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Capital Markets Update: May 2024

Welcome to the current edition of Capital Markets Update, the monthly briefing from the Corporate Group at Walker Morris, rounding up the previous month’s regulatory developments within the equity capital markets, and looking ahead to future developments.

Capital Markets Update April 2024

April’s news

Proposed approach to operation of Digital Securities Sandbox published

On 3 April 2024, the Bank of England and the Financial Conduct Authority (FCA) jointly published a consultation paper on their proposed approach to implementing and operating the Digital Securities Sandbox (DSS). The DSS is a regime that will allow firms to use developing technology in the issuance, trading and settlement of securities. Firms that successfully apply for the DSS will be able to operate under a set of rules and regulations that have been modified to facilitate this.

Further HMRC guidance on capital-raising arrangements and stamp duty

On 8 April 2024, further guidance was added to paragraph STSM053100 of the Stamp Duty on Shares manual on what constitutes a capital-raising arrangement for the purpose of the Finance Act 2024 exemption from the 1.5% charge to stamp duty or SDRT that otherwise applies on transfers to depositary receipt issuers and operators of clearance services.

TPT publishes sector specific guidance on climate transition plans

On 9 April 2024, the Transition Plan Taskforce (TPT) published final sector guidance to complement the TPT Disclosure Framework. The guidance covers seven sector-specific “deep dives” and a separate sector summary. The sectors covered are Asset Owners, Asset Managers, Banks, Electric Utilities & Power Generators, Food & Beverage, Metals & Mining, and Oil & Gas.

FCA consults on payment optionality for investment research

On 10 April 2024, the FCA published a consultation paper on a new way of paying for investment research. The FCA wants to give UK buy-side firms (including asset managers) greater flexibility on how they can purchase investment research. The consultation proposes a new regime that would allow the bundling of payments for third-party research and execution services, subject to the FCA’s proposed guardrails.

Companies House issues guidance on removing an overseas entity from the register

On 17 April 2024, Companies House published guidance on how to remove an overseas entity from the Register of Overseas Entities. The guidance is applicable where an overseas entity is no longer a registered owner of property or land in the UK which was bought on or after 1 January 1999 in England and Wales, 8 December 2014 in Scotland and 5 September 2022 in Northern Ireland. The guidance provides that the overseas entity must have sold all its land or property in the UK and change of ownership be reflected in the updated land registry records before submitting an application for removal to Companies House.

Minor changes to the Takeover Code published

On 18 April 2024, the Takeover Panel published amendments to the Takeover Code. The changes relate to selection of members of the Panel and removal of the document charges section. The amendments take effect from 30 April 2024.

New jurisdictional framework proposed to narrow the scope of companies to which the Takeover Code applies

On 24 April 2024, the Takeover Panel published a consultation paper, PCP 2024/11, which proposes a new jurisdictional framework which would narrow the scope of the companies to which the Takeover Code applies. The proposals would refocus the application of the Code to companies which are registered in the UK and listed (or were recently listed) in the UK. The consultation closes on 31 July 2024 with the final amendments to the Code being published in Autumn 2024, with a view to the amendments coming into effect approximately one month later.

FCA publishes PMB 48

On 26 April 2024, the FCA published Primary Market Bulletin 48, a special edition that consults on proposed changes to the FCA Knowledge Base to reflect the proposed changes to the listing regime set out in CP23/31 (Primary Market Effectiveness Review) and the corresponding new UK Listing Rules. The deadline for responding to the FCA’s proposed changes is 26 May 2024.

FCA proceeds with changes to sponsor competence requirements

On 26 April 2024, the FCA published Handbook Notice 118, setting out its response to feedback received on changes proposed in CP 23/31 (Primary Market Effectiveness Review) to amend the sponsor competence requirements. The FCA is proceeding with its proposed changes to the sponsor competence requirements.

New guidance on green, social and sustainability sukuk

On 29 April 2024, the International Capital Market Association, Islamic Development Bank and the London Stock Exchange Group jointly published a press release announcing that they have issued new guidance on the issuance of green, social and sustainability sukuk (Islamic bonds). The guidance aims to provide issuers and key market participants with information on how sukuk may be labelled as green, social or sustainable.

Looking ahead to May 2024

2 May – New civil penalties regime enabling the Companies Registrar to impose a financial penalty for most offences under CA 2006 comes into force on this date.

14 May – Closing date for responses to FCA Consultation Paper 24/6 on proposed regulatory fees and levies for 2024/25.

26 May – Closing date for responses to the FCA’s proposed changes to the FCA Knowledge Base.

29 May – Closing date for the Bank of England and FCA’s joint consultation on proposals to implement and regulate the UK’s digital securities sandbox.

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