PLC QTRLY - Q4 2025

This is our regular quarterly update to help our listed company clients and other market participants keep up to date with key developments relevant to issuers on the Main Market and AIM market of the London Stock Exchange.

Prospectus regime: new rules take effect and FCA guidance

On 19 January 2026 the new Public Offers and Admission to Trading regime came into effect, replacing the EU-derived UK Prospectus Regulation (see PLC QTRLY Q3 2025 and details of the key changes in our summary here). On 17 October 2025, the FCA published Primary Market Bulletin 58 (PMB 58), which addressed implementation of the new rules, including the changes to the FCA's systems and processes to ensure a smooth transition to the new regime.

Feedback on the consultations in PMB 58 was considered in Primary Market Bulletin 61, which confirms finalisation of 7 procedural notes and 39 technical notes and deletion of 7 guidance notes in its Knowledge Base with effect from 19 January 2026.

New listings to be exempted from stamp duty reserve tax for initial period

On 4 December 2025, the government introduced the Finance Bill 2026, which will bring into effect the exemption from stamp duty reserve tax (SDRT) for newly listed securities which was announced in the government's 2025 Autumn Budget (by inserting a new section 89C into the Finance Act 1986).

Transfers of securities in a publicly traded company in the UK currently attract SDRT at a rate of 0.5% of the transfer price. Securities on growth markets such as AIM are exempt, but the full rate of SDRT applies to transfers of securities traded on other markets.

Once the new provisions take effect, no SDRT will be payable on transfers of securities in a listed company whose shares are admitted to trading on a UK regulated market during the first three years after the company is first listed, except where any of following exclusions apply:

• Listed company mergers: the listing is connected to arrangements by which a listed company takes control of another listed company.
• New holding company: the listing is connected to arrangements by which the company takes control of another company and, immediately before those arrangements, the other company is listed and controlled by the person or persons who, at the time of the new listing, control the company.
• Change of control: there is a change of control of the company between the date of the listing and the relevant transfer, or the agreement to transfer forms part of arrangements changing control in the company.

London Stock Exchange sets out changes to AIM following consultation

The London Stock Exchange (LSE) has published a feedback statement following its April 2025 discussion paper on the future of AIM (see PLC QTRLY Q2 2025), summarising responses to the discussion paper and setting out its plans for the future development of AIM.

The responses to the discussion paper demonstrated strong support for AIM and its unique position between the private markets and the Main Market.

The feedback statement highlights the need to "evolve and strengthen" AIM in order to maintain that unique position in the context of recent reforms to the UK listing regime and the launch of the Private Securities Market for private companies.

To that end, the LSE plans to change the AIM Rules, and to accept or consider derogation requests to reflect the changes pending rule redrafts, to:

• Permit dual class share structures that meet current Main Market requirements for AIM companies.
• Modify AIM Rule 13 requirements for director remuneration where nominated advisers are satisfied with contractual protections.
• Introduce flexibility for reverse takeover classifications under AIM Rule 14 and remove automatic trading suspensions for certain reverse takeovers.
• Increase the AIM Rule 12 (significant transactions) threshold from 10% to 25%.
• Permit incorporation by reference for historical financial information and use of UK GAAP (FRS 102) rather than IFRS.
• Dispense with Admission Document requirements for second lines of securities.

The LSE plans to consult on comprehensive AIM Rule changes and new technical guidance for nominated advisers in the first half of 2026 and to advance proposals to digitise and re-evaluate AIM Admission Documents.

T+1 settlement: HM publishes policy note and draft regulations

HM Treasury has published a policy note on mandating T+1 settlement in the UK, together with draft Central Securities Depositaries (Amendment) (Intended Settlement Date) Regulations 2026.

The draft regulations set out how the government intends to deliver T+1 settlement as the standard settlement period in the UK from 11 October 2027 by amending the intended settlement date in Article 5(2) of the UK Central Securities Depositories Regulation.

The deadline for technical comments on the draft regulations is 27 February 2026, with the final regulations due to be laid before Parliament before 11 October 2027.

Pre-Emption Group report on use of updated Statement of Principles

On 9 December 2025, the Pre-Emption Group published its third report monitoring the use of its Statement of Principles on the disapplication of pre-emption rights for UK listed companies since it was revised in 2022 to increase the level of disapplication authority that companies can request routinely to 20% (see PLC QTRLY Q4 2022).

The report examined adoption of the revised Statement of Principles by FTSE 350 companies for AGMs held between 1 August 2024 and 31 July 2025 and indicates that more companies are taking advantage of the updated guidance and that investor support remains strong. In particular:

• 77.6% of FTSE 350 companies with AGMs during the relevant period sought enhanced disapplication authority as permitted under the revised Statement of Principles (up from 67.1% in 2023/2024 and 55.7% in 2022/2023).
• 60.8% requested authority for a specified capital investment, in addition to authority for general corporate purposes (slightly down from 64.1% in 2023/2024).
• 99.1% of companies had all disapplication resolutions passed, with an average of only 5.1% votes against.

FCA guidance on delayed disclosure of inside information

On 23 October 2025, the FCA published Primary Market Bulletin 59 (PMB 59), which covers its review of delayed disclosure of inside information (DDII) notifications under UK MAR.

Article 17.4 of UK MAR permits an issuer to delay the disclosure of inside information if immediate disclosure would be likely to prejudice the issuer’s legitimate interests, delaying disclosure is not likely to mislead the public, and the confidentiality of the inside information can be ensured. If an issuer delays disclosure of inside information, they are required to inform the FCA of that delay immediately after the inside information is disclosed to the public.

Since the FCA's last review in 2020, the FCA found a 39% decrease in the average number of DDII notifications submitted per day, as well as a decrease in the number of issuers making DDII notifications. Average delays in disclosure increased by 7 days to 35.2 days, although the average delay in disclosing “unscheduled financial information” decreased by 6 days.

The FCA expressed concern that the significant and unexpected decrease in DDII notifications may indicate falling levels of compliance with Article 17.4 and reminded issuers to of their obligation under Listing Principle 1 to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable them to comply with their obligations, including their disclosure obligations under Article 17.4. This includes the requirement to inform the FCA immediately after disclosure to the public.that disclosure of the inside information was delayed.

PMB 59 also includes comments on the obligations of listed companies that are planning to acquire cryptoassets for the purpose of long-term value appreciation as part of their broader treasury management strategy, a reminder of key changes to the submission of disclosures to the National Storage Mechanism that took effect on 3 November 2025 and details of a consultation on proposals to support changes introduced by the Short Selling Regulations 2025.

Updated guidance on remuneration

FRC guidance on non-executive director remuneration

On 5 November 2025, the FRC published updated guidance on the remuneration of non-executive directors as part of its regular updates to the guidance supporting the UK Corporate Governance Code 2024.

The revised guidance:

• Recognises that companies may encourage non-executive directors to build personal shareholdings to foster alignment with shareholders and reinforce long-term commitment, whilst emphasising that any approach must be tailored to the specific circumstances of each company.
• Makes clear that, in line with the Code, boards have flexibility to pay non-executive directors a portion of their fees in shares, provided they maintain transparency about their rationale and approach.
• Emphasises the importance of preserving independence, noting that performance-related remuneration remains inappropriate for independent non-executive directors.

Investment Association annual letter to remuneration committee chairs

On 12 November 2025, the Investment Association published its annual letter to remuneration committee chairs, reconfirming the flexible approach to executive remuneration outlined in its 2024 Principles of Remuneration and identifying areas where implementation of the Principles by companies could be improved. These include:

• Company specific rationales and explanations: Companies should explain why their remuneration proposals are suitable for the individual company's strategy and unique circumstances and avoid generic language referring to "competitiveness against peers" or the need to "attract and retain talent".
• Use of benchmarking and peer comparisons for remuneration increases: Any benchmarking exercise should be robust and well-explained and should be discussed with investors at an early stage. Increases in remuneration should not be justified by reference to benchmarking alone, as it can lead to a ratchet effect in the market, and companies should demonstrate how any increase in quantum will lead to a strong link between pay and performance.
• Introduction of hybrid schemes: Hybrid long-term incentive structures which combine features of performance share plans and restricted share plans are expected to be used only for companies with a significant US footprint or need to compete for global talent. Remuneration committees should consult early with investors if considering the implementation of a hybrid scheme.
• Bonus deferral and shareholding requirements: Companies may reduce the proportion of annual bonuses deferred into shares once shareholding guidelines have been met, but should not completely remove deferral mechanisms since they are useful for allowing the operation of malus and clawback provisions.
• Changes to in-flight awards and use of discretion: Companies should avoid retesting, waiving or making retrospective changes to performance or vesting conditions. If discretion is used to make changes in exceptional circumstances, these should be clearly justified as providing a strong link between pay and performance and should be subject to early consultation with and support from shareholders.
• Improving the consultation process: Companies should consult shareholders before the AGM season in relation to any material changes.

The letter also reflects the approach to non-executive director remuneration taken in the FRC's updated guidance, stating that shareholders encourage independent non-executive directors to align their interests with those of shareholders by owning shares in the company and that a portion of the director fee could be paid in shares purchased at the market rate but supporting the UK Corporate Governance Code position that performance-related pay is inappropriate for independent non-executive directors.

Updates on corporate reporting

FRC annual review of corporate governance reporting

On 13 November 2025, the FRC published its annual review of corporate governance reporting, analysing reporting trends and practices against the 2018 UK Corporate Governance Code across a sample of 100 UK-listed companies. This will be the last review against the 2018 Code, with annual reports going forwards reviewed against the updated 2024 Code which applies to all financial years starting on or after 1 January 2025.

The review found that companies departing from Code provisions are increasingly providing clear, meaningful and context-specific explanations for their departures and noted that the Code's flexibility to "comply or explain" remains a fundamental strength, allowing businesses to tailor their governance arrangements while maintaining transparency and confidence. 25 of the 100 companies reviewed departed from at least one Code provision, with the most common departures relating to audit committee composition, chair independence and tenure.

The review also:

• Stressed the need for greater focus on ensuring that annual reports are as concise as possible, with companies encouraged to assess the volume and relevance of their disclosures and eliminate boilerplate language, repetitive content and generic statements.
• Examined preparations for the implementation of the new Provision 29 of the 2024 Code on risk management and internal controls, which will apply for financial years starting on or after 1 January 2026. More than half of the companies reviewed mentioned the new provision and examples of good reporting in this area are included in the review.
• Found that 66% of companies reviewed highlighted board-level oversight of cyber risks, with 85% of companies including cybersecurity as a principal risk and a further 12% outlining it within their operational principal risks.

FRC thematic review of corporate reporting by smaller listed companies

On 19 November 2025, the FRC published a thematic review of reporting by the UK's smaller listed companies, which analysed the reports of 20 companies either listed outside the FTSE 350 on the Main Market or on AIM, focusing on the four key areas of revenue, cash flow statements, impairment of non-financial assets and financial instruments.

The review sets out the factors in relation to these key areas which might lead the FRC to open an enquiry with a company, highlights the characteristics the FRC observes in good quality reporting and contrasts this with less informative disclosures, aiming to help smaller listed companies to identify and address key areas of ambiguity and omission in financial statements.

QCA report on adoption and implementation of its Corporate Governance Code

On 9 December 2025, the Quoted Companies Alliance (QCA) published a report on the adoption and implementation of the QCA Corporate Governance Code by companies listed on AIM or the AQSE Growth Market or in the Equity Shares (Transition) listing category at the time of the review in September 2025.

Key findings included:

• 92% of AIM companies (and 97% of UK AIM companies) adopted the QCA Code, with 26% having adopted the latest 2023 Code and the remainder still applying the 2018 version. Most say that they will be implementing the new 2023 Code in their 2025 annual report in line with requirements.
• 73% of AQSE companies and 53% of Equity Shares (Transition) companies adopted the QCA Code.
• Of the AIM companies adopting the QCA Code, 20% do not apply it in full (rising to 23% of those that adopted the 2023 version).
• Over a third of AQSE companies adopting the QCA Code do not apply it in full.
• The proportion of AIM companies taking advantage of the QCA Code's flexibility to "apply or explain" has increased from 1 in 10 in 2023 to around 1 in 5 in 2025.

Updates to 2026 proxy voting guidelines

ISS

On 25 November 2025, Institutional Shareholder Services (ISS) published its Benchmark Policy Updates for 2026, which will apply to shareholder meetings held on or after 1 February 2026.

Key updates to the UK proxy voting guidelines include:

• Definition of in-person shareholder meetings: A new definition has been included to address recent restrictive practices by some companies which could diminish shareholder participation or restrict opportunities for engagement with the board.
• Relationship agreements: The requirement for companies to maintain written and legally binding relationship agreements with controlling shareholders has been removed in line with recent changes to the UK Listing Rules.
• Change of control: Policy language has been updated to reflect the removal of change of control guidance from the Investment Association's Principles of Remuneration.
• Good leaver disclosure: An explicit expectation has been added for companies to provide a rationale and justification for the treatment of departing directors classified as "good leavers", aligning with UK market best practice and investor expectations regarding transparency of exit arrangements.
• Related party transactions: Policy language has been updated to acknowledge the removal in the UK Listing Rules of the requirement for shareholder approval of most related party transactions, while retaining case-by-case evaluation criteria for any transactions that remain subject to shareholder approval.

Glass Lewis

On 4 December 2025, Glass Lewis published its 2026 UK Benchmark Policy Guidelines, which apply to shareholder meetings from 1 January 2026.

Key updates include:

• Committee size: Shareholders are recommended to vote against, rather than abstain from voting on, the re-election of the audit and/or remuneration committee chair where the committee is too small.
• Gender diversity: In the absence of any mitigating circumstances, shareholders are recommended to vote against the re-election of the nomination committee chair where a FTSE 350 board does not comprise at least 40% gender diverse directors.
• AIM board independence: AIM companies' boards should be at least half independent and include a minimum of two independent non-executive directors. The guidelines recommend voting against one or more of the non-independent directors if this threshold is not satisfied.
• Performance-related pay: A description of Glass Lewis' new proprietary pay-for-performance model has been added, but recommendations on the remuneration report and policy proposals will continue to result from a holistic assessment of the company's remuneration structure, disclosure and practices as a whole, as well as other relevant external factors.

If you would like to discuss any of these issues or any other public company matters, please contact Connor Cahalane, James Channo or Karen Hendy.