A few of our achievements are listed below - some are completed, but many remain a constant work-in-progress.
CSDR: The QCA worked over many years to highlight the potential negative impact on liquidity in small & mid-cap securities that bringing in that the new EU settlement discipline regime (the Central Securities Depositories Regulation (CSDR)) would have caused. If implemented, its introduction would have had a seriously detrimental impact on the ability of smaller quoted companies to raise capital, as well as on the functioning of capital markets for SMEs in the UK.
Brydon Review of Audit: The report included QCA recommendations that any reform pays due regard to proportionality in relation to company size and resources
QCA Audit Committee Guide: We revised and updated our guide for company audit committees for 2019
European IPO taskforce: QCA CEO Tim Ward invited to join the new taskforce to influence the incoming European Commission on how to encourage IPOs
Corporate Governance on AIM Research Report: YouGov survey results find that 39% of AIM companies say that adopting the QCA Corporate Governance Code has helped their business
Contribution of small and mid-sized quoted companies: New research from QCA and Hardman & Co find that small & mid-caps make up 93% of UK quoted companies, employ 3 million people and contribute over £26bn in tax
UK Corporate Governance Code: The reinstatement of some smaller company exemptions in the UK Corporate Governance Code that were proposed to be removed in the FRC’s consultation.
Kingman review of the FRC: The Kingman Review accepts the QCA's suggestion that the new regulator to replace the FRC has to act in a way that "is proportionate, having regard to the size and resources of those being regulated and balancing the costs and benefits of regulatory action".
Entrepreneurs’ Relief: HMT's relaxation of ER in the 2018 Budget, as well as the resolution of an anomaly on intangibles degrouping.
MiFID II: The FCA’s decision to continue to allow fund managers to receive small-cap investment research without payment where it has been commissioned and paid for by a smaller quoted company, including when issuing new shares.
Entrepreneurs’ Relief: HMT’s changing of the qualifying rules for Entrepreneurs’ Relief in the Autumn Budget to ensure that entrepreneurs are not discouraged from seeking external investment through the dilution of their shareholding.
Capital Gains Tax entrepreneurs’ relief - extension to long-term investors: We achieved the extension of entrepreneurs’ relief to external investors in unlisted trading companies for newly issued shares after a long-term campaign.
Simplifying the Prospectus Directive: We produced detailed proposals for changes to the Prospectus Directive so that companies are able to raise finance more efficiently. The European Commission's proposal for amending the Directive included a number of our proposals, including an exemption for fundraisings below €10m from the need to have a prospectus, a minimum disclosure regime for secondary offers, a minimum disclosure regime for SMEs and companies on SME Growth Markets, and the ability for companies on SME Growth Markets to incorporate information by reference into their prospectuses.
Became a member of the Takeover Panel: We became a nominating body of the Takeover Panel as it was felt that the smaller company constituency should be represented. Our CEO, Tim Ward, is our appointed representative on the Takeover Panel and our former Chairman, Michael Higgins, as our alternate.
Reduced the Financial Reporting Council levies for small companies: We campaigned for the proposed Financial Reporting
Council levies to be reduced following the FRC's plans to increase them in its Draft Plan, Budget and Proposed Levies 2015/16. The Financial Reporting Council took on board our comments and reduced the proposed levy increase for companies with the smallest market capitalisations.
Campaigned against proposed restrictions on how investment research is paid for: We participated in the MiFID II review and responded to
the FCA’s proposals on the use of dealing commissions to ensure that investment research in small and mid-size quoted companies is not eroded.
Persons of Significant Control (PSC) Register: We are working with BIS, as members of the PSC register working group, to develop the statutory and non-statutory guidance that will accompany the PSC register and ensure that the administrative burden impact on small and mid-size quoted companies is reduced.
CSD Regulation - ESMA's basic cash penalty rate proposal originally neglected the differences in liquidity of shares, setting penalties which would in effect disproportionately penalise small and mid-size quoted companies and the trading of their shares. After we stressed that this unintended effect and provided evidence to support it, ESMA amended the Technical Advice to the Commission in its Final Report, recommending that penalty rates should duly consider the liquidity of the instruments and significantly reducing the penalty rates for illiquid shares and SME Growth Market shares.
Audit Committee Guide for Small and Mid-Size Quoted Companies: We published our revised guide for audit committee members to assist them in being effective in their roles, meeting the expectations of investors and complying with best regulatory best practice for small and mid-size quoted companies.
Market Abuse Regulation and insider lists: We successfully campaigned for an exemption in the recently reviewed Market Abuse Regulation so that companies on SME Growth Markets, such as AIM and ISDX, will not have to produce insider lists.
Removal of stamp duty on the trading of AIM and ISDX shares: We successfully campaigned for the removal of stamp duty on growth market shares, which came into effect on 28 April 2014.
Are You Ready to Grow as a Quoted Company?: We published our revised guide, which helps companies to evaluate whether they are prepared and suitable to raise finance on a public equity market. Covering areas such as business models, characteristics of good management teams, corporate governance and liquidity, the guide describes some of the ideal attributes of quoted company from an investors’ point of view.
AIM Rule 26: We successfully campaigned for a change to AIM Rule 26 to help improve governance behaviour, which requires AIM companies to state on their website the corporate governance code they apply, how they comply with the code, or if no code has been adopted, state this and explain its current governance arrangements.
IFRS Foundation's Disclosure Initiative: We successfully campaigned for the IFRS Foundation to consult on the issue of disclosure overload and materiality.
Engineering Growth for Small and Mid-Size Quoted Companies: We held our annual one-day conference to highlight the importance of small and mid-size quoted companies in the UK economy. Our keynote speakers was The Viscount Younger of Leckie, Parliamentary Under Secretary of State at the Department for Business, Innovation and Skills, and the day included panel sessions on the availability of finance, corporate governance, and fund managers and investment.
Corporate Governance Code for Small and Mid-Size Quoted Companies: We published our revised guide, which helps quoted companies put into practice appropriate corporate governance arrangements and encourage positive engagement between companies and shareholders. Our Code is widely recognised as an industry standard for those growing companies for which the UK Corporate Governance Code is not applicable.
Inclusion of AIM and ISDX shares into ISAs: We achieved the inclusion of AIM and ISDX shares in Individual Savings Accounts (ISAs) after a long-term campaign.
Engineering Growth for Small and Mid-Cap Companies: We held our first one-day conference to highlight the importance of small and mid-size quoted companies in driving economic growth. There were over 160 attendees and David Gauke MP, Exchequer Secretary to the Treasury, was our keynote speaker.
Remuneration Committee Guide for Smaller Quoted Companies: We published a new guide this year to help our members tackle the controversial issues surrounding executive pay and arm them with the latest information.
QCA/BDO Small and Mid-Cap Sentiment Index: Developed, in partnership with BDO LLP and YouGovStone, the QCA/BDO Small and Mid-Cap Sentiment Index – a quarterly online survey that tracks business and economic confidence of the small and mid-cap quoted sector.
Prospectus Directive: Secured a commitment from the Government to bring in two key changes to the Prospectus Directive as soon as possible, which will make raising equity more efficient for quoted companies. Companies in the UK are now able to raise up to €5m or issue an offer to 150 people or less without having to produce a prospectus, as of 31 July 2011.
Venture Capital Schemes: Achieved an extension of the Enterprise Investment Scheme and Venture Capital Trusts so that more quoted companies could benefit from investment from these schemes.
Disguised Remuneration: Achieved amendments to HMRC’s anti-avoidance tax legislation on disguised remuneration, ensuring that quoted companies can continue to run their share schemes and incentivise employees without a significant amount of added complexity and cost.
Prospectus Directive: Successfully campaigned for the European Commission and European Parliament to double the threshold above which a prospectus needs to be produced from €2.5m to €5m; to introduce a proportionate approach to disclosure for SMEs and companies on regulated markets with a market capitalisation below €100m; and to exempt issues under employee share schemes. This will all help to ensure small and mid-size quoted companies can raise capital more quickly and efficiently.
Small and Medium Listed Issuers: Campaigned with French and German trade associations for Christine Lagarde, French Minister for the Economy, Industry and Employment, to sponsor an independent review of European Directives affecting small and mid-size quoted companies. This resulted in Fabrice Demarigny, Partner at Mazars and former Secretary General of CESR, proposing measures for an EU Listing (Small Business) Act. The report followed extensive consultation across Europe and included several meetings with our members.
Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCTs), AIM shares' inclusion in ISAs: Working closely with the London Stock Exchange and other market participants, we campaigned for the Treasury to extend current tax incentives, such as allowing AIM shares to be included in ISAs, widening the scope of EIS and VCTs and ensuring any CGT reliefs are beneficial for the sector. This resulted in the announcement by the previous administration of a consultation to consider changes. We were subsequently able to put forward our proposals in person to the Secretary of the Exchequer ahead of the Emergency Budget.
Are You Ready Guide: Launched a new guide for companies aspiring to go public, endorsed by leading figures of the investment community.
HM Treasury Roundtable Discussions with our members: Improved our engagement with HMT officials in their Primary Market team through setting up four roundtable discussions on general market improvements, involving corporates, stockbrokers, other advisers and investors. We also organised a specific roundtable discussion on non-bank lending to put corporates views directly to Treasury officials.
E-petition on Number 10 website: We attracted 462 signatures for our petition requesting the previous administration to set up a working group to design an appropriate structure for UK equity markets. The petition was closed as a result of the change of government.
Review of the Prospectus Directive: Following our campaigning, a number of our proposals were consulted upon in the review of the Prospectus Directive. These include the possibility of a simplified prospectus document, raising the current annual amount (€2.5m) which can be raised without having to produce a prospectus, removing the need for a prospectus for offers to existing shareholders, and exempting issues under Employee Share Schemes.
Pre-Budget Report: A number of our proposals to ease the impact of the current economic crisis were included in the Chancellor's Pre-Budget Report, including a withdrawal of the planned increased in the small companies' rate of corporation tax and additional carry back of losses up to £50,000 for three years.
Financial Reporting Council's Combined Code Review: We achieved a concession whereby, in a company outside the FTSE 350, the Chairman may be a member of the Audit Committee (but not its Chairman), so long as he is deemed independent on appointment.
Climate Change Act: Achieved delay to section 80 of the Bill (which called for all companies that have to produce a Business Review to report on their carbon emissions), until there a generally accepted method of measurement and reporting has been developed.
New AIM Rules: As part of our NOMAD committee's (now the Corporate Finance Expert Group) work on the new AIM Rules introduced in February 07, achieved removal of blanket disclaimer on AIM documents proposed by Stock Exchange.
Filing dates: Our Tax Expert Group campaigned against the Government's proposal to align the dates for submitting tax returns to HMRC with submitting accounts with Companies House, which would have accelerated tax return preparation by at least three months. The Pre-Budget Report in December 2006 announced that there would be no change.
Directors' Liability: Our Legal Expert Group successfully campaigned against the Treasury's proposal to extend the new liability regime of the Transparency Directive to AIM companies.
Company Law: Along with the ABI and the IoD, we successfully campaigned for the government to include greater protection against litigation as part of the shake-up to company law and ministers agreed to adopt a 'safe harbour' system.
Prospectus Directive: With APCIMS, we overturned a potentially costly and time-consuming UK interpretation of the Prospectus Directive relating to capital raising by small and mid-size quoted companies.
Operating and Financial Review: Together with other organisations, we successfully persuaded the DTI (now BIS) to loosen the legal structure of their original proposals and the involvement of auditors. This move should enable company directors to produce more meaningful reports for shareholders, and also avoid extra audit costs.
London Stock Exchange fee reduction: We, along with many other bodies, registered their disappointment with the substantial fee increases introduced in April 2002, especially as they were introduced alongside cuts in service levels. The LSE announced that the fee increases were to be reduced.
Transparency Directive: We successfully campaigned strongly against the mandatory nature of the proposal requiring all quoted companies to publish quarterly profit/loss accounts.
Higgs report: We were asked to provide company representatives to give their views on Corporate Governance to Derek Higgs during the research phase of his work. Their comments led to the creation of the small and medium sized company chapter. We also obtained a key concession, with small and mid-sized quoted companies only required to have two NEDs, saving companies considerable costs over time.
Profile of the sector: The FT dropped its small and mid-size quoted company sector coverage in 2003. We made representations that coverage should continue to encourage investment in the sector. It was reinstated, with a specific column dedicated to small and mid-size quoted companies. The Times subsequently increased its small cap coverage.
Original Prospectus Directive Proposals: Following our campaigning activities, the requirement for all quoted companies to update their prospectus annually was dropped by the Commission. This'win' is estimated to have saved quoted companies an average of £100k per annum.
2001 to 2003
EIS relief: Original proposals were for this relief to apply only to companies with under £10m of gross assets. Due to continued QCA lobbying activities, this threshold was increased to £30m.