- 8 May 2025
Thank you for your interest in our updates on the latest regulatory developments. There are a number of issues of interest this month. Do, please, feel free to bring these to the attention of colleagues for whom they might also be relevant.
Peter Swabey FCG,
Policy & Research Director
Of general interest to all working in governance
REQUEST FOR SUPPORT FROM MEMBERS
As deregulation trends gain momentum in the United States, are we beginning to see similar shifts across the Atlantic? How are international companies responding to recent US executive orders targeting DEI initiatives in the federal sector and potential lack of alignment on ESG more broadly, including approaches to climate change?
Join us for a virtual round table on Monday 19 May at 4pm to explore the evolving influence of the United States on global governance. This open forum invites governance professionals and anyone with an interest in corporate accountability to share insights, ask questions, and discuss the broader implications of these developments. Don’t miss this timely and important conversation. Register your interest at [email protected] by Friday 16 May.
Of interest to all those working in organisations with more than 250 employees
REQUEST FOR SUPPORT FROM MEMBERS
The Office for Equality and Opportunity, the Race Equality Unit, and the Disability Unit are consulting on the introduction of mandatory ethnicity and disability pay gap reporting for large employers (those with 250 or more employees). The feedback from this consultation will shape the proposals for the upcoming Equality (Race and Disability) Bill, announced in the King’s Speech in July 2024.
Large employers are already required to report on their gender pay gaps. This consultation seeks views on how ethnicity and disability pay gap reporting could be implemented in practice and integrated with existing reporting frameworks.
The Institute will be responding to the consultation before the closing date on 10 June. If you would be willing to help with the drafting of that response, please contact Valentina Dotto at [email protected]. Thank you to those members who have done so to date.
Of interest to all those working in corporate governance
REQUEST FOR SUPPORT FROM MEMBERS
The London Stock Exchange released its Discussion Paper: Shaping the Future of AIM on 7 April 2025, seeking feedback on potential updates to AIM Rules for Companies. The consultation explores:
- AIM’s role within the UK capital markets ecosystem, addressing investment incentives like business property relief and stamp duty exemptions.
- Simplifying nominated adviser (nomad) roles to cut costs and reduce duplication.
- Replacing a corporate governance code with streamlined governance requirements.
Proposed reforms include raising the threshold for substantial transactions from 10% to 25%, exempting certain related-party transactions from disclosure, and recognising a wider range of accounting standards. The Institute will be responding to the consultation before the closing date on 16 June. If you would be willing to help with the drafting of that response, please contact Valentina Dotto at [email protected].
Of interest to all those working in corporate governance
REQUEST FOR SUPPORT FROM MEMBERS
HMRC is consulting on modernising the 1.5% higher rate Stamp Tax on Shares applicable to certain overseas transfers of UK securities. This follows its April 2023 consultation on the principal 0.5% charge. Aimed at reducing unnecessary legislation and improving clarity, this consultation invites feedback from taxpayers, investors, businesses, and other stakeholders.
The Institute will be responding to the consultation before the closing date of 21 July. If you would be willing to help with the drafting of that response, please contact Valentina Dotto.
Of interest to all working in charities
REQUEST FOR SUPPORT FROM MEMBERS
The Charity SORP Group are consulting on an updated Statement of Recommended Practice (SORP) 2025. The consultation seeks feedback from charities, auditors, and finance professionals on proposed updates to the charity accounting framework.
The Institute will be responding to the consultation. If you would be willing to help with the drafting of that response, please contact Valentina Dotto.
Of interest to all working in higher education
REQUEST FOR SUPPORT FROM MEMBERS
Advance HE has published a Framework for Leading in Higher Education, designed to guide leadership practices within the sector. The framework focuses on three key dimensions: knowledge and understanding, values and mindsets, and applications and skills. It serves as a resource for self-development, preparing for promotion, and supporting team and organisational development.
Advance HE is currently seeking feedback before finalising the document in September. The Institute will be responding to the consultation. If you would be willing to help with the drafting of that response, please contact Valentina Dotto.
Of interest to all responsible for remuneration reporting
NEW LEGISLATION
Further to our request for views last month, the Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 were laid before Parliament on 3 April and are due to come into force on 11 May. The regulations will remove certain overlapping requirements from the directors’ remuneration reporting framework and also clarify certain powers of the UK audit regulator. Key proposed changes include:
- Director Pay Change: Companies will no longer compare individual directors’ annual pay changes with average employee pay changes. They will focus on the CEO pay ratio for simplicity.
- Single Figure Total Table: The table summarising directors' total remuneration will omit columns for total fixed and variable pay, as these figures are detailed elsewhere.
- Share Options: Companies will remove the disclosure of changes to share option exercise prices or dates due to existing adequate reporting.
- Website Publication: Companies will only need to keep DRRs on their websites until the subsequent financial year’s DRR is published, aligning with broader annual reporting rules.
- Vesting and Holding Periods: Companies will end mandatory disclosure of vesting and holding periods for share-based awards, relying instead on voluntary reporting under the UK Corporate Governance Code.
- Directors’ Service Contracts: Companies will no longer need to disclose contract durations but must still seek shareholder approval for contracts exceeding two years. The Code continues to recommend annual director re-elections.
- Payments Outside the Remuneration Policy: Companies will make payments outside the approved directors' remuneration policy (DRP) permissible with shareholder approval, reverting to the pre-2019 approach.
The regulations apply to remuneration policies approved after 11 May. We pointed out that there will be many remuneration policies already published in notices of AGMs taking place after 11 May. DBT have published some helpful guidance to the effect that the new regulations remove requirements rather than adding them and, consequently, “where a company has prepared a directors’ remuneration policy in accordance with the pre-11 May 2025 directors’ remuneration policy requirements that is not due to be put to shareholders for approval until after 11 May 2025, this policy will cover certain matters no longer needed under the new regulations, but the policy should otherwise still satisfy the requirements of the directors’ remuneration reporting regime as a whole.”
Of interest to all those working in corporate governance
The FCA published Primary Market Bulletin 55 (PMB 55) on 17 April 2025, seeking feedback on updates to five remaining Technical Notes still referencing pre-July 2024 Listing Rules. These updates are set to be finalised by July 2025. The FCA also confirmed amendments to 44 Technical and Procedural Notes consulted on in PMB 53, deleted one Technical Note and one Procedural Note, and proposed further revisions to Technical Note 710 (Sponsor Services: Principles for Sponsors). Additionally, it plans to update Technical Note 507.1 to align with the new European Single Electronic Format taxonomy.
If you have any views on the consultation that you would like the Institute to submit, please contact Valentina Dotto.
Of interest to all those working in corporate governance
From 8 April 2025, individuals can verify their identity directly with Companies House or via Authorised Corporate Service Providers (ACSPs). To support this process, Companies House has issued a suite of new guidance documents. These guides provide clear instructions for individuals and ACSPs on completing the verification process effectively.
Of interest to all working in governance
On 8 April, the Government published a new Cyber Governance Code of Practice which, together with a wider governance package, shows boards and directors how to manage digital risks and protect their businesses and organisations from cyber attacks. The recent cyber incidents at M&S and the Co-op underscore the increasing importance of robust cybersecurity measures for organisations.
According to the Government announcement, “effective management of cyber risks is critical to the operation of modern businesses".
This Cyber Governance Code of Practice shows how company boards and directors can build resilience to a wide range of cyber risks across their organisation. The Code, which has been co-designed with technical experts from the National Cyber Security Centre (NCSC) and a range of governance experts across industry, focuses on the actions senior leaders should take to govern cyber risks effectively within their organisation.
A one-page summary of the Cyber Governance Code of Practice has been provided to offer a concise view of the Code.
The Code forms part of the government’s free package of support on cyber governance and should be the first point of reference for board members. It is underpinned by Cyber Governance Training, which helps boards and directors to strengthen their understanding of how to govern cyber security risks, and the Cyber Security Toolkit for Boards, which supports boards and directors in implementing the actions set out in the Code.
There are also documents showing how the Code maps to cyber standards, such as the NCSC’s Cyber Assessment Framework (CAF).
Of interest to all those working in corporate governance
The FRC has published its findings on structured digital reporting for the 2024/25 period, aiming to improve transparency and reporting accuracy for businesses, ensuring better compliance with evolving financial standards. The review aims to enhance the quality and accessibility of financial reports through recommendations derived from market-wide analysis of digital reporting. Using tools developed by the FRC, it specifically examines 25 annual reports filed in 2024. Since 2021, certain companies on UK regulated markets have been required to file reports in a structured digital format (iXBRL), making them machine-readable and improving data accessibility for investment and lending decisions. This review was supported by the FCA and focuses on improving report quality and market effectiveness.
Of interest to all those working in corporate governance
The EU Council formally adopted Directive (EU) 2025/794 (‘Stop-the-Clock’ Directive) on 14 April 2025, ahead of schedule. Published in the Official Journal on 16 April 2025, it came into force on 17 April 2025. Member States must incorporate it into national law by 31 December 2025.
Part of the European Commission’s ‘Omnibus I’ package, the Directive delays sustainability reporting requirements under the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) by two years for companies with obligations starting in 2025 or 2026. It also extends deadlines for the Corporate Sustainability Due Diligence Directive (EU) 2024/1760 (CSDDD), postponing transposition to 26 July 2027 and initial application to 26 July 2028 for in-scope companies, including non-EU entities.
Of interest to all those working in corporate governance
On 10 April 2025, the FCA outlined its approach to finalising the regulatory framework for the Private Intermitted Securities and Capital Exchange System (PISCES). In response to feedback on Consultation Paper 24/29, the FCA proposed technical adjustments to align PISCES with private market practices, including changes to core disclosure requirements, legitimate omissions, permissioned trading events, and operator oversight.
The final policy statement and rules are set for publication in June 2025, with operator applications opening soon after. Legislation to establish PISCES as a component of the financial market’s infrastructure is expected in Parliament by May 2025.
Of interest to all working in charities
The Charity Commission has issued an alert warning charities about fraudulent messages recently sent to charities and trustees, purporting to come from the Commission. These letters typically request actions such as removing trustees or chief executives, releasing funds, or providing sensitive documents like passports or utility bills. They may appear to come from the Commission, its Chief Executive Officer, or its Directors.
The Commission has reported these incidents to Action Fraud and is monitoring the situation. It has provided guidance to help charities distinguish between genuine and fraudulent correspondence. Charities are advised to contact the Commission directly if they have any doubts about the authenticity of such communications.
This development underscores the importance of vigilance and robust internal controls within charities to protect against fraud and ensure the integrity of their operations.
Of general interest
An Office of the Whistleblower Bill has been introduced to create an independent regulator to protect whistleblowers. The Bill sets out the Office's role in establishing and enforcing standards for managing whistleblowing cases, offering advice and disclosure services, and overseeing investigations.
The Office will also have the power to direct investigations and ensure whistleblowers receive redress for any detriment they suffer. The Bill is currently at the second reading stage in the House of Commons but, as a Private Members Bill, it is unlikely to become law unless adopted by the Government.
Of interest to all those working in corporate governance
Slaughter and May has updated its Timeline of ESG Developments in 2025, highlighting key dates for Q2. This resource aids horizon scanning for corporate governance professionals.
Of interest to all working in charities
Grant Thornton’s report highlights key developments in the charity sector, focusing on challenges such as sustainability, digital transformation, and governance improvements for long-term viability.
Of interest to all those working in large private companies
THANKS TO MEMBERS
The virtual roundtable of members working in large private companies, held on behalf of the Financial Reporting Council on Tuesday 29 April was a great success and many thanks to those members who joined us. The FRC team were grateful for all the contributions received. In general, it is fair to say that the Wates Principles were commended by all for their flexibility and ease of applicability to the large private sector.
And finally, some articles that passed across my desk and struck me as being of interest to members:
Aabar v. Glencore - English Court of Appeal to revisit the Shareholder Rule: Reed Smith LLP has published an interesting article on the Shareholder Rule case that I have mentioned in previous recommended reading. Unsurprisingly, it is going to further appeal.
AI Oversight by Boards: This article from Harvard discusses how boards can oversee AI to ensure responsible and effective use, focusing on governance frameworks, risk management, and the integration of AI technologies in business. Boards are encouraged to set clear strategies and monitor AI’s impact on value creation.
OFSI Takes Enforcement Action Against UK Charities: Greenberg Traurig has published an interesting article about action taken by the Office of Financial Sanctions Implementation (OFSI) against UK-registered and regulated charities for breaching sanctions legislation by failing to respond to OFSI’s requests for information.
Redefining the CEO's Role: This article from Harvard outlines the evolving role of CEOs, highlighting the need for adaptability in leadership. It emphasises foresight in strategic planning, technology integration, and talent management as central to navigating modern business challenges.
Regulatory Shifts in ESG: This article from Harvard addresses the changes in Environmental, Social, and Governance regulations, forecasting the regulatory landscape and outlining steps companies should take to meet future compliance standards effectively.
Reputation in the AI era: 5 steps to help you build resilience: Schillings has published an interesting article which looks at protecting reputation in the AI era.
On the subject of further reading, it would be remiss of me not to mention the CGIUKI blog published in April:
30 April – 2025 Annual Lecture