Capital Markets Update – June 2019

Business Meeting 10 Print publication


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.

May’s news

NEX Exchange launches consultation

On 1 May 2019 the NEX Exchange launched a Market Consultation  regarding proposed changes to the Growth Market Rules for Issuers to reflect the forthcoming EU Growth Market Prospectus regime. The consultation closed on 31 May 2019.

Consultation into revised SIRs

On 1 May 2019 the Financial Reporting Council (FRC) launched a consultation on its plan to revise the Standards for Investment Reporting (SIRs). The SIRs have not been updated since 2008 and the FRC plans to issue revised SIRs to reflect regulatory changes which have occurred since then. The consultation closes on 26 July 2019.

BEIS announces corporate transparency and register reform

On 5 May 2019 the Department for Business, Energy and Industrial Strategy (BEIS) launched a consultation into proposals for the reform of company law. The proposed reforms intend to enhance the role of Companies House, increase the transparency of corporate entities and help combat economic crime. The consultation closes on 5 August 2019.

Practical guide to improve financial reporting

On 13 May 2019 the FRC and the ICAEW published a practical guide  to help smaller listed and AIM quoted companies improve the quality of their financial reporting.

BEIS responds to Stewardship Code consultation

On 14 May 2019, the BEIS select committee published a response to the review currently being undertaken by the FRC into the UK Stewardship Code.

Shareholder Rights Directive

On 14 May 2019, the Proxy Advisors (Shareholders’ Rights) Regulations 2019 were published which transpose Article 3j of the revised EU Shareholder Rights Directive into UK law. The regulations come into force on 10 June 2019.

Registration of Overseas Entities Bill

On 20 May 2019, the Joint Committee of the House of Lords and House of Commons issued a press release announcing that it had published a report on the draft Registration of Overseas Entities Bill. The draft Bill sets out provisions to establish a new beneficial ownership register of overseas entities that own UK property.

Modern Slavery Statements

On 22 May 2019, the final report of the independent review into the Modern Slavery Act 2015 launched in July 2018 was laid before Parliament. The report includes a list of recommendations for reform.

Investment Association presents findings on dividend payments

On 25 May 2019, the Investment Association published its report on the prevalence of listed UK companies paying dividends without seeking shareholder approval. The report arose from the Government’s consultation into Insolvency and Corporate Governance.

LSE publishes two editions of Inside AIM

On 28 May 2019, the London Stock Exchange published two editions of Inside AIM entitled “Staffing of Nominated Advisors” and “AIM Designated Market Route”.

Reporting regulations published

On 29 May 2019, the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 were published on the Government’s legislation website.

Independent board evaluation consultation

On 29 May 2019, ICSA, the Institute of Chartered Secretaries and Administrators, published a consultation relating to its review of the effectiveness of independent board evaluation in the UK listed sector. The consultation ends on 5 July 2019.

Public censure for breach of AIM Rules

On 30 May 2019, the London Stock Exchange announced the public censure and fine of £450,000 on an AIM quoted company for breaches of Rules 10 (Principles of Disclosure), 13 (Related party transactions), 17 (Disclosure of miscellaneous information), 19 Annual accounts), 21 (Dealing policy) and 31 Responsibility for compliance).

FCA policy statements

On 31 May 2019, the Financial Conduct Authority (FCA) published its policy statement “Proposals to Promote Shareholder Engagement” which implements aspects of the Shareholder Rights Directive. On the same date the FCA also published its policy statement “Changes to align the FCA Handbook with the EU Prospectus Regulation”. The new sourcebook will be renamed the Prospectus Regulation Rules sourcebook.

Looking ahead to June 2019

7 June 2019 – closing date for the Brydon review into the effectiveness and quality of statutory audit.

10 June 2019 – Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 come into force.

10 June 2019 – Proxy Advisors (Shareholders’ Rights) Regulations 2019 come into force.

10 June 2019 – new FCA rules on effective stewardship come into force.

11 June 2019 – closing date for the Government’s consultation into the recommendations made in the Kingman review of the FRC.