Updates introduced for various international regulatory reforms on stewardship

January 19th, 2024

The UK, Japan, the International Sustainability Standards Board (ISSB) and International Internal Audit Standards Board (IIASB) have all published updates on stewardship regulatory reforms.

The UK Financial Conduct Authority (FCA) published further details on its proposed rules to encourage companies to list in the UK in December.

The proposed rules include a change to simplify the UK’s listing regime with a single listing category, replacing the standard and premium categories.

The proposals also include changes to the rules on dual class structures. In 2021, the FCA finalised rules allowing dual class shares structures within premium listing, with certain limits and safeguards in place, to allow founders enhanced voting rights.

Under the current rules, these voting rights expire after five years, but in its latest proposal, the FCA has removed this time-based sunset clause.

The rules were first opened to a public consultation in May 2023, and the consultation period will end on 22 March.

In December, the Japanese government published its ‘Policy Plan for Promoting Japan as a Leading Asset Management Centre’ in December, which includes several corporate governance reforms.

Under plans backed by prime minister Fumio Kishida and his “new form of capitalism”, Japan will develop “Asset Owners Principles”, reform occupational pension funds and promote the diversification of investment opportunities.

Also in December, the ISSB also published amendments to the Sustainability Accounting Standards Board (SASB) standards, aiming to improve their international applicability.

SASB Standards are designed to identify and standardise disclosure for the sustainability issues most relevant to investor decision-making, helping companies meet industry-specific disclosures.

And earlier this month, the IIASB also released the new Global Internal Audit Standards in January, offering a guide to practice of internal auditing and are comprised of 15 guiding principles.

The standards serve as a basis for evaluating and elevating the quality of the internal audit function.