Issue link: https://digital.shearman.com/i/1512772
Shearman & Sterling LLP U.K. Corporate Governance Developments | 60 Under the new Principles, these annual report disclosures must be supplemented by a report (published within one week of the issuance) containing details of the issuance size, use of proceeds, gross plus net proceeds, discount, allocation, shareholder consultation with respect to the issuance and any retail involvement. In addition, issuers conducting non-pre- emptive issuances are required to consult (where permitted or practicable) with major shareholders before the issuance and to make the issuance on a "soft pre-emptive" basis (e.g., by considering how existing shareholders can be invited to participate (including by the use of retail-investor platforms or a follow-on offer) and, as also required by the Principles, by ensuring that management (and not just the banks or placing agents) are involved in share allocation, etc.). Another recommendation of the Secondary Capital Raising Review was that high-growth capital-hungry companies should be encouraged to make the case to shareholders for being authorized to make non- pre-emptive issuances well in excess of the 20% limit and for a longer period than the usual one year. This recommendation is now included in the new Principles. While the Statement of Principles permits companies to seek an increased limit for disapplication of pre- emption rights, in the first half of the 2023 AGM season, a little over a half of companies have not sought approval for the increased limit. 2 BOARDROOM DIVERSITY There have been three notable developments so far this year concerning diversity on the boards of U.K.- listed companies, with two of those developments also having implications for large unlisted-U.K. businesses. Listing Rules Disclosures The first concerns all U.K. and overseas premium- or standard-listed equity issuers (including those with equity shares represented by listed-depositary receipts). For accounting periods beginning on or after April 1, 2022, annual reports have had to include prescribed disclosures about gender and ethnic diversity on their boards. We have started to see these disclosures appearing in annual reports published in recent months. Companies must disclose whether they have met targets for: (i) women's representation on their boards (40%); (ii) at least one of the chair, CEO, senior independent director (SID, which is a position on the board required by the U.K. Corporate Governance Code) and CFO to be a woman and (iii) at least one person on the board to be from a minority ethnic background. In addition, companies must publish a table setting out numerical data (in a prescribed format) of the ethnic background and the gender identity or sex of individual members of the board and executive management. Where targets have not been met, an explanation for not meeting them must be given. 2 See Shearman & Sterling LLP, "New Pre-emption Group Principles Issued," https://www.shearman.com/~/media/Files/ Perspectives/2022/11/New-Pre-emption-Group-Principles-Issued-- MandA-UK-Spotlight-Shearman-Sterling-110922.pdf (November 9, 2022).