Ask what the Financial Conduct Authority requires "of a board" and the question has two subjects. One is the company seeking or holding a listing on the Official List, where composition, independence and committee structure answer to the UK Listing Rules and the UK Corporate Governance Code. The other is the authorised firm, an asset manager among them, where the FCA regulates not the shape of the board but the identity and accountability of named individuals under the Senior Managers and Certification Regime (SM&CR).
The vocabulary overlaps; the substance does not. Listing regulation asks a structural question: is this board independent enough for the company's shares to remain on the Official List? Its levers are eligibility, disclosure, suspension and cancellation. Firm authorisation asks a personal question: is there an approved individual who owns this responsibility, and is that individual fit and proper? Its levers are approval, notification, conduct rules and personal enforcement. A listed asset manager is subject to both; a large unlisted manager only to the second.
The Listing Regime: What the FCA Requires of a Board
The Listing Principles
The FCA's UK Listing Rules (UKLR) came into force on 29 July 2024, in the most significant overhaul of the regime in over three decades. They replaced the premium and standard segments with a single category for Equity Shares in Commercial Companies, and obligations not carried across fell away then. Of the six Listing Principles, the first carries most of the governance weight:
"A listed company must take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations."
Principle 2 requires the company to deal with the FCA openly and cooperatively, and Principle 3 to enable its directors to understand their responsibilities. The FCA is prepared to take enforcement action for a breach of the Listing Principles alone, regardless of whether any specific FCA rule has also been breached. The Principles are not a preamble to the operative rules; they are operative themselves.
Eligibility and the board's discretion
Eligibility turns in part on whether the board genuinely runs the company. For externally managed issuers, the board must have discretion to make strategic decisions and the capability to act on key strategic matters without reference to a person outside the issuer's group. The prohibition on arrangements limiting or transferring that discretion outside the group is retained, and any such arrangement will disqualify the company from listing. Where a controlling shareholder is present, meaning a holder of 30% or more of voting rights, the company must retain the ability to independently carry on its main business and maintain a constitution allowing the election and re-election of independent directors. The reform removed the requirement for a controlling shareholder agreement; instead, where directors consider a shareholder resolution is intended to circumvent the listing rules, the board must state its opinion.
One point needs caution. Accounts of the "independent business" requirement are inconsistent, describing it in one place as a surviving eligibility criterion and in another as one the new rules do not retain, on the same source. What both accounts share is that independence from a controlling shareholder remains live and the board's strategic discretion remains a hard eligibility gate; whether a free-standing independent business test survives is a question for the rule text rather than a summary of it.
Composition and independence under the Code 2024
The UK Corporate Governance Code 2024 applies for accounting periods beginning on or after 1 January 2025, with Provision 29 effective from 1 January 2026, on a "comply or explain" basis. Companies in the commercial companies category must state annually how they have complied and, where they have not, the extent of and reason for non-compliance. Provision 11 sets the threshold:
"At least half the board, excluding the chair, should be non-executive directors whom the board considers to be independent."
Independence is assessed annually against Provision 10, which lists circumstances likely to impair it, or appear to: employment by the company or group within the last five years; a material business relationship within the last three years; close family ties with the company's advisers, directors or senior employees; cross-directorships or significant links with other directors; representing a significant shareholder; or more than nine years' service from first appointment. The list is expressly "not limited to" those circumstances, and it is not a disqualification list. Where one applies and the board still considers the director independent, a clear explanation must be provided. The judgment stays with the board; the Code removes only the option of making it silently.
The chair should be independent on appointment, the roles of chair and chief executive should not be held by the same individual, and a chief executive should not become chair of the same company. One independent non-executive should be appointed senior independent director, serving as a sounding board for the chair and an intermediary for other directors and shareholders, and leading the non-executives in appraising the chair's performance annually without the chair present.
Committees and diversity targets
Provision 24 requires an audit committee "of independent non-executive directors, with a minimum membership of three, or in the case of smaller companies, two", not chaired by the chair of the board. Provision 32 sets the same minimum for the remuneration committee, adding that "the chair of the board can only be a member if they were independent on appointment and cannot chair the committee". Board diversity targets came in through FCA 2022/6, effective 20 April 2022. Reported on a comply or explain basis, they require that:
"At least 40% of the individuals on its board of directors are women; at least one of the following senior positions ... is held by a woman: (A) the chair; (B) the chief executive; (C) the senior independent director; or (D) the chief financial officer; and at least one member of the board is from a minority ethnic background."
The annual financial report must state whether each target was met and give reasons for any miss. DTR 7.2 separately requires a corporate governance statement covering the applicable code, internal control and risk management systems, and the diversity policy.
What blocks or ends a listing
A director disqualified under the Company Directors Disqualification Act 1986 cannot serve on the board of a listed company. Grounds include fraudulent or wrongful trading, insolvency-related breaches, bankruptcy, fraud, and unfitness to be concerned in the management of a company. Disqualification runs up to 15 years by court order.
Beyond the individual, the FCA may refuse, suspend or cancel where the company fails to maintain adequate procedures, systems and controls; where a company with a controlling shareholder cannot demonstrate independent conduct of its main business; or where the board has limited or transferred its strategic discretion outside the group. Persistent failure to maintain adequate composition, combined with inadequate explanations, could lead to enforcement action and suspension, though the "comply or explain" architecture means this operates through the quality of the explanation rather than a bright line.