Capital Markets Update – February 2021

Business Meeting 10 Print publication


This month’s news

FCA publishes indicative list of financial instruments subject to transparency rules

On 1 January 2021, the Financial Conduct Authority (FCA) published an indicative list of financial instruments that are subject to notification requirements under section 89F(1)(b)(iii) of FSMA and DTR 5.3.1R (Notification of voting rights arising from the holding of certain financial instruments). The list is substantively the same as the list that applied before 31 December 2020 under Article 13 of the Transparency Directive and the indicative list produced by the European Securities and Markets Authority.

FCA publishes list of equivalent non-UK regimes

On 5 January 2021, the FCA published an amended version of the list of third countries it regards as equivalent in relation to certain provisions under the Disclosure Guidance and Transparency Rules, more specifically DTR 4 (Periodic Financial Reporting), DTR 5 (Vote Holder and Issuer Notification Rules) and DTR 6 (Continuing obligations and access to information).

AFME publishes updated selling restrictions rubric

On 8 January 2021, the Association for Financial Markets in Europe (AFME) published guidelines updating its model equity selling restrictions. The guidelines set out the selling restrictions rubric for use in documentation for offerings or admissions taking place from 1 January 2021 onwards and reflect the wording of the UK version of the Prospectus Regulation.

FCA publishes Market Watch 66

On 11 January 2021, the FCA published Market Watch 66 which sets out its expectations on recording telephone conversations and electronic communications when alternative working arrangements are in place, including increased homeworking.

IA announces examination of stewardship issues

On 13 January 2021, the Investment Association (IA) announced the formation of a new steering group which will examine how to better embed effective stewardship into the investment process in order to create sustainable value for savers and investors.

ESMA issues statement on reverse solicitation rules

On 13 January 2021, the European Securities and Markets Authority (ESMA) issued a Public Statement to remind firms of the MiFID II rules on reverse solicitation. The statement comes in light of ‘some questionable practices’ by firms attempting to circumvent MiFID II requirements in this regard following the end of the UK transition period.

IA publishes statement on shareholder priorities

On 18 January 2021, the Investment Association published a paper in which it sets out its shareholder priorities for listed companies in 2021. The paper assesses the progress made by companies on the four issues identified to be of particular importance in 2020, namely: responding to climate change, audit quality, stakeholder engagement and diversity. The paper also sets out investors’ expectations for 2021.

Financial Services Bill – amendments to MAR

On 19 January 2021, the House of Lords Library published a briefing paper ahead of the Lords stages of the Financial Services Bill which includes provisions amending the UK Market Abuse Regulation to make clear that issuers and advisers must all maintain lists and to amend timescales for notifying transactions.

ISCA publishes review of independent board evaluation

On 20 January 2021, ICSA, The Chartered Governance Institute, published its report having concluded the review into the quality of independent board evaluations in the UK listed sector which it launched in May 2019 at the request of the Department for Business, Energy and Industrial Strategy.

EU consultation on single access point

On 21 January 2021, the European Commission launched a consultation seeking general and technical views on the way to establish a European single access point for companies’ financial and sustainable investment-related information that must be made public pursuant to EU legislation.

Glass Lewis publishes approach to executive compensation

On 22 January 2021, Glass Lewis published its approach to executive compensation in the context of the COVID-19 pandemic. It states that while the COVID-19 pandemic has not changed its approach to executive pay, the document is intended to provide illustrative guidance on the application of its existing policies to executive remuneration under various expected scenarios.

ISS publishes approach to executive compensation

On 25 January 2021, Institutional Shareholder Services (ISS) published some new FAQs which provide general guidance as to how it may approach COVID-19-related pay decisions. In particular, the guidance covers how ISS will evaluate COVID-19-related changes to short and long-term incentive plans.

AIC to publish ESG disclosures

On 25 January 2021, the Association of Investment Companies (AIC) announced, in response to the increasing demand from investors, advisers and wealth managers for information on environmental, social and governance (ESG) criteria and policies, it is to publish individual investment company ESG disclosures on its website.

FCA and FRC publish joint statement relating to Covid-19 measures

On 27 January 2020, the FCA and the FRC published a joint statement reminding companies to revisit the measures introduced in March 2020 which provide flexibility in light of the COVID-19 pandemic. The measures include allowing listed companies an additional two months to publish their audited annual financial reports. The FCA and FRC recognise that the busiest period of the year for preparing, auditing and publishing financial information has coincided with further restrictions imposed through the recent national lockdowns in the UK.

LSE publishes Inside AIM

On 27 January 2021, the London Stock Exchange (LSE) published an edition of Inside AIM announcing the continued application until further notice of the temporary extensions to reporting deadlines under the AIM Rules for audited annual results and half-yearly reports.

Call for new corporate due diligence rules

On 27 January 2021, the European Parliament adopted a draft legislative initiative calling on the Commission to legislate for new corporate due diligence laws which will hold all companies operating in the EU internal market (including those from outside the EU) accountable when they harm people or the planet.

ESMA publishes updated Prospectus Regulation Q&As

On 28 January 2021, ESMA published an updated version of its Q&As on the Prospectus Regulation. The Q&As include new sections on the order of information in a prospectus, financial information which only covers short periods and the use of the same prospectus to make several offers.

GC100 publishes a discussion paper on the future of AGMs

On 28 January 2021, the GC100 published a discussion paper providing a company perspective on the limitations of the current format for annual general meetings and proposes that a different approach which embraces the use of technology could result in greater shareholder and stakeholder engagement.

Looking ahead to February 2021

1 February 2021 – Institutional Shareholder Services Proxy Voting Guidelines for 2021 come into force.

3 February 2021 – closing date for Government’s consultation into company law reform.

5 February 2021 – closing date for the FRC’s consultation on its new model for corporate reporting.

21 February 2021 – temporary pause in strike offs at Companies House ends.

28 February 2021 – final date for delivery of ESMA’s report concerning disclosures under Article 8 of the Taxonomy Regulation.