Newsflash – New Listing Rule proposed on diversity & inclusion

August 2021

The FCA has issued a consultation (CP21/24) on a proposal to change the Listing Rules to require in scope companies to disclose publicly in their annual financial report whether they meet specific board diversity targets relating to gender and ethnicity on a ‘comply or explain’ basis.

There would be a further amendment to require that in-scope companies publish standardised data on the composition of their board and most senior level of executive management by gender and
ethnic background.

The proposed targets are as follows:

  • at least 40% of the board should be women (including those self-identifying as women).
  • at least one of the senior board positions (Chair, Chief Executive Officer, Senior Independent Director or Chief Financial Officer) should be a woman (including those self-identifying as a woman).
  • at least one member of the board should be from a non-White ethnic minority background (as referenced in categories recommended by the Office for National Statistics)

Alongside the ‘narrative’ comply or explain disclosure, the new Listing Rule would require in-scope companies to publish data in their annual financial report on the composition of their board and the most senior level of executive management by gender and ethnicity, as of a specified date during their accounting year.

It is proposed that this Listing Rule would apply to all UK and overseas issuers with premium or standard listings of their equity shares, or certificates representing equity shares. Open-ended investment companies, and ‘shell companies’ (as defined in LR5.6.5AR) would be excluded from this requirement. However, investment trusts will be in scope for this requirement.


The FCA has indicated that it will seek to make relevant rules by late 2021 which will apply to accounting periods starting on or after 1 January 2022.

Closing dates

The FCA’s consultation on diversity and inclusion on company boards and executive committees closes on 20 October and can be accessed here.”

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