Capital Markets Update – April 2021Print publication
Report published following UK listing review
On 3 March 2021, HM Treasury published the report of the UK Listing Review, chaired by Lord Hill. The report identifies an urgent need for reform of both the Listing Rules and the prospectus regime, to ensure UK competitiveness post-Brexit.
FCA issues fine for market manipulation
On 4 March 2021, the Financial Conduct Authority (FCA) published a Final Notice in relation to Mr Adrian Geoffrey Horn, a former market-making trader, announcing that it had fined him £52,500 for market manipulation and prohibited him from performing any functions in relation to regulated activity.
Disclosure requirements under EU Prospectus Regulation
On 4 March 2021, the European Securities and Markets Authority (ESMA) published guidelines intended to ensure that market participants on EU regulated markets have a consistent understanding of the relevant disclosures required on the format, content, scrutiny and approval of a prospectus. The guidelines will not apply automatically in the UK.
PLSA publishes 2021 Stewardship and Voting Guidelines
On 10 March 2021, the Pensions and Lifetime Savings Association (PLSA) published its 2021 stewardship and voting guidelines. The guidelines include amendments relating to virtual AGMs, board leadership and company purpose, board composition and diversity, remuneration practices and climate change.
FCA publishes new technical note on ESG disclosures
On 11 March 2021, the FCA published a technical note covering disclosures in relation to ESG matters, including climate change. The technical note clarifies existing disclosure obligations for a wider scope of issuers stating that ESG disclosures may already be required under the Listing Rules, Prospectus Regulation Rules, DTRs and the Market Abuse Regulation (as retained in UK law).
Government launches modern slavery statement registry
On 11 March 2021, Government announced the launch of the Modern Slavery Statement Registry. At the moment use of the registry is voluntary but once the necessary legislation has been passed, it will become mandatory for organisations required to produce a statement under s 54 Modern Slavery Act 2015 to submit the statement to the registry.
Parker update report published on ethnic diversity
On 12 March 2021, the Parker Review Committee published its 2021 update report setting out survey results of FTSE 100 companies on the ethnic diversity of their boards, which follows its update report in February 2020.
Reporting of net short positions expires
On 15 March 2021, ESMA published a press release announcing that it had decided not to renew its decision to require holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority if the position reaches, exceeds or falls below 0.1% of the issued share capital. The measure has applied since 16 March 2020 and was last renewed in December 2020. The decision expired on 19 March 2021.
Glass Lewis publishes review of governance practices
On 18 March 2021, Glass Lewis published a review of the impact of the 2018 UK Corporate Governance Code on governance practices. The review revealed that most FTSE 350 companies complied with the Code in full, but that this was true of only a small minority of Main Market companies.
CMA publishes revised Merger Assessment Guidelines
On 18 March 2021, the Competition and Markets Authority (CMA) published revised Merger Assessment Guidelines. The CMA’s previous merger assessment guidelines were published in 2010 and the updated guidelines are intended to reflect market evolution since that date.
Government launches consultation on audit and corporate governance reform
On 18 March 2021, Government published a consultation aimed at restoring trust in audit and corporate governance. The consultation seeks views on wide-ranging reforms intended to strengthen the UK’s audit, corporate reporting and corporate governance system. The consultation closes on 8 July 2021.
Major shareholdings notification portal goes live
On 22 March 2021, the FCA announced that its new major shareholdings notification portal is now operational. All TR-1 notifications in relation to voting rights held in an issuer admitted to trading on a UK regulated market, such as the Main Market of the London Stock Exchange, must now be submitted to the FCA via the major shareholdings notification portal.
Proposals to make climate-related financial disclosures mandatory
On 24 March 2021, Government published a consultation seeking views on proposals to make climate-related financial disclosures mandatory by publicly quoted companies, large private companies and LLPs. The consultation closes on 5 May 2021 and it is intended that the relevant regulations will apply to accounting periods starting on or after 6 April 2022.
IOSCO publishes statement on going concern assessments
On 24 March 2020, the International Organization of Securities Commissions (IOSCO) published a statement reminding issuers, audit committees, external auditors and/or those charged with governance of the important role that each plays in providing investors with high quality, reliable, timely, and transparent financial information, especially in times of heightened uncertainty such as the Covid-19 pandemic.
FRC publishes report on audit supervision
On 25 March 2021, the FRC published its report setting out what firms can expect from the FRC in the course of supervision. It also highlights the FRC’s focus on audit quality and supporting the resilience of individual firms and the wider audit market.
Delegated regulation published regarding exempted documents in the context of takeovers
On 26 March 2021, the Delegated Regulation, which supplements the Prospectus Regulation by setting out the minimum information requirements for exempted documents in the context of a merger, division or takeover, was published in the Official Journal of the European Union. The Delegated Regulation will come into force in EEA member States in twenty days’ time.
FCA publishes Handbook Notice 86
On 26 March 2021, the FCA published Handbook Notice 86 covering amendments to the FCA Handbook and other materials made on 25 March 2021.
FCA publishes Primary Market Bulletin 33
On 29 March 2021, the FCA published Primary Market Bulletin 33, its newsletter for primary market participants. The edition features Brexit-related changes for EEA audit firms, information on Short Selling Regulation compliance, a recent enforcement outcome and details of the new online portal for submitting major shareholdings notifications.
Key dates in April 2021
5 April – the automatic extension of filing deadlines for companies registered at Companies House come to an end.
30 April – closing date for comments on amendments to the rules and points of guidance in the compensation sourcebook relating to the Financial Services Compensation Scheme.
30 April – asset owners who wish to be included on the first list of signatories to the 2020 Stewardship Code need to apply by this date.