Capital Markets Update: March 2023

February’s news

ESMA updates EU Prospectus Regulation Q&A

On 3 February 2023, the European Securities and Markets Authority (ESMA) published a revised version of its questions and answers on the EU Prospectus Regulation. The updated edition includes a new question concerning the Article 1(4)(d) exemption from the requirement to publish a prospectus. The approach that UK listed issuers should take to ESMA guidance is explained in the FCA’s Guidance on Brexit. It is the FCA’s view that these materials remain relevant to UK listed issuers and other market participants.

Response published to FRC’s minimum standard for audit committees

On 3 February 2023, the City of London Law Society published its response to the Financial Reporting Council’s (FRC) consultation on a proposed Draft Minimum Standard for Audit Committees. The Standard will apply to audit committees of all UK incorporated FTSE 350 premium listed companies.

FCA statement on new financial promotions regime for cryptoassets

On 6 February 2023, the Financial Conduct Authority (FCA) issued a statement highlighting that all cryptoasset firms marketing to UK consumers, including those based overseas, will soon be required to comply with the new UK financial promotions regime. The statement urges firms to start preparing for the regime as the FCA will take robust action against firms breaching the requirements once they take effect.

Call for evidence on financial services regulation consultations

On 8 February 2023, the House of Commons Treasury Sub-Committee on Financial Services Regulations published a call for evidence on certain of the FCA’s proposed changes to its regulatory text, including those proposed requiring DTR 4.1 issuers to prepare, publish and file with the FCA their annual financial report in an electronic format, and for the financial statement within it to be in a structured digital format. The deadline for submissions was 21 February 2023.

Companies House publishes update on changes to filing annual accounts

On 10 February 2023, Companies House published a blog which discusses its plans to introduce software-only filing of annual accounts under new powers proposed in the Economic Crime and Corporate Transparency Bill. Companies House will set out the timetable for rolling out the change to software-only accounts filing once the Bill has become law. In the meantime, Companies House encourages companies to change to software filing before it becomes a legal requirement.

FCA publishes discussion paper on supporting sustainable change in financial services

On 10 February 2023, the FCA published a discussion paper  which seeks views on how regulated firms’ sustainability-related governance arrangements, incentive structures and capabilities can support the finance sector in driving positive sustainable change. Responses are requested by 10 May 2023.

Investment Association publishes shareholder priorities for 2023

On 13 February 2023, the Investment Association (IA) published its shareholder priorities for 2023. Amongst other things, the IA will monitor companies’ responses to climate change, audit quality, board diversity and stakeholder engagement. The IA has also published a new version of its Share Capital Management Guidelines. The guidelines, last published in 2016, set out the expectations of IA members where companies seek shareholder authorities for the general allotment of new shares and the disapplication of pre-emption rights.

IA continues to focus on climate change and diversity

On 19 February 2023, the IA issued a press release stating that investment managers will continue to focus on climate change and diversity in this year’s AGM season. The shareholder priorities, issued annually ahead of the AGM season, outline the key areas investment managers want companies to consider as drivers of long-term value, in order to see them succeed in the future.

Changes to ‘acting in concert’ presumptions take effect

On 20 February 2023, changes to the Takeover Code took effect relating to the presumptions of the definition of ‘acting in concert’ and related rules.

FCA publishes Primary Market Bulletin

On 20 February 2023, the FCA published Primary Market Bulletin 43, its newsletter for primary market participants. The newsletter highlights the launch of multi-factor authentication for FCA systems, including the Electronic Submission System.

FRC attempts to dispel misconceptions about corporate governance and stewardship

On 20 February 2023, the FRC published a ‘Corporate Governance and Stewardship mythbuster’ which attempts to dispel many commonly held misconceptions about corporate governance and improve understanding of the subject.

Withdrawal of Practice Statement No 12

On 20 February 2023, the Takeover Panel announced that it has withdrawn Practice Statement No 12 (Rule 9 and the interests in shares of clients whose funds are managed on a discretionary basis). It has also made minor consequential amendments to Practice Statements No 22 and No 33.

QCA marks ten years of corporate governance

On 23 February 2023, the Quoted Companies Alliance (QCA) published Report: QCA Corporate Governance Code to mark the code’s tenth anniversary. The QCA code, which is tailored towards small and mid-sized UK quoted companies, is due to be updated during 2023.

Looking ahead to March 2023

1 March – multi-factor authentication is expected to apply to the FCA’s Electronic Submission System from March 2023.