Listed company update III

This update summarises the major developments in UK corporate law and regulation for listed companies since our last update in November 2014

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February 2015

2014 Annual Reports and 2015 AGM season

In early 2014, Company Secretaries and their advisors were faced with a range of new requirements in annual reporting and AGM approvals.  The good news for this year is that this coming season looks to be more settled for those companies with a December 2014 year end and Spring 2015 AGM, with no major changes to grapple with.  Most companies should therefore be able to focus on consolidating their approach and utilising the useful guidance made available in the past few months.  

Company reporting

For most premium-listed companies, annual reporting requirements have not changed since 2014 unless they choose to adopt in advance the changes introduced under the 2014 UK Corporate Governance Code (see our November Listed Company Update for further details).

Companies should note that for financial years ending on or after 1 September 2014, the Listing Rules require that any disclosures required by the Listing Rules are in a single identifiable section in the Annual Report, unless the report contains a cross-referencing list indicating where such disclosures can be found.  

Directors' remuneration report and policy

Companies will be reporting for the second year under the new remuneration reporting regime and this year's implementation reports will be reporting against the remuneration policies approved in 2014.  There is no need for companies to include their remuneration policy in full within their Annual Report if it was approved by shareholders in 2014, or to submit this to shareholders for approval again this year, unless the Directors wish to amend the policy.  That said, even if a company is not amending its remuneration policy this year, various institutional shareholder bodies recommend that the headline policy table is disclosed in the directors' remuneration report, with a cross-reference to the company's website for the full policy. 

Guidance on narrative reporting

The final FRC guidance on the strategic report was published in June 2014.  This contains useful guidance for companies producing their strategic report this year.  Other guidance includes the FRC Lab report "Towards Clear & Concise Reporting", the FRC Annual Corporate Reporting Review, the FRC Report on Implementation of the UK Corporate Governance Code (all available from, the Investment Association Share Capital Management Guidelines (see and the GC100 Statement on Remuneration (see 


As noted above, most companies should not need to obtain approval for the remuneration policy this year as long as their policy has not changed.  There are no new resolutions for listed companies to put to their shareholders the first time at their 2015 AGMs.  There are, however, some changes that may need to be reflected in the AGM resolutions, such as changing any references to the ABI within resolutions or explanatory notes to The Investment Association (see the Listed Company Update issued in November 2014 for further details).   For FTSE 350 companies, the resolution relating to the remuneration of the auditor should refer to remuneration being set by the audit committee, rather than the full board, and companies with controlling shareholders need to comply with new rules relating to the election and re-election of independent directors, as noted further below.  

The 2014 edition of the UK Corporate Governance Code includes a new requirement that where a significant proportion of votes (widely felt to be 20% or more, but this depends on an individual company's shareholder base) has been cast against a resolution at any general meeting, the company should explain, when announcing the results of voting, what actions it intends to take to understand the reasons behind the voting result. 

Companies may also wish to review their articles to afford them flexibility to adopt new dividend payment methods, such as mobile phone payments, as and when they become available.  The ICSA Registrars Group has published a guidance note and suggested wording for articles of association.

Companies with controlling shareholders

Premium listed companies with controlling shareholders will need to incorporate new disclosure and approval requirement into their annual reporting and AGM procedures this year.    A controlling shareholder is anyone who, together with any persons with whom they are acting in concert, exercises or controls 30% or more of the voting rights of the company.  The new provisions require companies with a controlling shareholder to put a relationship agreement in place between the company and the controlling shareholder containing certain independence provisions and include enhanced disclosures about compliance with this agreement in their Annual Report.  

There is also now a dual voting procedure in place for the election and re-election of independent Directors Any such election or re-election must be approved by both (i) a majority of shareholders as a whole and (ii) by a majority of independent shareholders (ie. excluding the controlling shareholder).  This can still be achieved via a single resolution, provided that the votes of independent shareholders can be identified. It is important that affected companies discuss this procedure with their registrars to ensure that they can achieve this and that they disclose dual proxy voting results for such resolutions.  

Guidance on AGM issues

The Investment Association published its Share Capital Management Guidelines towards the end of 2014 and in general there are very few material changes between the IA Guidelines and the previous ABI guidance it has replaced.  One change relates to companies that offer a scrip dividend – the IA says that the scrip dividend should be renewable every three years rather than five.  Download a copy from  The NAPF Corporate Governance and Voting Guidelines 2014 have helpfully been reordered to reflect the order in which resolutions typically appear in AGM circulars.  Companies should also consider the new ISS UKI Guidelines 2015 (see and the PIRC UK Shareowner Voting Guidelines 2014 (available from when drafting their AGM resolutions.  

If you require any assistance in drafting your 2014 Annual Report disclosures or 2015 AGM documentation, please contact us via

Amendments to the Listing Rules

The FCA has made various changes to the Listing Rules, Prospectus Rules and Disclosure and Transparency Rules, taking effect from either 1 February 2015 or 1 April 2015, depending on the section.  LR 13.2 is amended with effect from 1 April 2015 such that many circulars which previously required advance UKLA approval will no longer do so after 1 April.  Circulars that still need to be approved before despatch to shareholders include those relating to class 1 transactions, related party transactions, share buybacks of more than 25% of the company's share capital and reconstruction and refinancing transactions.    

Reporting on payments to governments for extractive industries

Our last update provided details of new UK reporting regulations requiring disclosure of payments to governments by extractive industries and loggers of primary forests.   On 25 November 2014, BIS published draft industry guidance for consultation.  The guidance has been developed by a working group involving representatives from the oil, gas, mining and metals industries and is intended to provide guidance on the new reporting regime.  The Disclosure and Transparency Rules have been updated to reflect the new requirements and apply to financial years beginning on or after 1 January 2015.  

Breaches of DTR 3 notification obligations

In November 2014 the FCA issued the Primary Market Bulletin No. 9 and highlighted its concerns about the non-compliance by persons discharging managerial responsibilities (PDMRs) and listed companies regarding their notification obligations under DTR 3.  The FCA also raised concerns about situations where PDMRs had entered into arrangements with third parties whereby the third party would make the required notification on behalf of the PDMR.  The FCA has made it clear that the PDMR remains responsible for satisfying its DTR 3 obligations and will be liable if the notification is not made by a third party.  As a reminder, DTR 3 requires PDMRs and their connected persons to notify the issuer of all transactions conducted on their own account in the shares of the issuer within four business days of the transaction.  The issuer must then release an RNS announcement containing this information by no later than the end of the business day following the receipt of the information.  

The fine of £539,800 recently imposed on Reckitt Benckiser for DTR 3 breaches demonstrates that this issue is clearly on the FCA's radar and reinforces the need for companies to ensure that they have proper systems and controls in place to satisfy these obligations.  Please contact us if you would like us to review your procedures in this area.  

Sponsor competence

In January 2015, the FCA published Primary Market Bulletin No. 10, which set out the FCA's approach to competence requirements for sponsors and applicants.    

The premium listing regime places great reliance on sponsors and the FCA used its power to fine sponsor for the first time in January 2015, when it imposed a fine of £231,000 in relation to breaches of the Listing Rules

On the horizon: reporting on anti-corruption and bribery matters

A European Directive will require the disclosure of information about anti-corruption and bribery in the strategic report.  BIS has announced that it intends to consult on the UK implementation of the Directive in early 2015 and these requirements will apply to financial years beginning on or after 1 January 2017. 

On the horizon: Modern Slavery Bill

As reported in our last update, companies of a certain size will be required to prepare an annual slavery and human trafficking statement under the Modern Slavery Bill.    While its final form remains unclear, the legislation will probably contain some form of corporate reporting statement which most likely need to include the steps the company has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its own business.  Disclosure will also need to be made on the company's website.  

Promises made during takeover bids

The Takeover Panel has adopted new rules, effective from 12 January 2015, requiring parties to a takeover bid to clarify the nature of any commitments made during the offer period regarding actions they will take (or not take) after the deal is concluded.  

QCA Behaviour review of small and mid-size quoted companies

The Quoted Companies Alliance (QCA) has published its second Corporate Governance Behaviour Review in conjunction with UHY Hacker Young.  The review looks at the corporate governance disclosures of small and mid-size quoted companies against the 2013 QCA Corporate Governance Code.  The QCA comments that company disclosures have improved slightly in areas such as audit committee reporting and risk management disclosures, but deteriorated in areas such as posting voting decisions of general meetings on corporate websites.  Whilst AIM companies are not generally obliged to announce voting decisions, investors have indicated that this is something they would like to see and so companies should focus on improving disclosure in this area.  

ISDX – consultation on proposed amendments to rulebooks

In January 2015 the ISDX launched a market consultation in relation to proposed changes to the ISDX Growth Market Rules for issuers and the ISDX Corporate Adviser Handbook.  ISDX is seeking to align the criteria in respect of companies seeking admission and continuing obligations more appropriate for companies seeking an admission to a SME Growth Market.  

Cyber Security – BIS guidance for non-executive directors

BIS has published guidance to help non-executives assess cyber security risk in their companies.  The guidance suggests questions non-executives can ask of themselves, their executive colleagues and the audit or risk committee to enable them to understand the systems used by their companies and the management and mitigation of associated risks.  A copy of the report can be found at

In the dock – insider dealing

A former reporting and financial manager at IT services firm Logica plc appeared in court in February in respect of three offences of insider dealing in Logica shares in 2012. The FCA is currently prosecuting eight other individuals for insider trading at other firms. 

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