UK corporate governance and narrative reporting: Key developments checklist

Introduction

This checklist is intended to help UK-listed companies keep abreast of key developments in the fast moving areas of corporate governance and narrative reporting.

It sets out our thoughts on some of the main areas of change during the last few months, as well as a list of key developments by area, including links to more detailed summaries of those developments.

Key themes

Given this checklist covers the period in which the COVID-19 pandemic emerged, it is not surprising that a large number of the developments included relate to COVID-19.

The Financial Conduct Authority (FCA), the AIM Regulation team at the London Stock Exchange and Companies House have all provided temporary extensions of financial reporting and other filing deadlines in recognition of the difficulties companies are facing in the current circumstances. The Financial Reporting Council (FRC) and its Financial Reporting Lab have also published guidance for companies and auditors on aspects of audits in 2020 and disclosures in narrative and financial reports in light of the impact of COVID-19 on businesses.

The Stay at Home measures introduced in March 2020 created a number of difficulties for those companies planning and convening AGMs in the first half of the year, with a number of issues, including  the location of, and attendance and voting  at, such meetings having to be considered, along with shareholder engagement generally. In addition, many companies had to decide whether to withdraw or revise dividend resolutions due to be put to the 2020 AGM.

Given the difficulties that have arisen with this AGM season, companies should review their articles of association prior to their 2021 AGM to see if there are any amendments they could make to ensure that company meetings can be adjourned or postponed more easily or otherwise held, possibly as a hybrid meeting combining physical and electronic participation at the meeting. While the Corporate Insolvency and Governance Act 2020 has introduced temporary relaxations on company meetings, it is unlikely that investor bodies will be supportive of virtual company meetings in the UK, although they do look favourably on hybrid company meetings.

Looking forward, it is clear that listed companies will need to place greater focus on their climate change and other ESG-related disclosures, given the FCA’s proposed Listing Rule changes in this area and we will continue to report on this proposal as it develops. 

Companies are also likely to have to make sensitive decisions regarding executive remuneration for 2020 in light of share price performance, the impact of the pandemic on their business more generally (including the extent to which they have accepted Government support) and the wider political climate. 

Accounting, audit and narrative reporting issues in light of COVID-19

FRC’s Covid-19 Thematic Review – Review of financial reporting effects of Covid-19 (July 2020): The FRC has published the results of its first thematic review of company reporting since the onset of the Covid-19 pandemic. The review found that although companies provided sufficient information to enable a user to understand the impact Covid-19 had on their performance, position and future prospects, some, particularly interim reports, would have benefited from more extensive disclosure. A summary of the review is here.

FRC’s proposals to amend accounting standards concerning going concern and COVID-related rent concessions (July 2020): The FRC has issued two Exposure Drafts proposing amendments to UK and Ireland accounting standards. FRED 75 proposes amendments to FRS 104 – Going concern, and FRED 76 proposes amendments to FRS 102 and FRS 105 – COVID-19-related rent concessions, setting out explicit requirements for accounting for temporary rent concessions for operating leases occurring as a direct consequence of the COVID-19 pandemic, and within a limited timeframe. A summary is here.

FRC Lab’s report on COVID-19 – Going concern, risk and viability (Reporting in times of uncertainty – June 2020): The FRC’s (FRC) Lab has published a report to provide guidance to companies considering their disclosures in light of the COVID-19 crisis in relation to going concern, risk reporting and the viability statement. The report considers these three key disclosure areas, and it highlights key considerations for companies and questions for boards in those areas. It also includes examples of current disclosure practices (from recent annual reports) and highlights what is useful in those particular disclosure examples. Further details are here.

FRC Lab’s report on COVID-19 – Resources, action, the future (Reporting in times of uncertainty – June 2020): The FRC’s Lab has published a report to provide guidance and examples to companies seeking to answer questions in an infographic issued by the Lab in March 2020. This raised questions about reporting on three key areas: resources (including the availability of cash); actions to manage short-term expenditure and ensure viability; and the future (how decisions taken now ensure the company’s sustainability and impact customers, suppliers and employees). Further details are here.

FRC‘s guidance for companies on Corporate Governance and Reporting (including Interim Reports) – Updated May 20, 2020 (May 2020): The FRC has updated the guidance on corporate governance and reporting it published earlier in May 2020 (see a summary of its contents here), by explaining how companies should report exceptional items and alternative performance measures (APMs) in their reports and accounts in the context of the COVID-19 crisis. A summary of its contents is here.

ESMA’s Public Statement on implications of the COVID-19 outbreak on the half-yearly financial reports (May 2020): The European Securities and Markets Authority (ESMA) has issued a Public Statement to promote transparency and the consistent application of European requirements for the information provided in half-yearly financial reports under the current circumstances related to the COVID-19 outbreak. A summary of its contents is here.

ESMA’s Q&A – ESMA Guidelines on Alternative Performance Measures updated (April 2020): ESMA has updated its Questions and Answers on the ESMA Guidelines on Alternative Performance Measures (APMs) to include a new Q&A on the application of the Guidelines in the context of COVID-19. A summary of its contents is here.

Modifications of independent auditor’s opinions and reports (April 2020): This guidance, published by the FRC, concerns the need for possible modified auditors’ opinions and reports during the COVID-19 crisis. It follows the guidance published by the FRC in March 2020 which deals with the practical difficulties facing companies and auditors in preparing financial statements and carrying out audits during the pandemic (see below). A summary of the April 2020 guidance is here.

Guidance for auditors and matters to consider where engagements are affected by Coronavirus (COVID-19) (March and April 2020): This FRC Bulletin provides guidance for auditors carrying out audit engagements that may be affected by COVID-19. First issued in March 2020, It was updated in April 2020 to provide guidance on gathering evidence through remote means. A summary of its contents is here.

Guidance on audit issues arising from the COVID-19 (Coronavirus) pandemic (March 2020): The FRC published guidance on issues arising from the spread of the coronavirus for companies proposing to report their financial results in the coming months, and for auditors. This follows the February 2020 advice for companies previously published by the FRC on the disclosure of risks and other consequences arising from the coronavirus (see below). A summary of its contents is here.

Advice to companies and auditors on coronavirus risk disclosures (February 2020): The FRC has published guidance for companies on the disclosure of risks and other reporting consequences arising from the emergence and spread of the coronavirus. This is particularly relevant for companies which operate in, are dependent on supply chains in, or have close trading associations with, China, although other companies could become affected. A summary of its contents is here.

Accounting audit and narrative reporting deadlines extended in light of COVID-19

Temporary changes to Companies House filing requirements (July 2020): In light of the coming into force of the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020, Companies House has published guidance outlining how the temporary measures introduced by these Regulations will affect public companies, private companies, limited liability partnerships, Societas Europaea, overseas companies and European Economic Interest Groupings when those entities have to file documents or notices with Companies House. A summary of that guidance is here.

Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 (June 2020): These Regulations came into force on June 27, 2020 and, pursuant to Section 39 Corporate Insolvency and Governance Act 2020, they extend a range of filing deadlines for companies and other entities registered at Companies House falling after that date and ending on April 5, 2021. A summary of their contents is here.

Temporary measures for publication of half-yearly reports by AIM companies (June 2020): This issue of Inside AIM  sets out temporary changes relating to an AIM company’s obligation to notify half-yearly reports in accordance with the AIM Rules for Companies. From June 9, 2020, AIM Regulation will permit AIM companies that need extra time to prepare their half-yearly report an additional one month in which to notify them. This extension is temporary and is being kept under review. For a summary of Inside Aim’s contents, see here.

FCA’s Primary Market Bulletin Issue No 28 – Coronavirus (COVID-19) update (May 2020): The FCA has published a special edition of its Primary Market Bulletin which includes a statement on temporary relief for the timing of half-yearly financial reports, a statement on market practice in relation to “going concern” assessments and commentary on the FCA’s view on issuers’ engagement with shareholders and the role of issuers in delivering “soft pre-emption” in placings. A summary of its contents is here.

Companies to receive three-month extension period to file accounts at Companies House during COVID-19 period (March 2020): Companies House has announced that companies can apply for a three-month extension for filing their accounts in light of the COVID-19 crisis. Any extension application should be made online and if issues around COVID-19 are cited, companies will be automatically and immediately granted an extension. A summary of the announcement is here. This announcement followed an earlier one in March from Companies House when Companies House advised that an application for an extension should be made before the filing deadline, with reasons for the extension request provided. Companies were advised that if an extended filing deadline is agreed, companies should file their accounts before the new due date to avoid any late filing penalty. A summary of this announcement is here.

FCA’s Statement of Policy on delaying annual company accounts during the coronavirus crisis (March 2020): This Statement of Policy announces temporary relief for listed companies facing the challenges of corporate reporting during the coronavirus crisis.  It gives listed companies needing extra time to complete their audited financial statements an additional two months in which to publish them. A summary of its contents is here. Further information is also provided in a Joint Statement, published by the FCA with the PRA and FRC at the same time, the content of which is summarised here.

FCA requests delay to forthcoming announcement of preliminary results (March 2020): In March, the FCA announced that it was writing to listed companies it was aware were intending to publish their preliminary financial statements shortly, requesting that they do not do so for at least two weeks. This was to give companies time to prepare their disclosures in light of the impact of the coronavirus crisis as observing pre-set timetables might not give companies sufficient time to do this. A summary of that announcement is here.

Temporary measures for publication of annual audited accounts by AIM companies (March 2020): In this edition of Inside AIM, AIM Regulation confirm that, to assist AIM companies in the preparation of their annual accounts in the current difficult circumstances, from March 25, 2020 an AIM company can apply to AIM Regulation for a three month extension to the reporting deadline for the publication of its annual audited accounts pursuant to AIM Rule 19. This extension is available for AIM companies with financial year ends between September 30, 2019 to June 30, 2020. The request for an extension must be made to AIM Regulation by the nominated adviser, prior to the AIM company’s current AIM Rules reporting deadline. A summary of the contents of this edition of Inside AIM is here.

Transparency Directive – Financial reporting deadlines (March 2020): ESMA has issued a public statement to provide clarity and promote coordinated action by National Competent Authorities regarding issuers’ obligations to publish periodic financial information in the context of COVID-19. A summary of that public statement is here.

Accounting, audit and narrative reporting issues – Other

FCA’s consultation on delay to implementation of the European Single Electronic Format (July 2020): The FCA have published a consultation paper proposing rule changes to delay by one year the mandatory European Single Electronic Format (ESEF) requirements for annual financial reporting under the Transparency Directive. A summary of the proposals is here.

ICAEW’s guidance for preparers of prospective financial information – TECH 04/20CFF (June 2020): The ICAEW has issued a new technical release, TECH 04/20CFF, which is a preparation framework for a high standard of financial forecasts or projections.  It is aimed at helping the preparation of prospective financial information (PFI) for which there is a prescribed form, for example, in the UK, in connection with regulated capital markets transactions, and in situations where there are no regulatory requirements, for example, in connection with the private raising of debt or equity, or in connection with the private sale of a business. A summary of its contents is here.

UK government’s position on effect of ESEF Regulation on directors’ sign-off of accounts (June 2020): The Department for Business, Energy and Industrial Strategy (BEIS) has published a policy paper setting out the UK government’s position on the directors’ sign-off of accounts of companies subject to the requirements of the Transparency Directive (implemented through the FCA’s Disclosure Guidance and Transparency Rules) and the European Single Electronic Format (ESEF) Regulation. A summary of its contents is here.

Editorial updates to 2018 Guidance on Strategic Report (May 2020): The FRC has issued two editorial updates to its Guidance on the Strategic Report which it published in July 2018. These relate to Appendix II and Appendix III of that Guidance. A summary of its contents is here.

Audit Quality Indicators – AQR Thematic Review (May 2020): The FRC has  published the results of a review it has conducted into the use of Audit Quality Indicators (AQIs) as a tool for flagging poor and good audit quality within the UK. A summary of its contents is here.

Transparency International UK: Open Business – Principles and guidance for anti-corruption corporate transparency (March 2020): Transparency International UK has published a report which includes practical and implementable guidance for companies on corporate anti-risk disclosures across five areas that are at high risk of corporate corruption. The report also includes the business case for corporate governance and anti-corruption transparency, as well as responses to some of the legal challenges that might inhibit companies from disclosing information. A summary of its contents is here.

BEIS Committee – Delivering audit reform (March 2020): The BEIS Committee has launched an inquiry on delivering audit reform. This follows a series of inquiries from the BEIS Committee, from the Competition and Markets Authority, Sir John Kingman and Sir Donald Brydon. Oral evidence is to be taken from stakeholders later in the year on the response to the various audit reviews and the BEIS Committee will examine how they can fit together to deliver the necessary reform to the UK’s audit industry. In the meantime a Call for Evidence has been launched. A summary of its contents is here.

Information on the transition period for auditors and firms (February 2020): BEIS and the FRC have published a joint letter setting out information for auditors and audit firms in light of the Brexit transitional period (TP) until December 31, 2020. It confirms that during the TP, there is no change for UK and EEA auditors and firms, and their clients. A summary of its contents is here.

Accounting and reporting during the transition period (February 2020): BEIS and the FRC have published a joint letter setting out information on  accounting and reporting standards during the Brexit transitional period (TP) until December 31, 2020. It confirms that during the TP, there is no change to the UK’s accounting and corporate reporting framework. A summary of its contents is here.

FRC’s  Implementation Guidance for Ethical Standard (2019) (February 2020): The FRC has published implementation guidance relating to the revised Ethical Standard it published on December 17, 2019. This covers transitional provisions and “Other Entities of Public Interest” (OEPIs). A summary of its contents is here.

AGM issues

Shareholder meetings under the Corporate Insolvency and Governance Act 2020 – ICSA Guidance Note (July 2020): ICSA’s Chartered Governance Institute has published a further update to its earlier guidance, published in March 2020 (see below), on shareholder meetings during the COVID-19 pandemic to reflect the temporary changes to shareholder rights in articles of association concerning shareholder meetings, as set out in the Corporate Insolvency and Governance Act 2020 (Act) (see below). The questions answered in the Guidance Note can be found here.

Corporate Insolvency and Governance Act 2020 (June 2020): On June 25, 2020 the Corporate Insolvency and Governance Act 2020 received Royal Assent and most of its provisions came into force on June 26, 2020. A key aim of the Act is to provide businesses with the flexibility and breathing space necessary to enable them to continue trading during the COVID-19 pandemic and so the measures, some permanent and some temporary, are designed to help UK companies and other similar entities by easing the burden on businesses and helping them avoid insolvency during this period of economic uncertainty. The Act also includes temporary relaxation of company filing requirements and requirements in relation to company meetings, including AGMs. A summary of its contents is here.

Measures in respect of company filings, AGMs and other general meetings during COVID-19 – Best practice guidance for AGMs (June 2020): In April and May 2020 BEIS published a series of Q&A to help companies plan matters such as their AGM in light of the COVID-19 restrictions which made it difficult to meet certain statutory obligations. Companies were urged to consider the best feasible way of fulfilling obligations to engage with shareholders where previous practices could put the safety and wellbeing of shareholders at risk. A summary of the contents of the April 2020 Q&A is here. In the May Q&A (see summary of its contents here), BEIS announced that it would publish guidance on what it considers best practice in this regard and this updated BEIS Q&A, published on June 8, 2020, sets out that best practice guidance in Appendix A. A summary of its contents is here.

BEIS announcement about temporary suspension of wrongful trading liability and temporary measures around AGMs (May 2020): BEIS updated an earlier press release (first published on March 28, 2020) concerning, among other things, regulations to protect companies hit by COVID-19. These provisions are included in the Corporate Insolvency and Governance Act 2020 (see above). A summary of the contents of the press release is here.

ShareAction’s letter to Chairs of FTSE 100 companies (April 2020): ShareAction published a letter that it had sent to the Chairs of FTSE 100 companies asking them to take steps to protect shareholder engagement during the 2020 AGM season. The letter notes that, despite the constraints imposed as a result of COVID-19, there are still steps companies can take to preserve shareholder engagement and it is concerned about the holding of “closed door” AGMs which limit shareholder engagement. A summary of its contents is here.

Withdrawal or amendment of dividend resolution to Annual General Meeting – ICSA Guidance Note (April 2020): ICSA’s Chartered Governance Institute has published guidance for companies that conclude that it may no longer be appropriate to recommend or declare a dividend that is due to be put to shareholders for approval at the AGM, or that the dividend should still be paid but the amount reduced. A summary of its contents is here.

AGMs and impact of COVID-19 – ICSA Guidance and Supplement (March 2020): Available options for UK listed companies to consider as part of their AGM contingency planning were first discussed in initial guidance published by ICSA in March 2020 (see here). In light of the compulsory Stay at Home measures then implemented in the UK, which included a ban on public gatherings of more than two persons, ICSA published supplementary guidance for UK listed companies. This was endorsed by bodies including the FRC, the Investment Association and the GC100 and was reviewed by BEIS. A summary of its contents is here.

Temporary changes to LSE’s Dividend Procedure Timetable: Coronavirus (COVID-19) (March 2020): The London Stock Exchange (LSE) published guidance for issuers in respect of payment dates under its Dividend Procedure Timetable (DPT) in light of the challenges and uncertainties caused by COVID-19. A summary of its contents is here.

FCA’s Primary Market Bulletin No. 27 – Coronavirus update (March 2020): The FCA published a special edition of their Primary Market Bulletin (PMB) to provide commentary for issuers and market participants in light of the COVID-19 pandemic. The FCA states that it will keep the matters in the PMB under consideration and the information updated, with the FCA’s core focus being to ensure consumers are protected and markets continue to function well. A summary of its contents is here. 

Board Committees

ICSA’s updated terms of reference for the Risk Committee (June 2020): ICSA has published updated model terms of reference for the Risk Committee of a company seeking to comply with the 2018 UK Corporate Governance Code and which reflect the Guidance on Risk Management, Internal Controls and Related Financial and Business Reporting published by the FRC in September 2014. Significant banks and insurance companies are required to have a separate board Risk Committee, but companies in other sectors sometimes consider it desirable or necessary to have a Risk Committee, separate from the board Audit Committee. A summary of their content is here.

ICSA’s updated terms of reference for the Remuneration Committee (January 2020): ICSA has published updated model terms of reference for the Remuneration Committee of a company seeking to comply fully with the requirements of the 2018 UK Corporate Governance Code. These are intended as a guide for companies to adapt to their needs and the list of duties included is based on existing good practice from a number of sources. See further here.

ICSA’s updated terms of reference for the Nomination Committee (January 2020): ICSA has published updated model terms of reference for the Nomination Committee of a company seeking to comply fully with the requirements of the 2018 UK Corporate Governance Code. These are intended as a guide for companies to adapt to their needs and the list of duties included is based on existing good practice from a number of sources. See further here.

ICSA’s updated terms of reference for the Audit Committee (January 2020): ICSA has published updated model terms of reference for the Audit Committee of a company seeking to comply fully with the requirements of the 2018 UK Corporate Governance Code. The model terms also reflect the Financial Reporting Council’s Guidance on Audit Committees published in April 2016. These are intended as a guide for companies to adapt to their needs and the list of duties included is based on existing good practice from a number of sources. See further here.

Climate change/climate reporting

FCA’s Climate Financial Risk Forum Guide to climate-related financial risk management (June 2020): The Climate Financial Risk Forum (CFRF), co-chaired by the FCA and the Prudential Regulation Authority (PRA), has published a guide which aims to help financial firms understand the risks and opportunities arising from climate change and assist them in integrating them into their risk, strategy and decision-making processes. More information about the guide is here.

ISS’ 2020 Climate Proxy Voting Guidelines (March 2020): Institutional Shareholder Services (ISS) has announced the launch of a new thematic specialty Climate Voting Policy to assist investors in integrating climate-related factors into their voting decisions at annual general meetings in 2020. ISS plans to update the Climate Voting Policy Guidelines annually in light of emerging trends on climate change and other related environmental, social and governance (ESG) issues, and recent developments in market standards and regulations, as well as investor feedback. They apply to all global markets except the United States. A summary of its contents is here.

FCA’s proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations – CP20/3 (March 2020): The FCA has published Consultation Paper CP20/3, which sets out the FCA’s proposals for a new rule and guidance for certain listed issuers to make climate-related disclosures consistent with the recommendations in the final report of the Financial Stability Board’s Task Force on Climate-Related Disclosures (TCFD) published in June 2017 This follows a commitment by the FCA to consult on such new rules in FS19/6 published in October 2019. A summary of the contents of CP20/3 is here.

European Reporting Lab’s report on how to improve climate-related reporting (February 2020): The European Corporate Reporting Lab, established by the European Financial Reporting Advisory Group (EFRAG), has published a report, “How to improve climate-related reporting – A summary of good practices from Europe and beyond”. This has been prepared by the European Lab Project Task Force on Climate-Related Reporting and it includes two supplements, Supplement 1: Climate-related reporting practices and Supplement 2: Scenario analysis practices. A summary of its contents is here.

Review of how companies and auditors assess and report on impact of climate change (February 2020): The FRC has announced that it is undertaking a major review of how, and the extent to which, UK companies and auditors are responding to the impact of climate change on their business to ensure reporting requirements are being met. The review will also consider how the quality of information can be improved to support informed decision-making by investors and stakeholders. A summary of the announcement contents is here.

Corporate governance

Government’s response to the BEIS Committee on inquiry into Thomas Cook (July 2020): In October 2019 the BEIS Committee held a series of evidence sessions on the collapse of Thomas Cook which concluded with recommendations to BEIS on corporate governance, executive pay and bonuses, and audit reforms. On June 15, 2020 the Government sent its response to the BEIS Committee and that response was published in July  2020. A summary of that response is here.

ICGN and governance priorities during the COVID-19 pandemic (April 2020): The International Corporate Governance Network (ICGN) has published an open letter  to companies, regulators and stakeholders setting out governance priorities during the COVID-19 pandemic and beyond. ICGN is seeking to advance an international dialogue among investors and companies around effective responses to the pandemic while looking to restore and rebuild a more sustainable global economy. A summary of the letter’s contents is here.

ICSA’s good practice for virtual board and committee meetings (March 2020): ICSA’s Chartered Governance Institute has published guidance on the legal and practical issues for virtual board and committee meetings, as well as guidance on how virtual meetings can be made as effective as possible. A summary of the contents of the guidance is here.

FRC’s company guidance update – Guidance for companies on corporate governance and reporting (March 2020): In light of COVID-19,  the FRC published guidance for companies highlighting key areas of focus for boards in maintaining strong corporate governance and high-level guidance on the most pervasive issues when preparing annual reports and other corporate reporting. A summary of its contents is here.

FCA’s Primary Market Bulletin No. 27 – Coronavirus update (March 2020): The FCA published a special edition of their Primary Market Bulletin (PMB) to provide commentary for issuers and market participants in light of the COVID-19 pandemic. The FCA states that it will keep the matters in the PMB under consideration and the information updated, with the FCA’s core focus being to ensure consumers are protected and markets continue to function well. A summary of its contents is here.

LSE’s  Inside AIM – Coronavirus: Temporary measures (March 2020): The LSE has published an edition of Inside AIM to set out temporary measures being implemented by AIM Regulation to support AIM companies and nominated advisers in light of the COVID-19 pandemic. AIM Regulation is to apply discretion to certain of the AIM Rules for Companies and AIM Rules for Nominated Advisers (AIM Rules) and will keep the situation under review, particularly the potential impact on financial reporting, and will provide further guidance as necessary. A summary of the content of Inside AIM is here.

Diversity

Update report from The Parker Review – Ethnic diversity enriching business leadership (February 2020):  The Parker Review Committee has published an update report.  This follows its first report at the end of 2017 which made a number of recommendations, including that FTSE 100 companies should have at least one non-white director by 2021, with FTSE 250 companies having at least one non-white director by 2024.  Recommendations were also made in relation to developing the internal pipeline and enhanced transparency around diversity policies and reporting. A summary of its contents is here.

ESG and other narrative reporting developments

FRC’s call for participants in project relating to reporting on stakeholders and section 172 (July 2020): The FRC is inviting investors and companies to participate in a new project on corporate disclosures about stakeholders, including statements under Section 172 Companies Act 2006. Further information is here.

ICAEW paper on Non-financial reporting – Ensuring a sustainable global recovery (June 2020): The ICAEW has published a paper to contribute to the debate on non-financial reporting taking place in Europe and elsewhere. The ICAEW believe that improved reporting on environmental and social issues is central to efforts to encourage system change which is needed to expedite the sustainable rebuilding of economies around the world. A summary of the paper’s key recommendations is here.

PLSA launches industry group on ESG duties next steps (May 2020): The Pensions and Lifetime Savings Association (PLSA) has announced that it has set up an industry group to help produce guidance to support trustees of pension schemes in meeting the deadlines and duties imposed on them in relation to environmental, social and governance (ESG) and stewardship reporting. A summary of the announcement’s contents is here.

European Commission consultation on review of Non-Financial Reporting Directive (February 2020): The European Commission has published  a consultation paper seeking views on possible revisions to the Non-Financial Reporting Directive (Directive 2014/95/EU) (NFRD). The NFRD applies to large public interest entities with more than 500 employees (including large listed companies, banks and insurance companies) and it requires them to include a non-financial statement as part of their annual public reporting obligations. This consultation stems in part from an online public consultation in 2018 which resulted in feedback suggesting that there are problems regarding the non-financial information currently disclosed by companies. A summary of its contents is here.

European Commission’s possible revision of Non-Financial Reporting Directive (January 2020): The European Commission has published a consultation document relating to possible revision of the NFRD.  A summary of its contents is here.

Institutional investors guidance and guidelines

Pre-Emption Group’s expectations for issuances in the current circumstances (April 2020): The Pre-Emption Group (PEG) has issued a statement recommending that investors consider supporting share issuances of up to 20 per cent of issued share capital on a case-by-case basis. This recommendation to apply additional flexibility is to be in place on a temporary basis until September 30, 2020. The PEG will reconvene before then to assess how companies and investors have responded to the flexibility. A summary of the statement’s contents is here.

Impacts of the COVID-19 pandemic – ISS Policy Guidance (April 2020): ISS has issued guidance as to how it will apply its benchmark policies and voting guidelines at AGMs held in 2020 in light of the issues and challenges companies are facing from the COVID-19 pandemic. A summary of its contents is here.

Investment Association’s letter to chairs of FTSE 350 companies (April 2020): The Investment Association has sent a letter to the chairs of FTSE 350 companies setting out their members views on engagement and communication, financial reporting, annual general meetings (AGMs), dividends, executive pay and long term capital raising. A summary of its contents is here.

PIRC’s Shareholder Voting Guidelines 2020 (March 2020): PIRC has published its Shareholder Voting Guidelines 2020, setting out is views on what constitutes corporate governance best practice in relation to the board, the report and accounts and associated matters, shareholder rights and corporate actions, corporate structures and transactions, directors’ remuneration, investment companies and environmental, social and governance (ESG) matters. A summary of the contents of the Guidelines is here.

One fifth of FTSE 350 companies cautioned for lack of gender diversity at senior leadership levels (February 2020): The Investment Association has published a press release announcing that 63 FTSE 350 companies have received letters from the Investment Association and Hampton-Alexander Review about the lack of gender diversity on their board and executive committees. They have been asked to outline the action they are taking to ensure they meet the Hampton-Alexander targets of a minimum 33 per cent women on their board and senior leadership teams by the end of 2020. A summary of the press release is here.

PLSA’s Stewardship Guide and Voting Guidelines 2020 (February 2020): The PLSA has published its updated annual Stewardship Guide and Voting Guidelines. These are aimed at pension fund trustees and provide practical guidance for trustees considering how to exercise their votes at annual general meetings. The Guidelines are intended as a step-by-step checklist and include a table summarising voting recommendations on issues including executive remuneration, audit, company leadership and dividend policy. A summary of their contents is here.

Shareholder dissent hits a quarter of FTSE All Share companies in 2019 (February 2020): The Investment Association has issued a press release following analysis of information added to its Public Register in 2019 in relation to resolutions at FTSE All Share companies which received a vote of 20 per cent or more against. In total, 158 FTSE companies were added to the Public Register in 2019, with key themes being opposition to pay-related resolutions and individual director re-election. A summary of the contents of the press release is here.

Shareholder priorities for 2020 – Supporting long-term value in UK listed companies (February 2020): The Investment Association has published a document setting out the expectations of its members on four areas that its members believe can be critical drivers of long-term value. These are responding to climate change, audit quality, stakeholder engagement and diversity. The document outlines why investors consider these four areas to be important areas of focus for companies and it also sets out their expectations for change in 2020. It notes that for companies with year-ends on or after December 31, 2019, IVIS, the Investment Association’s Corporate Governance research service, will assess the progress made and highlight where companies are not meeting investor expectations. A summary of its contents is here.

Remuneration

Executive remuneration in UK listed companies – Shareholder expectations during the COVID-19 pandemic (April 2020): The Investment Association has published guidance for remuneration committees of UK listed companies setting out shareholder expectations on how remuneration committees should be reflecting the impact of COVID-19 on executive pay. The guidance notes that the impact of COVID-19 will be different for each company and while there are minimum expectations for all companies, individual circumstances and the impact on stakeholders need to be taken into account in each case. A summary of its contents is here.