Equity Capital Markets

Since our spring edition of Insights, there have been the following developments:

• May 2023: Publication of the FCA's latest consultation paper as part of its Primary Markets Effectiveness Review. As anticipated by the 2022 discussion paper, it proposes as a single segment listing for equity shares in commercial companies. This will mark the end of the current two-tier listing regime comprising premium and standard listings.
  
  
• May to July 2023: The FCA published a series of engagement papers on key aspects of the proposed new regime for public offers and admissions to trading. The deadline for responding to the questions raised by the engagement papers has now passed and the FCA intends to provide feedback on key points raised before starting to work on developing specific rule proposals for consultation next year. Further details can be found on the FCA website.
  
  
• July 2023: HM Treasury published a near-final draft of the Financial Services and Markets Act 2000 (Public Offers and Admission to Trading) Regulations 2023, setting out the proposed changes to the existing public offers and admissions to trading regime, together with a Policy Note which provides further details of the proposed reforms.
  
  
• The FCA plans to release its proposed new rules on the listing regime before Christmas and a quick turnaround on responses is expected.

For further details on all of the above, and for a reminder of the key features of the proposed new listing, prospectus and secondary fundraising regimes, please read our briefing.

The Financial Reporting Council (FRC) has recently confirmed that it will be taking forward only a small number of the original proposals set out in its July 2023 consultation on the changes to the UK Corporate Governance Code (Code) and that it intends to publish an updated Code in January 2024. The revised Code is expected to apply to financial periods beginning on or after 1 January 2025 and updated FRC guidance is also expected to be published before the new Code takes effect. 

The main substantive change being taken forward will be in relation to provisions around internal controls, although the FRC has noted that feedback has been taken on board, firstly to ensure the revisions are more targeted and proportionate and, secondly, to differentiate the UK approach from the more intrusive approach adopted in the US. The FRC has confirmed that proposals relating to the role of audit committees on environmental and social governance and modifications to existing provisions around diversity, over-boarding, and Committee Chairs engaging with shareholders will not be taken forward.  For details of the original proposals, please see our briefing .

The FRC's approach is unsurprising in the context of the Government's withdrawal of the draft reporting regulations (see our Company Law and M&A chapter) and the ongoing wider debate about business reporting requirements and burdens across the economy.

The Quoted Companies Alliance (QCA) has recently published its revised Corporate Governance Code. The revised Code will apply from financial years beginning on or after 1 April 2024 and there will be a 12-month transition period (from 1 April 2024) during which companies will have additional flexibility to adjust to the new provisions. The Code continues to adopt a pragmatic, principles-based approach and ensure associated disclosures are published to assist with good corporate governance. Changes include greater emphasis on engagement with key stakeholders and on the company's corporate culture, and a new Principle on establishing a remuneration policy which is support of long-term value creation and the company's purpose, strategy and culture.

A copy of the revised Code is available to download on the QCA's website for members and can be purchased by non-members.