FCA Consultation on changes to Listing rules

The Financial Conduct Authority (FCA) is currently consulting on changes to its Listings Rules to require listed companies to publish annual statements on certain proposed targets for gender and ethnic minority representation on their boards – including data on the make-up of their board and most senior level of executive management in terms of gender and ethnicity.

Targets for these statements, referred to as “comply or explain” statements include:

• At least 40% of the board should be women (including those self-identifying as women).

• At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Chief Financial Officer (CFO) or Senior Independent Director (SID) should be a woman (including individuals that self-identify as a woman).

• At least one member of the board should be from a Non-White ethnic minority background (as defined by the Office for National Statistics).

In addition to the above, the FCA is also proposing changes to existing disclosure and transparency rules that would require companies to ensure that any existing disclosures on diversity policies addresses key board committees and also broader aspects of diversity such as considerations of ethnicity, sexual orientation, disability, lower socio-economic background and other diversity characteristics.

These proposals would apply to UK and overseas companies with equity shares in either the premium or standard listing segments of the FCA’s Official List, while the disclosure and transparency changes apply to companies with securities traded on UK regulated markets, such as the Main Market of the London Stock Exchange. The FCA has confirmed that the proposed diversity targets are not mandatory, that organisations are not required to “meet quotas”, and that the intent is that the targets should be used as a positive benchmark for issuers to report against.

The consultation is scheduled to end on the 22nd October 2021, and subject to feedback and FCA Board approval, the FCA expects to confirm the rules by late 2021.