Capital Markets Update – July 2020Print publication
ICSA publishes updated risk committee terms of reference
On 1 June 2020, the Chartered Governance Institute (ICSA) published an updated version of its Terms of reference for the risk committee. The terms of reference are particularly relevant to regulated companies such as banks and insurance companies.
ICAEW publishes an introductory guide to dividends
On 1 June 2020, the Institute of Chartered Accountants in England and Wales (ICAEW) published an Introduction to the law on dividends which provides an overview for directors of the various laws that they should consider before declaring dividends.
Government publishes policy paper on the ESEF Regulation
On 1 June 2020, BEIS published a Policy Paper setting out the Government’s position on the effect of the European Single Electronic Format Regulation (ESEF Regulation) on the directors’ sign-off of accounts of UK-incorporated issuers. The ESEF Regulation came into force on 18 June 2019 and applies to consolidated annual accounts prepared in accordance with IFRS by companies with securities admitted to trading on a regulated market.
ICGN publishes statement on executive remuneration
On 2 June 2020, the International Corporate Governance Network (ICGN) published a short Viewpoint on executive remuneration issues arising from the COVID-19 pandemic.
ICAEW guidance for preparers of prospective financial information
On 4 June 2020, ICAEW published the final version of its Guidance for preparers of prospective financial information. The guidance should be applied by 15 October 2020, when ICAEW states it will withdraw its 2003 guidance, Prospective financial information: Guidance for UK Directors, but early adoption is encouraged.
Commission publishes draft delegated regulation amending RTS Regulation
On 4 June 2020, the European Commission published a Draft Delegated Regulation and accompanying Annexes to amend and correct the Commission Delegated Regulation (RTS Regulation). The RTS Regulation supplements the Prospectus Regulation in relation to regulatory technical standards (RTSs) including the minimum content and the format of key financial information in the prospectus summary; the publication and classification of prospectuses; content and dissemination of advertisements for securities; situations where a supplementary prospectus may be required; and technical arrangements necessary for the functioning of the notification portal. The draft delegated regulation will apply retrospectively from 21 July 2019.
FCA publishes quarterly consultation paper
On 5 June 2020, the Financial Conduct Authority (FCA) published Quarterly Consultation Paper 28 (CP20/7), which consults on various proposed minor amendments to the FCA Handbook.
FRC publishes updated guidance on AGMs
On 8 June 2020, the Financial Reporting Council (FRC) published new Q&A and guidance on best practice for AGMs which update the earlier Q&A it published in April. The new Q&A take account of relevant provisions in the Corporate Insolvency and Governance Bill 2020, which received Royal Assent on 26 June 2020.
FCA publishes guidance on handling inside information
On 9 June 2020, the FCA published Primary Market Bulletin 29 in which it sets out the feedback it received on its consultation on a best practice note on identifying, controlling and disclosing inside information and includes the final Best Practice Note in full. The note provides up-to-date guidance for industry regulators on identifying, controlling and disclosing inside information.
ESMA announces public hearing on ESG disclosure standards
On 9 June 2020, the European Securities and Markets Authority (ESMA) published a Press Release stating that a public hearing on the proposed environmental, social and governance (ESG) disclosure standards for financial market participants, advisers and products will be organised by the three European Supervisory Authorities.
LSE publishes Inside AIM
On 9 June 2020, the London Stock Exchange (LSE) published an edition of Inside AIM setting out temporary changes to an AIM company’s obligation to notify half-yearly reports in accordance with the AIM Rules for Companies. With effect from 9 June 2020, AIM companies that need extra time to prepare their half-yearly report will be given one additional month in which to notify them. The extension is temporary and will be kept under review.
Final report published on the CMU
On 10 June 2020, the European Commission issued an Announcement that the High-Level Forum on Capital Markets Union (CMU) has published its final report setting out a series of 17 recommendations aimed at removing the biggest barriers in the EU’s capital markets. The report emphasises that completion of the CMU has become particularly important in the EU’s recovery from the COVID-19 pandemic.
Financial Reporting Lab issues two reports
On 15 June 2020, the Financial Reporting Lab issued two reports which aim to provide practical guidance to companies on areas of reporting that are especially important to investors. The First Report provides further practical advice to companies, setting out the disclosure investors expect to see from them during the current economic crisis. The Second Report provides detailed guidance on going concern, risk reporting and viability statement disclosures within annual reports.
Draft supplemental Prospectus Regulation published
On 16 June 2020, the European Commission published for consultation a draft regulation to supplement the Prospectus Regulation concerning the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division.
European Parliament adopts Taxonomy Regulation
On 18 June 2020, the European Parliament published a Press Release stating that it has adopted the regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation). The Taxonomy Regulation sets out an EU-wide “taxonomy” which will provide businesses and investors with a common classification system against which they can identify those economic activities which are considered environmentally sustainable.
FCA issues final notice to AIM listed company over market abuse
On 26 June 2020, the FCA published a final notice to Redcentric PLC for committing market abuse in breach of section 118(7) (dissemination) of the Financial Services and Markets Act 2000, as in force at the relevant time.
FCA publishes Handbook Notice 78
On 26 June 2020, the FCA published Handbook Notice 78 which covers amendments to the FCA Handbook and other materials made on 21 May and 25 June 2020.
Looking ahead to July 2020
14 July 2020 – closing date for feedback on the European Commission’s draft delegated regulation setting out the minimum information companies must include in an exempted document when applying for an exemption from the requirement to publish a full prospectus.
15 July 2020 – closing date for ESMA’s consultation on the functioning of the SME growth market regime in the EU.
15 July 2020 – closing date for the European Commission’s consultation on its renewed sustainable finance strategy.
21 July 2020 – end to the period during which prospectuses approved under the Prospectus Directive will continue to be valid.
31 July 2020 – closing date for the BEIS Committee’s call for evidence on the roadmap for reform of the UK’s audit industry.