Senior Director, Susan Fadil, provides a Corporate Governance update and highlights what to expect in 2021.
A number of reforms are on the agenda for 2021. The Financial Conduct Authority (FCA) plans to convene a stakeholder group to consider how to introduce more flexibility to Annual General Meetings (AGMs). Responses are pending to the Financial Reporting Council’s (FRC) discussion paper on its proposed new model for corporate reporting, with further developments likely to follow. The Business, Energy and Industrial Strategy (BEIS) Committee is expected to map out a path for implementing reforms to the audit industry, and to publish comprehensive proposals on how it will effect reforms that will enhance the role of Companies House and increase the transparency of UK corporate entities. Meanwhile HM Treasury will be carrying out reviews of the listing regime, the post-EU financial services regulatory framework and the future of financial services in the UK.
Moves to require companies to make climate-related disclosures will continue. Changes to the Listing Rules mean that, for accounting periods beginning on or after 1 January 2021, premium listed companies will be required to include a statement in their annual financial report which sets out whether their disclosures are consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Work will be done in 2021 to extend the scope of the rule to more listed issuers and to move towards mandatory disclosure. Meanwhile, BEIS is planning to introduce amendments to the Companies Act (CA) 2006 that will require UK-registered companies, including very large private companies, to make TCFD-aligned disclosures in the strategic report of their annual report and accounts. Under the proposed timetable, regulations may be made by mid-2021, and possibly come into force in 2022.
COVID-19 restrictions are continuing into 2021 and certain temporary reliefs granted to companies to help them meet their obligations will extend until spring. These include the relaxation of some of the rules relating to company meetings, a suspension of wrongful trading liability and changes to filing deadlines.
The post-Brexit transition period ended at 11.00 pm (UK time) on 31 December 2020. During the transitional period the UK was treated for most purposes as if it were still an EU member state, and most EU law continued to apply to the UK. Those arrangements having now ended and various changes have occurred. The remaining withdrawal agreement provisions have come into operation and the legal changes associated with the UK’s withdrawal from the EU and from the EU’s international agreements have taken effect. As a result, the European Union (Withdrawal) Act 2018 (EUWA) introduced the ‘Retained EU law’, this is essentially a snapshot of the EU law as it applied in the UK on 31 December 2020. Furthermore, the Brexit Statutory Instruments (SIs) deferred from exit day have also come into force by reference to the end of the transition period. Among the changes now introduced to provide for the end of the transition period are amendments to the Listing Rules, prospectus regime, Disclosure Guidance and Transparency Rules (DTRs), market abuse regime and the Alternative Investment Market (AIM) Rules.
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