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Capital Markets Update – December 2020

Business Meeting 10 Print publication

02/12/2020

This month’s news

FCA delays mandatory ESEF reporting

On 5 November 2020, the Financial Conduct Authority (FCA) published PS20/14, which sets out its decision to delay the mandatory European Single Electronic Format (ESEF) requirements for annual financial reporting by one year and provides an update on the COVID-19-related temporary measures introduced to extend deadlines for the publication of financial statements.

ESMA publishes additional Prospectus Regulation Q&As

On 9 November 2020, the European Securities and Markets Authority (ESMA) published the fifth version of its questions and answers on the Prospectus Regulation. The fifth version includes five new Q&As.

ESMA amends Transparency Directive Q&As

On 9 November 2020, ESMA published an updated version of its questions and answers on the Transparency Directive. Minor modifications have been made to question 26 to reflect the end of the UK’s transition period for leaving the EU.

Government announces plans for green finance

On 9 November 2020, the Chancellor issued a press release setting out an overview of Government’s plans for the financial services sector following the UK’s departure from the EU.

FRC publishes report on climate change reporting

On 10 November 2020, the FRC published a report setting out an overview of its findings from its thematic review of how companies are considering the impact, risks and opportunities of climate change.

Economic Crime Plan action

On 11 November 2020, the Economic Secretary to the Treasury issued a written statement announcing Government’s intention to bring forward a precautionary power to block listings on national security grounds as set out in Government’s Economic Crime Plan.

ISS publishes 2021 Proxy Voting Guidelines

On 12 November 2020, Institutional Shareholder Services (ISS) published updates to its UK proxy voting guidelines for 2021. Amendments include changes to policies relating to overboarding, board gender diversity and remuneration.

Process for notifying details of major shareholdings changed

On 12 November 2020, the FCA updated the area of its webpage which provides information on the requirements, pursuant to DTR 5, for shareholders and holders of financial instruments of Main Market and UK-incorporated AIM companies to disclose changes in their holdings.

FRC publishes end-of-year letter

On 12 November 2020, the FRC published an end-of-year letter addressed to CEOs, CFOs and chairs of audit committees, setting out its reporting expectations of preparers of reports and accounts in 2021.

Takeover Panel publishes minor amendments to the Takeover Code

On 12 November 2020, the Takeover Panel published Instrument 2020/1 and the Code Committee of the Panel published Instrument 2020/2, making various minor amendments to the Takeover Code. The Panel also published a statement summarising the amendments.

FCA issues warning notices to former executive directors of Carillion

On 13 November 2020, the FCA published a warning statement indicating that, on 18 September 2020, it had issued warning notices to Carillion plc (in liquidation) and some of its former executive directors, notifying them that it proposes to take action in relation to breaches of the Market Abuse Regulation and certain Listing Rules.

IA publishes executive remuneration guidance

On 16 November 2020, the Investment Association (IA) published a suite of documents including its principles of remuneration which detail its members’ expectations in relation to executive pay for 2021.

IA publishes paper on climate change

On 16 November 2020, the IA published a position paper setting out the stance of the investment management industry on climate change.

FRC thematic review on cashflow and liquidity disclosures

On 17 November 2020, the FRC published the findings of a thematic review of corporate reporting which examines the issues companies face when preparing IAS 7 cash flow statements and complying with the liquidity disclosure requirements in IFRS. The review also considers the strategic report, going concern disclosures and viability statements.

CMA consults on mergers guidelines

On 17 November 2020, the Competition and Markets Authority (CMA) published a revised version of its merger assessment guidelines for consultation. The CMA noted there have been a number of developments to its approach to merger control assessment since the 2014 guidelines were adopted meaning the CMA must consider its merger assessment approach to ensure it promotes competition for the benefit of consumers. The consultation closes on 8 January 2021.

Call for evidence on UK listing regime

On 19 November 2020, HM Treasury published a call for evidence in relation to a review of the UK listing regime. The objective of the review is to propose reforms to the UK listing regime that will attract firms and help companies to access finance. The deadline for submitting responses is 5 January 2021.

End of additional flexibility on non pre-emptive placings

On 20 November 2020, the FRC issued, on behalf of the Pre-Emption Group (PEG), a statement confirming the end of the relaxation of the usual thresholds for non pre-emptive issuances. From 1 December 2020, the standard limit of 10% of issued share capital (5% for general corporate purposes with an additional 5% for specified acquisitions or investments), as set out in PEG’s Statement of Principles, will apply.

FCA announces upgrades to the NSM

On 20 November 2020, the FCA updated its webpage to inform issuers that it is expecting to upgrade the National Storage Mechanism (NSM) on 25 January 2021 to accept European Single Electronic Format (ESEF) compliant filings.

FCA provides information on new online portal

On 23 November 2020, the FCA updated its webpage which provides information on the requirements for certain shareholders and holders of financial instruments falling within DTR 5.3.1R(1) to disclose to the issuer and to the FCA when their holding reaches or falls below a given threshold.

Glass Lewis publishes 2021 UK policy guidelines

On 24 November 2020, Glass Lewis published its 2021 UK Proxy Paper Guidelines which provides an overview of the approach to proxy advice in the UK.

FRC publishes annual review of corporate governance reporting

On 26 November 2020, the FRC published its annual review of corporate governance reporting against the UK Corporate Governance Code for companies across the FTSE 100 and 250, as well as Small Cap companies.

FCA publishes Handbook Notice 82

On 27 November 2020, the FCA published Handbook Notice 82, which sets out changes to the FCA Handbook made by the FCA board on 22 October, 12 November and 26 November 2020.

Looking ahead to December 2020

1 December 2020 – PEG’s standard recommendation that institutional investors should support non pre-emptive issuances by companies of up to 10% (5% plus 5%, see above) of their issued share capital resumed from this date.

3 December 2020 – closing date for the European Commission’s consultation on proposals requiring companies to substantiate green claims.

4 December 2020 – closing date for the CMA’s consultation on proposed updates to its procedural guidance on operation of the merger control regime which reflect the end of the transition period and recent changes in UK merger control.

9 December 2020 – date by which solo-regulated firms will need to ensure that they meet the requirements of the FCA’s Senior Managers and Certification Regime.

9 December 2020 – deadline for firms (other than banking firms and insurers) for submitting data on relevant individuals to the FCA’s directory of key individuals in financial services.

18 December 2020 – closing date for Government’s call for evidence for Lord Hill’s review of the UK’s listing regime.

31 December 2020 – the temporary restrictions under CIGA 2020 on use of statutory demands and winding up petitions cease on this date.

31 December 2020 – the implementation period under the European Union (Withdrawal Agreement) Act 2020 ends at 11pm.

31 December 2020 – firms and Approved Reporting Mechanisms will need to comply with changes to the transaction reporting regime under MiFID II by this date.

31 December 2020 – deadline for completing and registering cross-border mergers involving a UK company pursuant to the EU Cross Border Mergers Directive (2005/56/EC).

31 December 2020 – Takeover Panel’s minor amendments to the Takeover Code made by Instruments 2020/1 and 2020/2 take effect from 11pm.

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