Governance Readout

As has been widely publicised, 18 November saw the introduction of mandatory verification (IDV) for directors and persons with significant control (PSCs) on UK incorporated companies. As discussed in our Readout of March 2025, all new and existing company directors and persons of significant control (PSCs) are required to have their identifies verified.

There are a few routes that an identity can be verified whether its directly with Companies House, using the Gov.UK One login (online or via an app), at the Post Office or via an authorised corporate service provider (ACSP).

The mandatory IDV requirements also apply to directors of the UK establishment of an overseas company from 18 November, whereas for those filing information with Companies House or officers of corporate PSCs will have to wait longer for the mandatory introduction of IDV.

Companies House has announced some transitional arrangements for those that must comply with IDV from 18 November.

On the same day as mandatory IDV, UK companies will no longer need to create or maintain registers of directors, director residential addresses, secretaries and PSCs. Instead, this information will be filed and held at Companies House.

In contrast, private companies will no longer be able to elect to use the central register held by Companies House to record shareholder information; therefore, with effect from 18 November, any private company who has been doing this will need to create and maintain their own shareholder register either at their registered office or Single Alternative Inspection Location (SAIL) address.

*This assumes that anyone with a birthday in November may not have confirmed their identity within 14 days of the first of November as the mandatory requirements were not in force.

The Financial Reporting Council (FRC) has released updated guidance to accompany the Corporate Governance Code that seeks to clarify the appropriateness of paying NEDs in shares, which follows a request from the UK Government to amend the guidance.

The guidance previously stated that share options or other performance-related components should not be included in a NED’s remuneration package, it is now acknowledged that many organisations support their NEDs in building personal shareholdings in the organisation.

Guidance now states that, based on the circumstances of the organisation, boards may explore alternative remuneration arrangements while maintaining an awareness of the need to maintain a NED’s independence.

This guidance does not change the UK Corporate Governance Code itself but clarifies that the existing principle of comply or explain provides companies with flexibility to structure NED remuneration.

Georgeson’s view

Listed companies and shareholders benefit from having the highest calibre NEDs in the boardroom. With a limited pool of talent, retaining these individuals is essential for company performance and meeting shareholder expectations. This guidance could allow publicly traded UK companies to align their NED remuneration practices more closely to the US and private market standards, addressing concerns from certain activist shareholders and overseas investors regarding the absence of share-based awards for NEDs.

Expanding share-based remuneration for NEDs could enhance their alignment with shareholders, help listed companies attract talent without increasing cash payments and encourage more focused oversight of management teams. As such, the FRC’s updated guidance provides companies with some additional flexibility to attract suitably diverse and international talent to UK boards.

At the same time the guidance reiterates the Code's stance that delivering share-based remuneration without performance conditions is essential for maintaining board independence but clarifies the circumstances under which companies may wish to deviate from the Code’s recommendations on a “comply or explain” basis.

The Investment Association has been asked to discontinue the Public Register, which lists companies with resolutions which have received 20% or more votes against. The Government argues that this will remove duplication with UK Corporate Governance Code requirements.

An order has been laid before the UK Parliament that will amend the Financial Services and Markets Act 2000. The order is to make the provision of ESG ratings a regulated activity; therefore, providers of ratings will be required to be authorised and supervised by the Financial Conduct Authority (FCA).

With investors increasingly relying on such ratings to assess companies, funds or financial instruments, coupled with the rapid growth of this market and no formal oversight, concerns have been raised regarding the transparency and conflict of interest arrangements of the rating providers.

The laying of the order before Parliament follows an earlier consultation published in 2024 which contained a draft statutory instrument.

It is anticipated that the new regulatory landscape for ESG rating providers will come into force on 29 June 2028, and prior to that the FCA will consult upon and make new rules and guidance in relation to the providers.

Computershare’s view

ESG rating agencies went unregulated for a relatively long period of time until the European Commission introduced the first-ever set of rules focused on regulating providers ESG ratings in May 2024. The UK quickly followed to ensure there are “transparent, reliable and comparable ESG ratings” for allocators of capital.

The new UK regulation will be welcomed by various market stakeholders as the ESG rating agency market was likened to the ‘wild west’. The FCA’s proposals will be informed by the International Organization of Securities Commissions (IOSCO) recommendations on the following key areas: transparency, governance, systems and control, and conflicts of interest.

The new regulatory framework will not come into force until June 2028 which means that companies need to remain proactive in their communication with ESG rating agents to ensure that the data used is accurate and that the methodology has been applied correctly.

Companies should consider the following actions:

• Identify which ESG rating agents are used amongst your largest shareholders.
• Understand how ESG ratings are used in investment decision making at the fund-level and which key metrics are used.
• Establish a roadmap of improvement for the ESG rating agents most used by your shareholders.
• Engage with the ESG rating agents to ensure that you are receiving full credit for your sustainability-related disclosures.

The Taskforce on Nature-related Financial Disclosures (TFND), a market-led, science-based, and government-supported global initiative, has published its 2025 status report, which has been released two years after they published their original recommendations. The report also aims to provide a comprehensive assessment of the market adoption and progress on related disclosures.

The status report also considers the impact of nature-related risks, which are those relating to but not limited to biodiversity loss, ecosystem degradation, and water stress, and climate-related risks which focus on the impact of extreme temperatures, flooding, and more.

The recommendations and their report provide guidance for organisations globally across all sectors and is consistent with international standards including the IFRS International Sustainability Standards Board (ISSB) and the Taskforce on Climate-related Financial Disclosures (TCFD).

Some of the key takeaways from the report include:

1. Rapid uptake
   620 organisations across more than 50 countries (representing US$20 trillion assets under management) have committed to aligned reporting and over 500 first- and second-generation reports have been published (reports either produced by early adopters (first generation) or those reports produced after the final TFND framework was released in late 2023 (second generation).
   
   
2. Climate reporting integration
   Nearly 80% of those publishing TNFD disclosure integrate them with climate-related reporting which indicates a move towards a more holistic approach to sustainability reporting.
   
   
3. Materiality
   63% of companies surveyed indicated they believe nature-related risks are significant or more significant than climate risks for their financial future.
   
   
4. Investor pressure and regulatory momentum
   77% of investors (based across the globe) want a dedicated global standard for nature-related disclosures. Regulatory requirements are ever-expanding especially throughout Europe and Asia where over 70% of businesses expect mandatory reporting within three years.
   
   
5. Challenges
   While there has been strong progress in governance and risk management disclosures, there remains challenges with metrics and targets relating to nature-related disclosures due to data gaps.

Computershare’s view

As organisations prepare their annual reports for the 2025/26 reporting period, they need to consider factoring in biodiversity, ecosystem and water risks into their core financial issues and not simply add-ons to their corporate and social responsibility statements. It is possible that TNFD recommendations will inform future mandatory standards and therefore a convergence with ISSB, so early adoption could reduce compliance risk.

It is also becoming more common to combine climate and nature disclosures into a unified narrative which works with investors increasing expectations on the level of transparency of related risks and associated opportunities.

Companies should consider the following recommended actions

• Start with TNFD’s four pillars
  Define board and management oversight of nature-related issues, assess how nature risks and opportunities affect your business model and financial planning. Look to implement processes to identify, assess and monitor nature-related dependencies and establish which performance indicators to disclose along with measurable goals.
  
  
• Apply the LEAP approach
  Locate priority areas of nature interaction, Evaluate dependencies and impacts, Assess risks and opportunities, and Prepare responses and disclosures.
  
  
• Leverage existing climate data
  As many of the TNFD disclosures overlap with those found in TCFD, where possible use existing ESG data as a foundation.
  
  
• Invest in nature data quality
  Follow TNFD’s guidance on improving nature-related data collection and reporting systems, and engage with stakeholders including indigenous peoples/local communities in governance and risk assessments.

The FCA’s latest Primary Market Bulletin (no. 59) covers a number of items, but those that may be of particular interest for readers of the Governance Readout are the observations following the FCA’s review of issuers’ compliance with delayed disclosures of inside information, and the reminder to issuers on key changes when submitting disclosures via the electronic submission system or a primary information provider.

Delayed disclosure of inside information (DDII)

The FCA has reviewed compliance with the requirements under Article 17.4 of the UK Market Abuse Regulation (UK MAR), following a previous review in November 2020. Findings include:

• A 39% decrease in DDII notifications which may have been caused by general market conditions.
• 18% of issuers on trading venues reviewed made notifications compared to 25% previously.
• Average delays increased by approximately 7 days, bringing the over number of days to 35.2, that being said the authority were pleased to see a fall over 6 days in relation to unscheduled financial information.

While the fall in the volume of notifications may not be indicative of a failure to comply with the regulations, issuers need to make sure they have appropriate arrangements in place to comply with Article 17.4 of UK MAR, which includes the requirement to immediately inform the FCA that disclosure of inside information was delayed after its disclosure to the public, and they should include a written explanation of how the requirements of 17.4 were met if requested.

The FCA also noticed that with those issuers who had significant delays there were many instances of the issuers lacking confidence in classifying and processing inside information which led to unnecessary classification and/or notification. Therefore, all issuers should review their policies and procedures, and where necessary arrange relevant training for employees.

National Storage Mechanism (NSM)

As covered in our March 2025 Governance Readout, changes to improve the National Storage Mechanism came into force at the beginning of November and introduced new metadata requirements.

Issuers need to remember the changes when submitting disclosures to the NSM as they must now include the issuers’ Legal Entity Identifier (LEI) where it is available together with the organisation’s name. The LEI must have an issued status and will need to be renewed annually.

If other issuers are mentioned within the disclosures, then their names and LEIs are to be included. An updated list of headline codes and categories have also been produced and must be used to categorise disclosures accurately.

New regulations will require in-scope companies to include certain information regarding their payment practices within their directors’ reports, in addition to the requirements found within the current payment practices regime introduced in 2017.

Where the current scheme requires companies that meet two of the three thresholds to be classified as a large company to disclose twice a year via a government website certain information on qualifying contracts such as those related to goods or services, the new requirements will require company directors to include within their annual report and accounts:

• Information on the payment period (expressed in days) in standard payment terms with suppliers – and where those standards have been varied in the financial year, provide details of the variation or any notification/consultation carried out with the suppliers.
• A statement of the average number of days taken to make payments under the qualifying contracts within the financial year, and the percentage and sum total of payments made within 30 days, between 31 and 60 days and on or after 61 days.
• A statement of the percentage and sum total of payments not made within the contractual payment period.

Companies considered in scope will be those that fall under the definition of a large company and will be satisfying at least two of the following criteria:

• Turnover of more than £54 million
• Balance sheet of more than £27 million
• More than 250 employees

The regulations come into force with effect from financial years beginning on or after 1 January 2026.

The Department for Business and Trade has set out further plans to simplify reporting in a written statement to Parliament. These form part of HM Treasury's updated action plan to reduce the regulatory burden on companies and to boost growth. In October 2024, the Government announced that it would remove redundant reporting requirements from the directors' report and would consult during 2025 to simplify the UK's current non-financial reporting framework. Some reporting requirements were removed with effect for financial years that commenced on or after 6 April 2025. The Government now proposes to go further to limit the number of companies required to produce a strategic report and remove the requirement for all companies to publish a directors' report altogether.

In July 2025, the UK Home Office published an optional template to be used as a guide for responding to supply chain transparency requirements in the UK, Australia and Canada. The template encourages proportionate risk-based reporting which is grouped by theme into seven overarching requirements including descriptions of risk management processes and due diligence processes in relation to modern slavery, forced labour and child labour in supply chains. The template (and the suggested structure in the guidance) is optional and the current UK Government has indicated no intention to legislate in this area.

The FRC has published its annual review of corporate reporting for 2024/25 following the monitoring conducted across UK company annual reports and accounts. The FRC has laid out its findings and expectations for the forthcoming reporting period.

The quality of reporting across the FTSE 350 has seen a lower proportion of reviews resulting in substantive queries compared to previous years; however, the FRC has indicated that a quality gap remains between those in the FTSE 350 and other companies.

Common issues identified from this review were

• Impairment of assets
  Topping the list of most raised issues for the third year in a row – and impacting 10% of reviews. However, no companies were required to restate their accounts. The review identified that more detailed disclosures, better connectivity between disclosures and other areas of financial statements may have prevented many queries.
  
  
• Cash flow statements
  The FRC was disappointed by the continuing number of cash flow restatements resulting from their review, with the main issues identified as being related to classification of cash flows by companies outside the FTSE 350. This issue is being considered as part of a thematic review of reporting by UK smaller listed companies.
  
  
• Financial instruments
  Issues related to the accounting treatment and restatement of accounts of financial instruments included unrecognised obligations to repurchase own shares and misclassification of warrants.

There were fewer substantive queries in respect of climate-related reporting; compliance challenges continue to persist, and companies are reminded that all climate-related financial disclosures required under the Companies Act 2006 must be provided in the annual report and accounts because cross-referencing to information located outside of the report does not comply with statutory requirements.

For the forthcoming reporting season, companies should review the report rigorously before it is published to identify common technical compliance issues to avoid many of the questions, corrections or restatements that the FRC often have to make. The strategic report should include a fair, balanced and comprehensive review of the company’s development, performance and prospects.

The FRC has stated that it expects the results of their thematic review into reporting by UK smaller listed companies to be published by the end of 2025.

The FRC has published a report on preparing for the Stewardship Code. It has published a report to assist with preparing for reporting under the UK Stewardship Code 2026. The report follows the new guidance on the Code published last week. The Stewardship Code 2026 comes into effect on 1 January 2026 and sets out what the FRC considers best practice for institutional asset owners and asset managers when exercising their stewardship responsibilities.

The FRC has published its Annual Review of Corporate Governance Reporting, analysing reporting trends and practices among 100 UK-listed companies against the 2018 UK Corporate Governance Code for the last time. Going forward, Annual Reports will be reviewed against the updated 2024 Code which came into effect in January. A key finding shows that companies reporting departures from Code provisions are increasingly providing clear, meaningful and context-specific explanations for their approach.

The FRC has also published practical insights to help smaller listed companies improve the quality of their corporate reporting and make the most of their resources.

The FRC has issued International Standard on Sustainability Assurance (UK) 5000, “General Requirements for Sustainability Assurance Engagements”, which provides UK companies, investors and assurance providers with a consistent, internationally aligned assurance standards for voluntary use in sustainability assurance engagements.

The Georgeson Corporate Governance team has produced a client memo examining the evolving landscape of AGM meeting formats across Europe, with a particular focus on the growing discussion around virtual-only AGMs.

The memo outlines recent legislative developments, highlights differences across key markets, and explores how issuers are adapting to changing legal requirements and investor expectations around engagement and accessibility.

The Georgeson Corporate Governance team has analysed the FTSE 350 remuneration report votes during July-September 2025.

83 FTSE 350 companies held their AGM, and three of these issuers received more than 20% opposition to the approval of their remuneration reports – all from the FTSE 250.

On 15 October 2025, Glass Lewis issued a press release announcing that it will phase out its benchmark proxy voting policy by 2027, moving instead to offer multiple “voting perspectives” that better reflect the diversity of its clients’ voting philosophies and stewardship priorities.

This announcement comes at a time of heightened scrutiny of the proxy advisor industry, particularly in the United States. Earlier this year, the US House Judiciary Committee launched an investigation into ISS and Glass Lewis, raising concerns about their influence over shareholder voting and the global duopoly of the proxy advisor market.

The key takeaway from the press release is that these changes will not happen until 2027, with Glass Lewis yet to disclose whether the standard vote recommendations will continue to be available for the 2027 AGM season.

This shift is part of a broader industry trend toward greater investor autonomy and customisation, but it introduces new uncertainty for issuers, who may need to engage more closely with a fragmented investor base and adapt to less predictable voting outcomes.

Georgeson, as a significant global client of Glass Lewis, has engaged consistently with them since this announcement. While Glass Lewis continues to refine the specifics of these changes, we remain in close contact to ensure our clients are informed. We are also monitoring how this policy shift may influence the broader proxy advisory industry, particularly any response from ISS.