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AGMs and Reporting: What's on the agenda for AIM companies in 2022?

AGMs and Reporting: What's on the agenda for AIM companies in 2022?


Many AIM companies will now be preparing for their 2022 AGM and FY2021 annual reports. This note summarises some of the key agenda items and our expectations for this year.

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AGMs, Articles and Board Composition

Format of meeting and shareholder engagement

With COVID-19 restrictions now lifted in England, and subject to any unforeseen changes, we expect it to be possible for shareholders to attend 2022 AGMs in person.  However, companies are likely to continue to offer increased shareholder engagement mechanisms compared to the position prior to the pandemic, such as the ability to ask questions by email in advance and/or broadcasting the AGM via a webinar. 

Over the past few years there has been a large number of companies amending their articles to include hybrid meeting provisions but we do not anticipate many companies, especially those on AIM, using these provisions yet, in particular due to the higher costs and logistical challenges associated with a hybrid meeting compared to one that is only in person.  Companies should be mindful that, with all restrictions lifted, shareholders have a legal right to attend AGMs and such attendance cannot be prevented, and should not be discouraged, for so long as there are no COVID-19 measures in place.

Articles of association

There remains uncertainty as to whether virtual shareholder meetings are legally valid under the Companies Act 2006, which requires the notice to state the "place" of the meeting. This has been interpreted as requiring a physical place (i.e. a hybrid meeting, with both electronic participation and a physical meeting place, is valid, but a virtual only meeting is not). For a time during the pandemic, it was possible to hold virtual only meetings under the temporary provisions of the Corporate Insolvency and Governance Act 2020 but the relevant provisions expired in March 2021.

Institutional shareholder bodies have also voiced their concerns about the nature of virtual meetings and, in December 2017, the Investment Association (the "IA") stated that it would not support changes to articles allowing virtual-only meetings. More recently, the Pensions and Lifetime Savings Association has stated that, whilst it has continued to support the use of virtual AGMs to ensure participation during the COVID-19 pandemic, it is concerned that "virtual only" meetings may reduce opportunities for shareholder engagement with the board.

Ahead of their 2022 AGMs, companies which do not already have provisions relating to hybrid meetings in their articles should consider proposing these amendments, together with any other updates required to reflect developments in law and market practice since the articles were last amended.  

Board composition and diversity

Diversity remains an area that all listed companies should be considering but of particular note for AIM companies is that ISS will generally, subject to certain mitigating factors, vote against the chair of the nomination committee of AIM companies with a market capitalisation of over GBP 500m where there is not at least one woman on the board.

2022 dividend procedure timetable

The LSE has published its 2022 dividend procedure timetable.

Dividends and sanctions

The Economic Crime (Transparency and Enforcement) Act 2022 received Royal Assent on 14 March 2022. Of particular importance for the AGM season is that an offence could be committed by listed companies if they pay dividends to sanctioned shareholders. As recommended by the Corporate Governance Institute, listed companies should be checking their register of members and taking steps, including by the issue of s.793 notices, to identify whether there are any beneficial holders who may be subject to sanctions. Any dividends (and interest on them) payable to sanctioned shareholders should be withheld by the issuer until the sanctions are lifted or the relevant shareholder successfully applies for an exemption from the Government.


While the IA guidance detailed below is primarily aimed at Main Market companies, it demonstrates best practice and so remains relevant for AIM companies.

Principles of renumeration

The IA has published its 2022 Principles of Remuneration and Letter to Chairs of Remuneration Committees of FTSE 350 Companies. The handful of changes to the Principles include:

  • an emphasis on remuneration committees providing a clear rationale for an increase to any element of, or to the overall level of, remuneration;
  • a new section on investor expectations on Value Creation Plans ("VCPs") in light of the increased adoption of VCPs over the last AGM season;
  • updates to reflect investor preference for companies to reduce awards at grant where share prices have fallen rather than relying on discretion when awards vest;
  • the exercise of discretion in remuneration arrangements should reflect not just overall corporate performance and the experience of shareholders but also the impact on wider stakeholders (including the workforce) and the general market environment;
  • where the management of material ESG risks/opportunities are in the company’s long-term strategy, they should also be incorporated into performance conditions and any such ESG metrics should be material to the business, quantifiable and linked to strategy, with the reason for choosing the metric and method of performance measurement clearly explained; and
  • incentive arrangements should be subject to malus and clawback but companies should establish a wider list of circumstances in which they will apply, moving away from the "market standards" of gross misconduct or misstatement of results, and the annual report should set out how the remuneration committee intends to enforce malus or clawback if needed.

The Letter also confirms that the IA Shareholder Expectations on Executive Remuneration during the COVID-19 pandemic will continue to apply in 2022.


Task force on Climate-related Financial Disclosures ("TCFD")

The extension of the TCFD-disclosure requirements to further large companies and LLPs by an amendment to the Companies Act 2006 will come into force on 6 April 2022 and apply to accounting periods starting on or after that date. Included in the new scope are UK registered companies with securities admitted to trading on AIM with more than 500 employees. For further information see our Client Note. BEIS has published guidance in connection with this new obligation to help in-scope entities understand how to meet their new obligations.  It contains useful FAQs on various aspects of the new requirement, including its application to group companies and to entities with global operations. For further details of the practical points covered in the guidance, please see our Client Note

The TCFD has published its 2021 Status Report describing how the alignment of companies' reporting with the TCFD recommendations has developed since its 2020 review of climate-related reporting.

The TCFD reports increased maturity in climate-related disclosures but notes that only 50% of companies made disclosures aligned with at least three of the TCFD's eleven recommendations.

Lessons learned from interviews with preparers include:

  • enhanced data-gathering strategies are critical to enable effective assessment of financial impact;
  • allocating sufficient resources to assessing financial impact helps timely development of decision-useful information;
  • overcoming institutional siloes enables more effective collaboration and alignment on assumptions and methodologies used for estimating financial impact; and
  • once financial impact has been estimated, approval from relevant internal stakeholders, including legal teams, is generally required when making public disclosures.

Over nine out of ten respondents who identified as users said they find disclosure of financial impacts useful and rating agencies stated that climate-related information is an increasingly important input into their financial impact assessments, informing the rating process. Users have highlighted several areas that would improve the information disclosed on financial impact to support decision-making, including:

  • the amount of expenditure or capital investment currently deployed toward climate-related risks and opportunities;
  • the amount of expenditure or capital investment to be deployed to meet targets for addressing climate risks and opportunities, often disclosed in transition plans; and
  • interconnected reporting linking qualitative disclosures with their actual and potential financial impact.

The TCFD released two supplemental documents simultaneously with this report: an updated version of Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, to reflect developments in disclosure practices since the Recommendations were introduced in 2017; and Guidance on Metrics, Targets and Transition Plans.

The FRC Lab has also published a report on developing practice in TCFD to assist premium-listed companies in complying with the mandatory reporting requirement (which has come into force ahead of the new obligation on AIM companies with more than 500 employees). The report sets out investor expectations and identifies climate-related scenario analysis as an area of key interest but where the disclosures are still developing. The report also sets out questions companies should ask themselves to ensure they disclose the information investors want, providing examples of where companies have done this as a guide.

The London Stock Exchange ("LSE") published a Guide to Climate Reporting for Main Market and AIM listed companies with practical advice on integrating climate-related disclosures and TCFD implementation. This guidance is part of the LSE's new Climate Transition Offering to help companies prepare for the transition to a low-carbon economy and produce effective climate reporting. The LSE also introduced the Climate Governance Score and Tool, a confidential online tool for listed companies which is accessible via the issuer services platform and measures companies' carbon management practices, the incorporation of climate change considerations into their business strategies and progress towards the key elements of TCFD reporting. The tool then allows companies to benchmark their performance against their peers.

The FCA reported on how the financial services industry and listed companies are adapting to climate change. It notes that policy announcements (for example the Government's 2050 net zero target) address the uncertainty as to how net zero commitments interact with business relationships and the report encourages listed companies to proactively engage with clients, customers and suppliers to set out the implications for their relationships. The report also sets out principles for net zero commitments for listed companies to consider and notes that commitments and targets should be realistic, appropriate to companies' business models and supported by suitable resourcing and governance arrangements. The FCA considers that, while there is some overlap with in-scope companies for TCFD-disclosure requirements and similar obligations proposed to be introduced pursuant to the Companies Act 2006, the two regimes can work effectively together.

In the spring last year, the Quoted Companies Alliance published a Practical Guide to ESG, following research by the QCA, Henley Business School and Downing LLP into ESG practice amongst UK small and mid-sized quoted companies. The Guide aims to outline an approach which is proportionate to the resource constraints of this type of company whilst providing stakeholders the ESG information they require.

The FCA's policy statement 21/24 also includes further information on climate-related disclosures by asset managers, life insurers and pension providers. This policy statement and related rules are addressed in more detail in Travers Smith's Financial Services Regulation: New Year Briefing 2022.


Following the introduction of new emissions reporting requirements for UK private companies and revised requirements that apply to UK quoted companies ("Streamlined Energy and Carbon Reporting" or "SECR") into FY2020 annual reporting (see our briefing for further information), in September 2021 the FRC published a thematic review on the quality of SECR disclosures, which may be of interest to those AIM companies who meet the reporting requirements. In particular, the FRC it notes that disclosures need to be improved so that they are understandable and relevant for users. The information should be presented in a way that is clear and relevant, include adequate explanations and descriptions (such as the methodologies for calculations) and be integrated with other narrative reporting on climate change.

Section 172 statements

While section 172 statements are not new, there has been some recent commentary on this topic. The FRC Financial Reporting Lab published Reporting on stakeholders, decisions and Section 172 in July 2021 setting out what investors are looking for in these statements and how companies can improve their reporting to meet investors' needs, including practical tips and questions companies should ask themselves.

Corporate governance disclosures

 In October 2021, the FRC published its Annual Review of Corporate Reporting (2020/21) (the "Annual Review") which highlights both areas of best practice and areas for improvement in corporate governance disclosures, which may be of interest for those AIM companies who choose to comply with the Code. The key messages from the Annual Review are summarised by the FRC in Corporate Reporting Highlights, including the top ten areas that prompt questions to companies from the FRC's monitoring function, the steps to take to avoid challenge and a list of disclosure improvements the FRC expect to see next year. In the FRC's 2022 review it will prioritise the disclosure of climate-related risks (particularly in the context of the new TCFD obligations) and judgements in light of the continuing uncertainty and economic and social impact of COVID-19.

The Annual Review also examines, for the first time, the extent to which companies are reporting on modern slavery risk and strategy as part of their duties to shareholders and other stakeholders. It concludes that overall, "the low quality of reporting on Modern Slavery by companies is concerning" and encourages companies to "build trust with investors and wider stakeholders by explaining how they are combatting Modern Slavery in their supply chains".  Companies should ensure the impact of these risks, along with those relating to wider ESG matters, is appropriately reflected in the financial statements and wider annual report.

In November 2021, the FRC published its Review of Corporate Governance Reporting setting out how a sample of FTSE 350 and small cap companies have reported during the year under the Code, which may be of interest to those AIM companies who choose to comply with the Code. The expectations set out in the FRC 2020 review were not met in key areas (for example, board appointments, succession planning and diversity), boilerplate disclosures and statements unsupported by examples of action remain a concern and companies should be clearer when describing how they comply with the principles of the Code and explaining any departures from it. The review lists a number of areas in which the FRC expects reporting to be improved in 2022, being:

  • increased attention on the alignment between reported good governance and company practices and policies, strategy and business models;
  • increased focus on assessing and monitoring culture by using different methods and metrics;
  • improved reporting of succession planning and how this links to assuring the make-up of the board and delivering diverse challenge;
  • improved reporting on outcomes and actions, rather than declarations or statements of intent without detail;
  • increased focus on assessing and ensuring the effectiveness of the risk management and internal control systems; and
  • improved explanation of how executive remuneration is aligned to a company's purpose, values and strategy.

At the beginning of December 2021, the Quoted Companies Alliance and UHY Hacker Young published their annual AIM Good Governance Review 2021/22. Overall, the review indicates continued high levels of transparency and compliance and improved explanations regarding evaluations of board performance and management. Areas identified for improvement include disclosure of directors' skillsets and time commitments and voting outcomes at general meetings.

Audit quality

In March 2021, the Government launched a white paper on Restoring trust in audit and corporate governance drawing together recommendations and themes from a number of previous reports (including the Kingman Independent Review, the Brydon Report and a CMA market study) to make detailed proposals for the reform of the UK audit industry. The proposed reforms include: introducing a directors' statement about the effectiveness of internal controls and risk management; new requirements to disclose distributable reserves; a directors' statement on the legality of proposed dividends and the effects on future solvency of the company; and an annual resilience statement covering the short, medium and long-term. The consultation period closed on 8 July 2021 and we are expecting the Government's response imminently.

Workforce engagement and culture

While the workforce engagement mechanisms are not new for 2021 (for those AIM companies who choose to comply with the Code), they remain an area of interest for the FRC. In May 2021, the FRC published a Report on Workforce Engagement and the UK Corporate Governance Code: A Review of Company Reporting and Practice to explore the approaches taken to providing a workforce voice in the boardroom, why different approaches have been chosen, what these changes have meant in practice and how effective they have been from a management and workforce perspective. Appointing a designated non-executive director is the popular choice for workforce engagement and the Report suggests that the effectiveness of this approach depends on the actions actually taken by the non-executive director and the other processes in place. Companies with an embedded practice of listening, openness and consultation appeared to have more effective workforce engagement mechanisms.

In December 2021, the FRC published a report on Creating Positive Culture. This builds on the FRC Guidance on Board Effectiveness and aims to promote good practice and positive working culture in companies, bringing together a wide range of views from board directors, leaders and senior individuals from across different functions and workforce representatives. Key findings of the report include that a positive working culture is based on transparency, trust, respect and inclusion and creating such an environment requires patience, openness and a commitment to development which is uninterrupted by changes in senior management. Potential challenges to positive corporate cultures are identified and include cultural heritage, fear of the unknown, mergers and acquisitions and clarity and complexity of change.

Reporting deadlines

During COVID-19, the London Stock Exchange permitted AIM companies to have additional time to prepare the annual and half year financial results due to the difficulties the pandemic was causing. AIM companies have been able to apply, via their Nominated Adviser, for an additional three months to file their annual report and accounts. The LSE has announced that the temporary measures will no longer be available for any annual financial periods and any half-year financial periods ending after 28 June 2022, and companies will be subject to the normal deadlines.

ESG Timeline

For details of upcoming developments relevant to ESG, please see our ESG timeline.

For further information please contact:

Read Aisling Arthur Profile
Aisling Arthur
Read Beliz McKenzie Profile
Beliz  McKenzie
Read Neal Watson Profile
Neal  Watson

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