Recent Developments for UK PLCs — April 2026

FTSE Russell Lowers Minimum Free Float Requirement for Non-UK Incorporated Companies

On 26 March 2026, FTSE Russell announced the alignment of the minimum free float requirement for both UK incorporated and non-UK incorporated companies within the FTSE UK Index Series.

Taking effect from the June 2026 index review, both UK and non-UK incorporated companies with a minimum free float of 10% will be eligible for inclusion to the FTSE UK Index Series, subject to satisfying all other inclusion criteria. The current minimum free float requirement for non-UK incorporated companies is 25%.

The rule change removes the distinction between UK and non-UK incorporated companies in relation to the minimum free float requirement. It is intended to make the indices more representative of the real economic exposure they are designed to measure, with the requirement aligning with the London Stock Exchange Main Market minimum free float requirement for all companies.

FRC Calls for Proxy Advisors to Embrace “Comply or Explain” 

On 16 March 2026, the Financial Reporting Council (FRC) published guidance on improving the quality of “comply or explain” reporting under the UK Corporate Governance Code (the Code). The guidance is aimed at helping companies, investors, proxy advisors, and other stakeholders recognise the value of flexible governance reporting, and to move away from treating compliance with the Code as a tick-box exercise.

The guidance also contains a specific call to action for shareholders, proxy advisors, and other stakeholders. These parties are encouraged not to expect or favour strict compliance over effective governance that meets the spirit of the Code, and to consider departures positively in their voting policies if the company’s explanation is transparent and informative.

The FRC highlighted that Provision 9 of the Code (relating to the independence of the chair) has continuously recorded one of the highest departure rates. The guidance includes specific expectations for explanations of departures from this provision. For departures from Provision 9, the FRC expects companies to:

• give a convincing rationale for retaining a non-independent chair, including the reasons why a new independent chair may not offer the same or better skillset;
• consider the risks of having a non-independent chair (for example, the impact on board effectiveness or board dynamics) and describe any mitigating actions taken; 
• set out whether the company has plans in place to comply with the provision, including any succession planning process or timeline; and 
• explain the background as to why the chair was not independent when first appointed.

Parker Review Report Shows Continued Progress on Ethnic Diversity Across Boards and Senior Management 

On 10 March 2026, the Parker Review Committee published its Annual Report for 2026, setting out the results of its voluntary census on the ethnic diversity of the boards and senior management of FTSE 350 companies and 50 of the UK’s largest private companies. The report shows continued progress in ethnic minority representation at both board and senior management levels, particularly within the FTSE 100, and sustained engagement from FTSE 350 companies despite broader political and economic shifts. However, the findings are mixed across different ethnic minority groups and types of company, indicating that further work remains to be done. 

Summary of key data as at December 2025:

• 98% of FTSE 100 companies have at least one ethnic minority director on their board (a record high, up from 95% in 2024), with ethnic minorities now holding 20% of all FTSE 100 directorships (up from 19% in 2024). 
• 82% of FTSE 250 companies have at least one ethnic minority director on their board. Of those FTSE 250 companies that responded to the census, 89% have met the target (up from 86% in 2024). 
• Only 42% of the 50 largest private companies in scope have at least one ethnic minority director on their board, a decrease from 48% in 2024.
• Ethnic minority executives represent 11% of UK-based senior management in the average FTSE 100 company (unchanged from 2024) and 10% in the average FTSE 250 company (up from 9% in 2024). The average targets set by companies for December 2027 are 15% for the FTSE 100, 13% for the FTSE 250, and 15% for private companies. 
• The report highlights that progress for the Black community has been slower, with evidence of declining representation at both board and senior management levels. 

The Review encourages those FTSE 250 and private companies that have not yet met the target of at least one ethnic minority director on their boards to consider what steps they can take to do so, particularly as the December 2027 target deadline for private companies approaches. 

New FCA Wholesale Markets Regulatory Priorities Paper Highlights Key Upcoming Developments

In March 2026, the FCA published its Wholesale Markets Regulatory Priorities report, replacing its previous portfolio letters with a single annual document setting out the regulator’s areas of focus across the wholesale markets sector. We highlight below three items from the report that are of particular interest to companies and their advisers.

• Consultation on amending rules on unconnected research in the context of an IPO: The FCA has confirmed that it intends to consult on amending its rules on unconnected research in the context of an IPO. Companies considering an IPO and their advisers should monitor developments in this area, as changes to the unconnected research rules could affect the scope of research coverage available in connection with new listings, and the dynamics of the IPO process more broadly.
• Multi-firm review of listing sponsors: The FCA has indicated that it will conduct roundtable events with listing sponsors and undertake multi-firm reviews, continuing to share best practices through its Primary Market Bulletin. 
• Review and testing of controls on conflicts of interest and management of information at corporate finance firms: The FCA has highlighted the management of conflicts of interest and conduct oversight as a key priority for 2026. Of particular relevance to corporate finance firms, the FCA has signalled that it will assess corporate finance firms’ compliance functions and their ability to effectively challenge the business. 

High Court Upholds Financial Adviser’s “Tailgunner” Clause in Engagement Letter Dispute

In Strand Hanson Limited v. Conduit Pharmaceuticals Ltd [2025] EWHC 3287 (Ch), the High Court considered the enforceability of a “tailgunner” provision in a financial adviser’s engagement letter. Strand Hanson had been engaged to advise Conduit on a proposed de-SPAC merger with Galmed, but the Galmed transaction fell away and Conduit instead completed an alternative de-SPAC merger with a different counterparty (MURF), assisted by a separate US adviser. The court held that the tailgunner clause, which required Conduit to pay Strand Hanson’s full fees if an “Equivalent Transaction” completed following an agreement entered into during the term of the engagement, was triggered by the MURF transaction, and awarded Strand Hanson a US$2 million cash advisory fee and US$5 million in damages for the failure to deliver its agreed carry shares. 

The decision is a significant reminder of the potency of so-called “tailgunner” clauses, which are commonly included in the engagement letters of financial advisers and investment banks. Listed companies should note that, while the FCA’s rules in COBS 11.A.2 prohibit restrictive contractual clauses (such as a Right of First Refusal) that could impede a client’s ability to choose its own adviser for future transactions, tailgunner provisions fall outside the scope of that prohibition. 

Companies should therefore carefully review the tailgunner provisions in their adviser engagement letters, paying close attention to the breadth of any “Equivalent Transaction” definition and the length of any applicable tail period, to ensure they fully understand their potential exposure before entering into or terminating advisory mandates. 

FCA Proposes Clarificatory Amendments to PRM Rules and UK Listing Rules

On 6 March 2026, the FCA published its Quarterly Consultation Paper No. 51 (CP26/8), which proposes (among other things) a number of clarificatory amendments to the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRM) and minor changes to the UK Listing Rules sourcebook (UKLR). 

Key PRM proposals include:

• Closing the employee share scheme exemption loophole: The FCA proposes to amend PRM 1.4.12R to clarify that the exemption from the prospectus requirement for transferable securities offered, allotted, or to be allotted to existing or former directors or employees does not apply where the issuer intends for the securities to be placed with a third party via an offer or allotment to a director or employee. 
• Greater flexibility for protected forward-looking statements: The FCA proposes amending PRM 8.2.3R so that the content-specific accompanying statement for a protected forward-looking statement (PFLS) does not need to be repeated each time the corresponding PFLS appears in a prospectus. 
• IPO prospectus publication timing: The FCA proposes to amend PRM 9.5.2R, which requires the prospectus for an IPO to be published at least three working days before the end of the offer period, so that it applies only to IPOs with retail participation (in line with the original policy intent).

The UKLR proposal suggests the following:

• Removal of duplicate notification obligations: The FCA proposes to delete UKLR 6.4.4R(4) and UKLR 6.4.5R, as well as corresponding rules in other UKLR chapters, which require issuers to notify a RIS of the results of any new issue of equity securities “as soon as possible”. The proposal was made because the rules overlap with the requirement under PRM 1.6.4R (which allows notifications to be made within 60 days of admission to trading and permits notifications to be rolled up over a 60-day period). Retaining both rules with different deadlines is considered disproportionate, particularly for issuers that regularly issue new shares under employee share option schemes. 

The deadline for responding to the Chapter 5 PRM proposals is 20 April 2026, and the deadline for responding to the Chapter 10 UKLR proposals was 23 March 2026.