Preparing for the 2022 AGM and reporting season
As the 2022 AGM and reporting season gets underway, we give an overview of the key changes affecting listed and AIM companies.
Given the ongoing uncertainty regarding the pandemic, it is likely that companies will continue to use a variety of different approaches when holding AGMs. However, 2022 is likely to see more companies return to holding in person AGMs (assuming no new restrictions on public gatherings are introduced). In response to shareholder concerns, 2022 may also see a greater number of companies undertake other shareholder engagement events in addition to their AGM.
Listed companies continue to benefit from the Financial Conduct Authority's two month extension to the usual timeframe for publication of the annual report and accounts, meaning that listed companies continue to have six months in which to publish their annual report and accounts. The FCA has indicated it will give sufficient notice to companies when the extension is to end so that they have time to plan for the change.
Physical copies of proposed amendments to articles of association or share schemes no longer need to be put on display in the City of London. Instead, documents will need to be submitted to the National Storage Mechanism so they can be viewed there from the date the AGM notice is sent.
Environmental, social and governance
ESG issues were prominent in 2021 and will continue to be a critical topic in 2022. Boards should expect to be subject to increased scrutiny of their ESG targets and the steps they are taking in relation to such targets.
Climate change is becoming one of the dominant areas of ESG focus and there is an increasing expectation that companies will make climate-related disclosures.
2022 will see premium listed companies making mandatory disclosures for the first time pursuant to the Listing Rules. These require commercial companies with a premium listing to include a statement in the annual report disclosing their compliance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and recommended disclosures for financial years beginning on or after 1 January 2021. Standard listed companies will be required to make those disclosures from next year.
In addition, for financial years beginning on or after 6 April 2022, the Companies Act 2006 will require certain companies (listed companies, AIM companies and high turnover private companies and LLPs with more than 500 employees) to include TCFD-aligned climate-related financial disclosures in their strategic reports.
Board diversity will continue to remain an area of scrutiny in 2022. Following the end of the Hampton-Alexander Review period, BEIS has announced that the government will support a new five year independent review, the FTSE Women Leaders Review, to monitor the representation of women among leaders of FTSE 350 companies, focusing on both board membership and on senior leadership roles.
Ethnic diversity on boards has remained an area of focus with 2021 seeing an increase in the number of FTSE 350 companies having at least one director of colour on their boards. The Parker Review set FTSE 100 companies a target to appoint at least one director of colour by 2021. FTSE 250 companies and AIM companies with a market capitalisation exceeding £50 million were set a target of 2024 to achieve this.
The continued focus on diversity is also evident in the FCA's recent consultation on diversity on boards and executive committees and its proposed amendments to the Listing Rules and Disclosure Guidance and Transparency Rules.
2022 sees the first year in which listed companies are required to produce their annual report and accounts in XHTML web browser format. While companies may continue to produce pdf versions it is the XHTML version which must be published and filed with the National Storage Mechanism.
In early 2021, BEIS published a consultation on restoring trust in audit and corporate governance. The response to that consultation is awaited but reforms are expected in 2022 which will require companies to change the way they approach their reporting.
Linking to diversity, this year will see the Government reviewing the gender pay gap reporting regime and it is expected that the Government will respond to its ethnicity pay gap reporting consultation.
For further information or advice on any of the matters discussed in this publication, or to obtain a copy of our annual report and accounts checklist for officially listed or AIM companies, please get in touch with your usual Corporate contact at DLA Piper.