17 Nov 2022

Corporate Update Bulletin - 17 November 2022

Welcome to the latest edition of Corporate Update, our fortnightly bulletin offering a two-minute read of the latest developments which we consider relevant to corporate counsel. Please get in touch with your usual contact if you want to explore any of the topics covered in more detail. If you would like to subscribe to this bulletin as a regular email, please click here.

In this issue


PEG issues new Statement of Principles on disapplication of pre-emption rights

On 4 November 2022, the Pre-Emption Group updated its Statement of Principles and Template Resolutions relating to the dis-application of pre-emption rights. As anticipated, the Statement has been updated to permit a company to issue shares for cash on a non-pre-emptive basis in respect of up to 10% of issued share capital for any purpose and a further 10% for an acquisition or a specified capital investment announced or occurring in the previous 12 months, an increase on the previous “5% and 5%” limits. 

Companies issuing shares on a non-pre-emptive basis under the new Statement of Principles should comply with certain conditions, including observing “soft” pre-emption rights as far as practicable and giving due consideration to involving retail shareholders, for example by making an offer through a retail platform or a “follow-on” offer to shareholders not allocated shares in the placing. Companies can also seek to dis-apply pre-emption rights in respect of a further 2% for such a “follow-on” offer. Companies are also required to prepare a post-transaction report in a prescribed format which must be announced and filed with PEG within a week of any issue under a general disapplication authority.

Companies should obtain shareholder approval for capital raising under the new Statement of Principles at their next AGM but a company that needs do a non-pre-emptive issue before its next AGM will be able to take advantage of the new guidelines under transitional provisions. 

IA publishes annual guidance on executive remuneration 2023

The Investment Association (IA) has published its annual Principles of Remuneration for 2023, and a Letter to remuneration committee chairs of FTSE 350 companies, setting out its expectations on executive pay and key issues for investors to consider when voting during the next AGM season. The guidance has not changed materially from the last version, but the latest revision has undoubtedly been influenced by the rising inflationary environment and the way in which the “cost of living crisis” may impact the perception of executive remuneration. In particular, the Principles provide that:

  • executive directors’ base salary increases should not be at a level greater than inflation or the increase awarded to the wider workforce;
  • whilst recognising the complexity and time commitment of being a non-executive director (NED) has sometimes outstripped NED fees and accepting the value that effective NEDs provide, any increases in NED fees should be clearly explained; 
  • any ESG performance conditions should be capable of quantifiable assessment, suitably stretching and linked to the company’s overall strategy, and should not reward “business as usual activity” or be used as a means of increasing overall quantum; and
  • companies should use their discretion, where appropriate, to override the formulaic out-turn of vesting outcomes of long-term incentive awards granted in early 2020 (at a time when share prices were at a historic low), to ensure that any vesting due soon reflects the “performance of the executive” and the “experience of key stakeholders”. 

TPT Consultation on disclosure framework and implementation guidance published

On 8 November 2022, the UK Transition Plan Taskforce (TPT) published its proposed Disclosure Framework for private sector climate transition plans and accompanying Implementation Guidance for consultation. TCFD-aligned disclosure requirements which already apply to many large UK companies and listed companies include a recommendation for companies to prepare a transition plan. The Framework is designed to assist entities to disclose credible, useful and consistent transition plans as recommended under the TCFD Recommendations or under transition plan disclosure recommendations in the ISSB’s proposed standards.

The TPT disclosure framework is grounded on three guiding principles (Ambition, Action and Accountability) and recommends disclosures covering 19 sub-elements, within five categories: foundations, implementation strategy, engagement strategy, metrics and targets, and governance. The draft implementation guidance sets out steps to develop a transition plan and when to disclose it. Recommendations include publishing transition plans in a standalone document which should be updated at least once every three years, and reporting on progress against the plan in the annual accounts. 

The consultation will close on the 28 February 2023, with a final Disclosure Framework and Implementation Guidance scheduled for Summer 2023. 

FRC launch Consultation on the minimum standard for audit committees

On 08 November 2022, the Financial Reporting Council (FRC) launched a Consultation on its draft proposal for a minimum standard for audit committees intended to apply to audit committees of all UK incorporated FTSE350 companies. The consultation follows the Government’s May 2022 response to Restoring Trust in Audit and Corporate Governance White Paper, which confirmed the government's intention to give the new Auditing, Reporting and Governance Authority (ARGA) statutory powers to mandate minimum standards for appointment and oversight of auditors.

The Minimum Standard is expected to come into force on a “comply or explain” basis, prior to the establishment of ARGA and until appropriate legislation is introduced mandating the standards. Areas of focus include: the appointment of the auditor and associated tendering process, the ongoing oversight of the audit and auditor, and reporting on the audit committee’s work in respect of the audit and in compliance with the Minimum Standard. The consultation will close on 8 February 2023.

ISS 2023 benchmark policy consultation published

The Institutional Shareholder Services (ISS) has published its 2023 benchmark policy consultation, seeking views on its proposed amended voting policies for 2023. Areas on which views are sought include: 

  • In relation to the UK, changes to the policy on remuneration, encouraging keeping directors’ annual salary increases low and proportionally lower to increases across the broader workforce. 
  • Recommendations to vote against directors and/or other voting items of companies not considered to be adequately disclosing climate risk disclosure information, companies without either medium-term GHG emission reductions targets or Net Zero-by-2050 GHG reduction targets for at least a company's operations (Scope 1) and electricity use (Scope 2).

Comments should be sent to the ISS by 16 November 2022. The final 2023 benchmark policy changes are expected to be announced by early December 2022, with the revised policies to apply to shareholder meetings on or after 1 February 2023.


This material is provided for general information only. It does not constitute legal or other professional advice.

Contact Information
Filippo De Falco
Partner at Slaughter and May
Alfred King
PSL Counsel at Slaughter and May