Capital Markets Update – June 2021

2nd June 2021

May’s news

FRC commissions project into the use of scenario analysis

On 10 May 2021, the Financial Reporting Council (FRC) announced that it had commissioned a research project to explore the use of scenario analysis by FTSE 350 companies. The objective is to learn more about the processes through which companies develop their scenario analyses, how these processes shape the outcomes produced and how those outcomes in turn influence companies’ strategic planning and decision making.

FRC publishes research on remuneration reporting

On 12 May 2021, the FRC published some research into the changes in remuneration reporting following the introduction of the UK Corporate Governance Code 2018. The report presents findings from a project carried out for the FRC by the University of Portsmouth, which examined the remuneration policy disclosures of a sample of FTSE 350 companies both before and after the introduction of the UK Corporate Governance Code 2018.

Law Society responds to consultation on mandatory climate-related financial disclosures

On 12 May 2021, the City of London Law Society and the Law Society of England and Wales published their joint response to Government’s consultation on mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs.

FRC publishes review of interim reports

On 18 May 2021, the FRC published the findings from its thematic review of interim reporting. The report highlights areas where the FRC found good practice and suggests ways in which interim reporting could be further improved.

Minor changes made to FRS101

On 21 May 2021, the FRC published amendments to FRS 101following completion of its annual review of FRS 101 Reduced Disclosure Framework. The amendments are chiefly to provide a disclosure exemption in relation to IAS 16 Property, Plant and Equipment, and to ensure consistency with IAS 1 Presentation of Financial Statements.

FRC publishes research on worker engagement

On 24 May 2021, the FRC published research setting out its review of company practice and reporting in relation to the requirement for boards to ensure effective workforce engagement under the UK Corporate Governance Code 2018.

FRC announces delegation of powers to the UK Enforcement Board

On 26 May 2021, the FRC announced that the Secretary of State for Business, Energy and Industrial Strategy had formally delegated statutory powers to the newly established UK Enforcement Board (UKEB). Under its delegated functions, the UKEB will play a pivotal role in influencing the development of international financial reporting standards (IFRS) and is responsible for the endorsement and adoption of IFRS for use by UK companies.

Plans to block market listings on security grounds

On 26 May 2021, news reports confirmed that Government plans to launch a consultation on new powers to prevent a company from listing on the London Stock Exchange if Government has security concerns about its owner or operations as it seeks to cultivate a ‘clean, transparent’ financial centre.

Glass Lewis publishes report into sustainability reporting

On 26 May 2021, Glass Lewis published an updated report into sustainability reporting. The report gives an overview of international sustainability and integrated reporting recommendations and standards, including those of the International Integrated Reporting Council, the Task Force on Climate-related Disclosures and the Sustainability Accounting Standards Board.

FCA publishes Market Watch 67

On 28 May 2021, the FCA published Market Watch 67 which discusses how the FCA uses orderbook data provided by firms to conduct surveillance in order to detect suspected market manipulation in equity markets.

Looking ahead to June 2021

1 June – from this date, where a change of company name by special resolution is filed on paper at Companies House, a paper consent form must also be filed.

16 June – consultation on consideration of social risks and opportunities by occupational pension schemes closes on this date.

23 June – responses to the FCA’s consultation on changes to UK MiFID’s conduct and organisational requirements are requested by this date.