Lavery Governance Consulting

Calling all company secretaries and directors – what is your board doing to ensure continued compliance with Listing Principle 3?   Listing Principle 3 requires that a listed company must take reasonable steps to enable its directors to understand their responsibilities and obligations as directors. Reasonable steps is often interpreted as formal training. Alongside a full, formal and tailored induction, the Corporate Governance Code Guidance envisages training to be provided to directors on an ongoing and timely basis   At a time of year when budgets and timetables for the upcoming year are discussed and set, is your board assessing and discussing its 2025 training needs so that its directors know and fully understand their obligations under the ever changing Listing Rules, Disclosure Guidance and Transparency Rules, UK Corporate Governance Code, Companies Act 2006 and other all the other rules and regulations that apply to their company?   Please get in contact if you would like to discuss the training solutions Lavery Governance Consulting can provide. #governance #training

Calling all company secretaries and directors – are your quarterly disclosure announcements referencing the correcting listing rule? Closed-ended investment funds which invest in other listed closed-ended investment funds must release an announcement within five business days of the quarter end detailing all investments in such funds which themselves do not have stated investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds. A number of such announcements issued in the last few days referenced the old listing rule number 15.6.8, rather than the new listing rule number UKLR 11.7.8. Company secretaries – review all template announcements, especially those used infrequently, to ensure any listing rule numbers quoted reflect the new listing rules. Directors – when reviewing announcements get confirmation that any rule references quoted are correct. #governance #listingrules #investmentcompanies

Calling all audit committee directors and company secretaries – are you prepared for the upcoming significant changes to terms of reference for audit committees?   One of the biggest impacts from the new UK Corporate Governance Code 2024 (“UK Code 2024”) and supplementary Corporate Governance Code Guidance (“CGC Guidance”) will be on audit committee terms of reference and what the audit committee focuses on with respect to the external audit, something which seems to have slipped under the radar of many.   Things taken away The CGC Guidance incorporates previous published FRC guidance on Board Effectiveness, Audit Committees and Risk Management.   Not all of the items in the previously issued guidance, especially those relating to audit committees, was transferred across to new CGC Guidance. This was done purposefully with the intention of simplification.   The Chartered Governance Institute model terms of reference for audit committees, which many companies use as a basis for the terms of reference for their own audit committees, contain a significant number of items derived from the FRC Guidance on Audit Committees which now no longer appear in the CGC Guidance.   Things added A new requirement under Principle 25 of the UK Code 2024 states that audit committees should follow the Minimum Standard.  This focuses heavily on the audit committee’s role in reviewing the effectiveness of the external audit process and contains a number of new items such as the audit committee should satisfy itself that the quality of the audit is of a sufficiently high standard supported by evidence and be able to justify how the committee arrived at its conclusion.   The Chartered Governance Institute has confirmed that they will be issuing updated model terms of reference for audit committees later in the year. In the interim in the images below is a rough approximation of the items that will be removed (in red) and added (in green) as a result of these changes.   Next steps for Company Secretaries and Audit Committee directors ·       Keep a close eye out for when the Chartered Governance Institute publishes its updated model terms of reference for audit committees.   ·       Any changes to the audit committee terms of reference should be discussed and tabled for approval as early as possible within the next financial year.   ·       Template agendas and the timetabling of when the audit committee undertakes the various items stipulated within its terms of reference during the financial year will need to be updated.   ·       Audit committee directors should give consideration as to the approach and evidence they wish to obtain to evidence the effectiveness of the external audit and how effective oversight is achieved throughout the year.   ·       Extra time should be allocated to drafting the audit committee report section of the annual report in the first reporting cycle as there will be a number of content changes.   #governance #listed

Calling all LSE listed directors and company secretaries– has your board agreed who are your company’s two key persons (which must be directors), nominated person and first point of contact and notified the FCA accordingly?   The requirement to provide the FCA with details of a first point of contact for an LSE listed company has been around for a long time. The point of contact needs to be knowledgeable about the company and the listing rules, be capable of ensuring action can be taken on a timely basis and be available on business days between 7am and 7pm.   The new listing rules, which came into effect on 29 July 2024, introduced two additional requirements.   1)      Key persons A listed company must provide the FCA with contact details of at least two of its executive directors or, if the company has no executive directors, two of its non-executive directors and keep this information up to date.   2)    Nominated person A listed company must provide the FCA with details of a person for receiving service of relevant documents, along with either an email address or UK postal address.   The relevant details for each of these three categories should be provided to the FCA using their Issuer Contact Details form, which can be found on their website. Whenever the company makes an application to list shares this form will need to be submitted along with the other documentation.   Company secretaries – if not already agreed, consider putting this topic on the agenda of the next board meeting. Have processes and checklists been updated to agree where this information should be recorded within the company records and that the FCA is notified of any changes (i.e. updating the director’s resignation checklist to include checking whether the director was a key person or first point of contact to prompt notification to the FCA accordingly).   Directors – as a board agree on the persons to fulfil each of these requirements and if you are a key person or first point of contact ensure you notify the company secretary of any changes to your business telephone number or business email address so that they can notify the FCA accordingly. #governance #listed

Calling all listed company directors – how are your boards testing the material controls in place to ensure compliance with legal, regulatory and corporate governance obligations?   The UK Corporate Governance Code and AIC Code of Corporate Governance requires boards to review its risk management and internal control framework annually including all material controls. Under the new corporate governance codes from financial periods beginning on or after 1 Jan 2026 boards will have to make a declaration in their annual reports as to the effectiveness of those material controls.   Whilst there are often many automated and systematic controls in place with respect to a company’s financial records and transactions, along with an annual external audit of the numbers, the controls for a company’s non-financial obligations (i.e. MAR, company law, Listing Rules, DTR and corporate governance codes) often rely on self-monitoring by the service provider or team to whom the responsibility has been delegated and in my experience rarely, if ever, externally tested.   In its “In Conversation: Looking ahead to the first reporting cycle of the 2024 UK Corporate Governance Code” podcast the FRC strongly recommend boards to start looking at their material controls now to ensure their risk management and internal control framework and reporting is in order ahead of the requirement to make the declaration.   Lavery Governance Consulting has developed a non-financial audit, comprising of over 400 tests capturing all of the obligations a LSE listed company must comply with under MAR, company law, Listing Rules, DTR and corporate governance codes. This can be used to test the effectiveness of the material controls in place monitoring compliance with these items, alongside confirming compliance with Listing Principle 1, that the company has taken reasonable steps to maintain adequate procedures, systems and controls to enable it to comply with its obligations.   If you would like more information, please contact siobhan@laverygovernance.com

Calling all listed company secretaries and directors – did you know the Block Listing Six Monthly Return form has been updated?   The FCA updated the return form on 29 July 2024 to reflect the change in the Listing Rules so that reference is made to UKLR 20.6.7G, rather than the old LR 3.5.7G.   Of nearly 100 six monthly blocklisting review announcements issued since the end of July over 50 used the old form.   A minor point certainly, however it gives an indication as to systems and controls in place to check for updates and understand new rules. As always, and especially for listed companies, impressions count.   Company secretaries – if your company has a block listing in place ensure the new form is used and any old six monthly return announcement templates are archived/cannot be accidentally rolled forward.   Directors – when reviewing a block listing six monthly return announcement, check that the listing rule reference is for the new listing rule sourcebook. #listingrules #governance

Calling all listed company secretaries and directors – do you know the full name of the DTR’s?   Simples, as the meerkat would say, Disclosure and Transparency Rules. Wrong.   On 3 July 2016, with the implementation of the Market Abuse Directive, the full name of the DTR sourcebook changed to “Disclosure Guidance and Transparency Rules”.   Despite this name change occurring eight years ago, many companies still use the erroneous wording Disclosure and Transparency Rules in their announcements. In a review of over 300 Total Voting Rights announcements released yesterday, 79 companies stated the incorrect name at least once in their announcement.   Some may say this is a minor point, ultimately everyone knows which part of the FCA handbook is being referenced. That may be the case, however impressions count and it gives rise to an awkward question. If a name change that occurred over eight years ago has not been picked up, what else has been missed?   Company secretaries – check all of your announcement templates, terms of reference, along with the annual and half yearly accounts to ensure the correct name for the DTR’s is used.   Directors – when given announcements or documents to review that refer to the DTR’s, check the correct name is quoted. #dtr #governance

Calling all Company Secretaries and Directors – are your London Stock Exchange announcements reflecting the changes arising from the new Listing Rules implemented on 29 July?   I have notifications set up for 160 London Stock Exchange listed companies. In a 24 hour period at the end of last week I noticed announcements from three different companies, each with different company secretarial providers, either referenced old listing rule numbers within the announcement or erroneously referred to the company being listed on the premium segment, something no longer in existence.   Company secretaries – have you updated all of your announcement templates and checklists to ensure gremlins such as the above don’t exist?   Directors – when given announcements to review have you asked the question/been given the assurance that any applicable references accurately reflect the new Listing Rules? #governance #listingrules

I recently had the pleasure of providing company secretarial training for LSE listed companies to Jersey Electricity, which was made even better by the feedback received below from Katy McBride, Head of Internal Audit:   "I recently attended the company secretary training program, and I am thoroughly impressed with the quality and depth of the course. The training was extremely well organised and covered all the key aspects of a company secretary's role. The content was comprehensive and up-to-date, reflecting current industry practices and regulatory requirements. This made the sessions highly relevant and relatable. The materials provided were well-structured, easy to understand, and served as an excellent reference after the training. What truly stood out was the expertise of the Siobhan. Siobhan demonstrated profound knowledge and extensive experience in corporate governance and compliance. She engaged the participants with real-world examples and case studies, which enriched the learning experience. Siobhan was very approachable and responsive to questions, fostering an open and inclusive learning environment."   If you would like to receive more information about the training options available, please don’t hesitate to get in contact. #governance #companysecretary #training

Calling all directors and company secretaries – the new listing rules will go live on 29 July 2024 Earlier this morning the FCA published the final version of the new listing rules and have confirmed that they will apply from Monday 29 July 2024, 18 short days away. Whilst the larger changes such as those in respect of related party transactions have been well advertised, the rules also contain a number of smaller changes that are not well known and that will require action from company secretaries and boards. There are new administrative items, overhauled listing principles and a general, somewhat unhelpful, rearranging of the rule book (very little has stayed in its current location). Over the next few weeks Lavery Governance Consulting will be running a series of online seminars covering all of the changes that will be bought in by the new listing rules as well as the 2024 Corporate Governance Code. Email siobhan@laverygovernance.com for more information or to book a space