UK Law and Practice Contributed by: Gareth Sykes, James Palmer, Isobel Hoyle and Hannah Whitney, Herbert Smith Freehills Kramer
companies (ESCC) category, regardless of where they are incorporated (see below on the changes introduced to the UK listing regime in 2024). It sets out principles and provisions relating to board leadership and company purpose; division of responsibili - ties; composition, succession and evaluation; audit, risk and internal control; and remu - neration. The provisions of the Governance Code apply on “comply-or-explain” basis that allows for flexibility in the implementation of the provisions by listed companies. However, in practice, the majority of companies to which the Governance Code applies comply with all, or nearly all, of the provisions. The FRC has issued a number of publications which sit alongside the Governance Code: (a) the Governance Code guidance, which aims to assist companies implement the 2024 Governance Code; (b) the Stewardship Code, which aims to improve long-term returns to beneficiaries by enhancing the quality and quantity of engagement between investors and com - panies (last updated in 2025); and (c) the Minimum Standard for audit com - mittees in relation to the external audit process and relations with the external auditor, which was adopted on “comply- or-explain” basis for FTSE 350 companies with immediate effect in May 2023 and which is cross-referred to in the 2024 Governance Code. • The UK Listing Rules, which are issued by the FCA. They set out the requirements for obtaining a listing of securities on the Official List and the mandatory continuing obligations that apply once a company is listed. The list - ing requirements and continuing obligations which apply to a company depend on which listing category it is admitted to. The UK Listing Rules also govern the requirements
in relation to transactions undertaken by a listed company and the disclosure of relevant information to investors. All companies listed in the ESCC category, regardless of where they are incorporated, are required under the UK Listing Rules to disclose how they have applied the principles of the Governance Code and to confirm that they have complied with the provisions of the Governance Code, or to the extent that they have not complied, explain what has not been complied with and the reasons for this. • Following a full-scale review of the UK listing regime, in July 2024 the FCA delivered its final rules for a significant restructuring of the UK listing regime which came into force on 29 July 2024. Under the new UK Listing Rules (UKLRs): the premium and standard listing segments were replaced with a single list - ing segment (the “equity shares (commercial companies)” category or “ESCC” ), with one set of eligibility requirements and continu - ing obligations for companies listed in that category (including the requirement outlined above to report against the Governance Code on “comply-or-explain” basis). Shareholder votes are no longer required for significant transactions or related-party transactions; and overall the UKLRs have moved from a more rules-based to a more disclosure-based regime. • The Transparency Rules, which are also issued by the FCA. They require companies to include a corporate governance state - ment in their annual report, setting out certain prescribed information. They also contain requirements in relation to audit committees (or the body responsible for performing simi - lar functions), setting out the minimum func - tions the body must carry out and require - ments as to the composition of that body. For the most part, the requirements contained in
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