UK Securities Regulator Finalizes Diversity & Inclusion Rules for Listed Companies

The U.K. Financial Conduct Authority has published its final policy and rules to implement diversity and inclusion requirements for listed company boards and executive committees. The new FCA rules, which will apply as an ongoing listing obligation, will require issuers to include a statement in their annual financial report on whether they have met specific board diversity targets on a ‘comply or explain’ basis.

The ‘comply or explain’ statement targets are:

• At least 40% of the board should be women. 
• At least one of the senior board positions (Chair, CEO, CFO or Senior Independent Director) should be a woman. 
• At least one member of the board should be from an ethnic minority background excluding white ethnic groups (as set out in categories used by the Office for National Statistics).

Issuers will also need to publish numerical data on the sex or gender identity and ethnic diversity of their board, senior board positions (Chair, CEO, SID and CFO) and executive management.

The new requirements apply to accounting periods starting on or after April 1, 2022, which means that annual financial reports published for 2022 around Q2 2023 would include the reporting changes.

The new rules will apply to U.K. and overseas issuers with equity shares, or certificates representing equity shares, admitted to the premium or standard segment of the FCA’s Official List, excluding open-ended investment companies and ‘shell companies’ but including closed-ended investment funds and sovereign controlled companies. Issuers of listed debt and debt-like securities, securitised derivatives or miscellaneous securities are excluded.

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