Newsletter for primary market participants
March 2022 / No. 39
About this edition
Welcome to the 39th edition of the Primary Market Bulletin (PMB).
In this edition we announce the removal of the temporary measures we introduced in 2020 allowing for delayed annual and interim financial reporting, as well as rescinding the temporary measures regarding working capital statements and General Meetings.
Removing temporary measures for issuers due to the pandemic.
In 2020, in response to the pandemic, we acted with other regulators to introduce a series of measures to help companies and their auditors ensure information continued to flow to investors and support the continued functioning of the UK’s capital markets. We announced most of these measures in a broader statement about recapitalisation issuances during the coronavirus crisis in April 2020.
Although the effects of Covid-19 are still being felt, we consider that practice has evolved sufficiently so that issuers and their advisors are now able to return to previous practices and methods of publishing appropriate financial information to support investor decision-making. We consider that we can now also rescind the temporary measures regarding working capital statements and General Meetings that we put in place to assist companies raising new share capital.
Corporate Reporting for listed companies
On 26 March 2020 we announced temporary relief to allow issuers an additional 2 months to publish their annual financial reports. This was followed on 27 May 2020 with further temporary relief to allow issuers an additional month to publish their half yearly financial reports (interims).
These temporary reliefs will no longer be available for reporting periods ending on or after 28 June 2022.
Annual financial reports for listed companies
Issuers subject to DTR 4 are required to publish their annual financial reports within 4 months of their financial year-end (DTR 4.1.3R). If they do not meet this deadline, we expect issuers to request a suspension of their listed securities. Should they not make this request, we can impose a unilateral suspension if the smooth operation of the market is, or may be, temporarily jeopardised or it is necessary to protect investors (section 77 FSMA and LR 5.1.1R).
Half yearly financial reports for listed companies
Issuers subject to DTR 4.2 are required to publish their half yearly financial reports within 3 months of the end of the relevant reporting period (DTR 4.2.2R). If they do not meet this deadline, we expect them to request a suspension of their listed securities. If they do not make this request, we can impose a unilateral suspension if the smooth operation of the market is, or may be, temporarily jeopardised or it is necessary to protect investors (section 77 FSMA and LR 5.1.1R).
Working capital statements
On 8 April 2020 we temporarily amended our approach to the disclosure of working capital statements in prospectuses and circulars approved by the FCA in light of the uniquely challenging circumstances created by the outbreak of the pandemic. This temporarily revised approach permitted issuers, under certain circumstances, to disclose their key assumptions on business disruption during the pandemic without requiring the inclusion of a qualified working capital statement. This was set out in more detail in a technical supplement, and was only intended to apply for the duration of the significant and unprecedented uncertainty created by the outbreak of the pandemic.
Given both the reduction in disruption and the experience of issuers and their advisers in working through it, the relevant technical supplement will no longer be applied. As such we will no longer approve prospectuses or circulars that use the temporarily revised approach to working capital statements after 28 June 2022.
Separately, we are currently considering feedback to our recent consultation on PMB 34 for the prospectus regime. The results of this consultation will be published in due course. In the interim, the ESMA Recommendations include guidance for the consistent implementation of Commission Regulation (EC) No 809/2004 implementing the Prospectus Directive published 20 March 2013 and have been carried over to the Prospectus Regulation regime.
General Meeting requirements under the Listing Rules
During the pandemic, we recognised that issuers may have been facing challenges in holding the general meetings which the Listing Rules require in a number of instances.
To address the challenges faced by issuers, on 8 April 2020 we announced a temporary modification to our Listing Rules on a case by case basis with regards to Class 1 transactions (LR 10.5.1R(2)) and Related party transactions (LR 11.1.7R). Premium listed companies undertaking a transaction within the scope of this policy could apply to us for a dispensation from the requirement to hold a general meeting, subject to certain conditions. This was set out in more detail in a technical supplement, and was intended to only apply for the duration of the pandemic.
We will no longer grant dispensations from the requirement to hold General Meetings on this basis from 28 June 2022 and the relevant technical supplement will no longer be applied.
We would, however, draw readers attention to the joint guidance issued by the Chartered Governance Institute and the City of London Law Society (CLLS) with the support of the Department for Business, Energy and Industrial Strategy and the Financial Reporting Council. It aimed to help public companies plan for an AGM or other General Meeting in 2021.We are supportive of both industry and government action in this area to consider different ways of effectively engaging with shareholders.