Following the May 2023 consultation on the UK Corporate Governance Code (“Code”), the FRC has published a revised Code. The changes focus primarily on one area - Internal Controls whilst other changes have been kept to a minimum in a move to promote smarter regulation.The 2024 Code will apply to financial years beginning on or after 1 January 2025 save for new Provision 29 (board declaration on effectiveness of their material internal controls) which will apply to financial years beginning on or after 1 January 2026.  Revised guidance on the 2024 Code will be published on 29 January 2024.

Following on from its earlier consultation, the Code Committee of the Takeover Panel has published its amendments to Rule 21 of the Code which take effect on 11 December 2023 and apply to on-going transactions which straddle this date.The principal changes amend Rule 21.1 so that the board of a target company would no longer be restricted from taking an action that either is not material or is in the ordinary course of its business and which would not result in an offer or bona fide possible offer being frustrated. The aim of the changes are to increase flexibility for target companies to carry on their ordinary course activities, including where these involve buying and selling assets, and to provide greater clarity as to the action that will and will not be restricted. Separately the Panel Executive has published changes to Practice Statement No. 5 (Rule 13.5 – invoking conditions and pre-conditions).

Following the government’s white paper on ‘Restoring trust in audit and corporate governance’, the FRC has published a consultation on the UK Corporate Governance Code (“Code”). The consultation focuses on changes to: reflect the responsibilities, diversity of skills and experience on boards and the expanded responsibilities of audit committees; improve the transparency of malus and clawback provisions for directors’ remuneration; and update the Code to ensure it aligns with the government’s draft legislation (not yet published). Comments are requested by 13 September 2023.  It is expected that the revised Code will apply to financial years beginning on or after 1 January 2025 to allow sufficient time for implementation.

Primary Market Bulletin No. 44 reminds issuers of the: use of multimedia content (including audio and video) in regulatory news announcements; FCA’s position on the requirement for a prospectus when shares are allotted under a scheme of arrangement (mix and match facility); and new disclosure obligations under the Listing Rules on diversity and the FCA’s approach to monitoring compliance.

An update report from the Parker Review on Ethnic Diversity highlights that 96% of FTSE 100 companies have met the target of at least one minority ethnic director on their boards. FTSE 250 companies are making progress towards meeting this target by 2024. The report also sets out new targets for each FTSE 350 company to set a target percentage for senior management positions that will be occupied by ethnic minority executives and for 50 of the UK’s largest private companies to have at least one ethnic minority director on the board.

The FCA has published Primary Market Bulletin No.42 which, amongst other things: (i) discusses themes from the FCA’s enquiries into unlawful disclosure of inside information (ii) highlights the relationship between the National Security and Investment Act and market abuse; (iii) provides guidance for issuers disclosing against the TCFD framework; and (iv) reminds cash shell companies of the rules in relation to reverse takeovers.This follows on from the government’s recent publication of the ‘Edinburgh Reforms’ for ‘Building a smarter financial services framework for the UK’ and reinforces the current focus to support market integrity and ensure a regulatory focus on growth and competitiveness.In addition the FCA has published Market Watch 71 where they share their observations about changes in advisory firms’ insider lists.