Capital Markets Update – December 2021

7th December 2021

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.

November’s news

ISS publishes 2022 benchmark policy consultation

On 4 November 2021, Institutional Shareholder Services (ISS) published its 2022 benchmark policy consultation, seeking views on its proposed new and amended voting policies for 2022. Comments on the proposals had to be received by 16 November 2021 and ISS expects to apply the revised policies to shareholder meetings on or after 1 February 2022.

FCA publishes Primary Market Bulletin 36

On 15 November 2021, the Financial Conduct Authority (FCA) published Primary Market Bulletin 36, its newsletter for primary market participants. The bulletin sets out information on the FCA’s disclosure expectations and supervisory strategy in relation to the Task Force on Climate-related Financial Disclosures (TCFD) aligned climate-related disclosure requirements for premium listed commercial companies in LR 9.8.6R(8) and, subject to the making of final rules, for certain standard listed companies in the proposed new LR 14.3.27R.

Glass Lewis publishes 2022 UK policy guidelines

On 16 November 2021, Glass Lewis published its 2022 UK Proxy Voting Policy Guidelines which set out Glass Lewis’ approach to topics ranging from directors’ appointments and pay, boards, balance sheet management and ESG issues.

Takeover Panel publishes bulletin on irrevocable commitments

On 17 November 2021, the Takeover Panel announced the publication of Panel Bulletin 3 on the requirements of Rule 2.10(c) of the Takeover Code where a person who has given an irrevocable undertaking or letter of intent becomes unable to comply with its terms, or no longer intends to do so.

IA publishes 2022 guidance on executive remuneration

On 18 November 2021, the Investment Association (IA) published its 2022 Principles of Remuneration setting out its members’ expectations in relation to executive pay. The IA has also published a letter to remuneration committee chairs of FTSE 350 companies, outlining key changes to the 2022 Principles and areas of focus for the forthcoming annual general meeting season.

Initiative to improve gender balance among CEOs launches

On 18 November, 25×25, a new UK corporate-led initiative designed to tackle gender imbalance at senior executive level, launched a campaign which aims to increase the number of female CEOs in FTSE 100 companies to 25 by 2025.

FRC publishes annual review of Corporate Governance Reporting

On 25 November 2021, the Financial Reporting Council (FRC) published its annual Review of Corporate Governance Reporting, which sets out the key findings from its review of how a sample of FTSE 350 and Small Cap companies have reported during the year under the UK Corporate Governance Code.

LSE issues censure and fine for breaches of AIM Rules

On 30 November 2021, the London Stock Exchange (LSE) published AIM Disciplinary Notice AD24, stating that it had agreed settlement terms with Sensyne Health plc for a public censure and fine of £580,000 for breaches of AIM Rule 13 (Related party transactions) and Rule 31 (AIM company and directors’ responsibility for compliance). The fine will be discounted to £406,000 for early settlement.

Looking ahead to December 2021

7 December – FRC Lab is hosting a webinar for companies and service providers on the new DTR 4 requirements regarding structured electronic reporting.

15 December – FRC’s revised auditing standard on the auditor’s responsibilities relating to fraud is effective for audits covering periods beginning on or after this date.

19 December – closing date for responses to the Department for Work and Pensions’ consultation on climate and investment reporting.

31 December – FCA aims to publish a policy statement by the end of December along with finalised Listing Rules which would require companies to publish an annual statement on board diversity.

31 December – FCA aims to publish finalised Listing Rules by the end of December which would extend to standard listed companies the continuing obligation to make climate-related disclosures which already applies to premium listed companies.