Capital Markets Update – January 2020

Business Meeting 10 Print publication


Happy New Year from all at Walker Morris.

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.

December’s news

PLSA publishes response to call for evidence on intermediated securities

On 2 December 2019, the Pensions and Life Savings Association (PLSA) published its Response to the Law Commission’s call for evidence on the intermediated securities system which was launched on 27 August 2019.

ESMA updates list of prospectus thresholds

On 2 December 2019, the European Securities and Markets Authority (ESMA) published an updated List of Thresholds below which an offer of securities to the public does not need a prospectus in each EU Member State under the Prospectus Regulation. The list was originally published in February 2019.

ESMA updates Prospectus Regulation Q&As

On 4 December 2019, ESMA issued a Press Release announcing that it had updated its Q&A on the Prospectus Regulation with the addition of two new Q&As.

ESMA publishes final report on draft RTS amending Prospectus RTS Regulation

On 4 December 2019, ESMA published its Final Report on the draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2019/979 (Prospectus RTS Regulation) containing regulatory technical standards under the new Prospectus Regulation. The Prospectus RTS Regulation sets out key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal.

FCA Quarterly Consultation

On 6 December 2019, the Financial Conduct Authority (FCA) published its Quarterly Consultation Paper 26 which consults on various proposed minor amendments to the FCA Handbook.

QCA publishes Good Governance Review

On 10 December 2019, the Quoted Companies Alliance (QCA) issued a press release announcing that it had published, together with UHY Hacker Young, its AIM Good Governance Review 2019/20.

SME growth markets regulation published in the Official Journal

On 11 December 2019, the Regulation amending the Market Abuse Regulation (MAR) and the Prospectus Regulation regarding the promotion of the use of SME growth markets was published in the Official Journal. It applies from 31 December 2019, except for the amendments relating to MAR which shall apply from 1 January 2021.

Cross border directive published

On 12 December 2019, Directive (EU) 2019/2121 was published in the Official Journal regarding cross-border conversions, mergers and divisions. It came into force on 1 January 2020 and member states will then have 36 months to implement it.

FCA publishes Handbook Notice 72

On 13 December 2019, the FCA published Handbook Notice 72 which covers changes to the FCA Handbook made on 21 November and 12 December 2019.

FRC announces thematic reviews of corporate reports and audits

On 13 December 2019, the Financial Reporting Council (FRC) issued a Press Release announcing that it will undertake thematic reviews of various aspects of corporate reports and audits in 2020/21. The reviews will supplement the FRC’s routine monitoring programme.

ESMA issues 2019 report on AMPs under MAR

On 13 December 2019, ESMA published its second annual Report to the European Commission on the application of accepted market practices (AMPs) in accordance with MAR.

FRC consults on changes to FRS 101

On 16 December 2019, the FRC issued a Press Release announcing that it had launched a consultation on proposed amendments to FRS 101 Reduced Disclosure Framework as part of its 2019/20 annual review.

European Parliament agrees new rules relating to green investments

On 16 December 2019, the European Parliament published a Press Release stating that it had reached agreement with the Council of the EU on new criteria for determining whether an economic activity is environmentally sustainable.

FCA issues Primary Market Bulletin 26

On 17 December 2019, the FCA published Primary Market Bulletin 26 its newsletter for primary market participants. The newsletter contains the first stage of updates to its Knowledge Base materials to reflect the change to the prospectus regime under the Prospectus Regulation.

FRC revises its Ethical Standard

On 17 December 2019, the FRC issued a Press Release stating that it had published a major revision to its Ethical and Auditing Standards. The revised Standards aim to strengthen auditor independence and prevent conflicts of interest. They include provisions prohibiting auditors from providing recruitment and remuneration services or playing any part in management decision making.

Final report on review into the quality and effectiveness of audit is published

On 18 December 2019, Government published its final Report of the independent review by Sir Donald Brydon into the quality and effectiveness of audit. The Report contains recommendations aimed at improving the audit standards of ‘public interest companies’, which in this context include UK companies with debt or equities admitted to trading on a regulated market.

ESMA publishes report on undue short-term pressure on corporations

On 18 December 2019, ESMA published a Report on undue short-term pressure on corporations in securities markets. This follows a European Commission request that the European Supervisory Authorities (the EBA, EIOPA and ESMA) investigate potential sources of undue short-termism on corporations and advise regulators on areas they should address.

FCA issues fine for failure of a PDMR to notify personal trades

On 20 December 2019, the FCA issued a Final Notice against a senior employee at Braemar Shipping Services plc, imposing a financial penalty of £45,000 for failure to notify personal trades in breach of Article 19(1) MAR. This is the first enforcement action by the FCA for a breach of Article 19(1).

Looking ahead to January 2020

1 January 2020 – all issuers listed on EU regulated markets (therefore not including AIM) must prepare their annual financial reports in the European single electronic reporting format from this date.

1 January 2020 – the UK Stewardship Code 2020 takes effect in substitution for the Stewardship Code 2012.

1 January 2020 – the cross-border conversions, mergers and divisions amending directive comes into force.

15 January 2020 – closing date for comments on FCA’s best practice note regarding inside information.

31 January 2020 – projected date the UK will leave the EU.