Capital Markets Update – May 2022

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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.

April’s news

CGI publishes survey results on AGMs and executive remuneration

On 8 April 2022, the Chartered Governance Institute UK & Ireland (CGI) published the results to its survey on annual general meetings and executive remuneration. In its survey, the CGI asked whether organisations are planning a return to physical AGMs this year. From the survey results, the CGI concluded that many companies are keen to get back to physical AGMs, although the use of technology means that hybrid meetings are just as competitive due to the benefits provided by the opportunity to streamline processes, reduce costs, prepare for Q&As and improve communication.

FRC publishes revised Audit Firm Governance Code

On 13 April 2022, the Financial Reporting Council (FRC) published a new version of the Audit Firm Governance Code, which aims to improve governance at the largest audit firms. The code, which applies to the Big Four and other firms that audit FTSE 350 companies and public interest entities, was first published in 2010 and last updated in 2016.

FRC consults on new requirements for approval and registration of PIE auditors

On 14 April 2022, the FRC launched a consultation on proposals to introduce new requirements for the approval and registration of audit firms and responsible individuals who undertake Statutory Audit Work in respect of public interest entities. The consultation is open until 26 May 2022.

New Listing Rules on diversity and inclusion

On 20 April 2022, the Financial Conduct Authority (FCA) published a policy statement on diversity and inclusion on company boards and executive management, setting out its final policy decision for proposals set out in consultation paper CP21/24. The policy statement introduces new Listing Rules to require certain issuers to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management. In-scope companies are required to make these disclosures in their annual reports for financial years starting on or after 1 April 2022.

FRC identifies failings in modern slavery reporting

On 25 April 2022, the FRC published a report on modern slavery reporting practices in the UK. The report highlights significant shortcomings in the quality of companies’ modern slavery reporting.

Companies House publishes update on the register for overseas entities

On 27 April 2022, Companies House published an update regarding the progress on the new register of overseas entities which will be created and held by Companies House under the Economic Crime (Transparency and Enforcement) Act 2022.

FRC Lab publishes guidance on supply chain disclosures

On 29 April 2022, the FRC Lab published guidance to help companies when preparing disclosures on their supply chains in their financial reports. This is the first in a series of publications from the FRC Lab that will examine current market issues and offer practical guidance to companies.

FCA publishes Handbook Notice 98

On 29 April 2022, the FCA published Handbook Notice 98, which covers amendments to the FCA Handbook and other materials made during March and April 2022.

Looking ahead to May 2022

3 May – FCA proposed changes to the electronic format (DTR 4) for annual financial reports come into force.

12 May – closing date for responses to the FCA’s consultation on the rates for its regulatory fees and levies in the 2022/23 financial year.

26 May – closing date for responses to FRC consultation on new requirements for approval and registration of PIE auditors.