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Newsflash: New Listing Rule on diversity & inclusion

April 2022

The FCA has issued its final policy decision (PS22/3) on measures to improve transparency of the diversity of company boards and their executive management following a consultation last year.

Overall, broad support was received on the main elements of the proposals, with the exception of concerns raised around the basis for reporting on the representation of women and some feedback relating to overseas data protection laws. As a result, more flexibility has been allowed for companies in relation to:

  • how they collect and report data relating to the representation of women; and
  • the data reporting requirements for companies with board members or executive management situated overseas, where local privacy and data protection laws may prevent companies asking for the relevant data which is required to be reported.

To address the provision of this additional flexibility, there are new
requirements for additional transparency from issuers on their approach to
collecting the data used for the purposes of these reporting requirements. 



These new requirements will apply to financial years starting on or after 1 April 2022. However, companies whose financial years began before then (from 1 January 2022 onwards) are encouraged to consider reporting on the targets and making numerical disclosures in relation to their current accounting period on a voluntary basis.



The companies in scope of the new Listing Rules are UK and overseas issuers with equity shares, or certificates representing equity shares, admitted to the premium or standard segment of the FCA’s Official List, including closed-ended investment funds and sovereign controlled companies, but excluding open-ended investment companies and ‘shell companies’ as defined in LR 5.6.5AR.

What the new rules require


Listing Rules LR 9.8.6R(9) and LR 14.3.33R(1) will require, as an ongoing listing obligation, issuers that are in scope to include a statement in their annual financial report setting out whether they have met specific board diversity targets on a ‘comply or explain’ basis, as at a chosen reference date within their accounting period and, if they have not met the targets, why not.

The targets are:

  • At least 40% of the board are women
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Senior Independent Director (SID) or Chief Financial Officer (CFO)) is a woman
  • At least one member of the board is from a minority ethnic background

Alongside the annual narrative comply or explain disclosure, there is also a new requirement (in LR 9.8.6R (10) and LR 14.3.33R (2)) to publish numerical data on the sex or gender identity and ethnic diversity of their board, senior board positions (Chair, CEO, SID and CFO) and executive management in a standardised table format. As noted above, some flexibility is allowed in the reporting on sex or gender identity, in order for companies to reflect their approach to data collection.

For the purposes of reporting ethnic diversity, the following categories are used to define those from a minority ethnic background:

  • Asian/Asian British
  • Black/African/Caribbean/Black British
  • Mixed/Multiple Ethnic Groups
  • Other ethnic group, including Arab

The final piece of the new disclosure requirements is for issuers to explain their approach to collecting the data. The expectation is that there is consistency in approach across the individuals being reported on, and for reporting against the targets and numerical disclosures.

To read the full policy decision, click here.

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