20 days after publication in the Official Journal, and the new rules are required to be implemented by member states 18 months later. Non-European companies generating a net turnover of €150m in the EU and that have at least one subsidiary branch in the EU will also be in scope of the CSRD.
1 December – new rules relating to the FCA’s main risk warnings for financial promotions of high-risk investments took effect.
5 December – closing date for statutory auditors of Public Interest Entities to register on the FRC’s PIE Auditor Register.
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Corporate and Head of Food & Drink
Corporate and Head of International