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Capital Markets Update – June 2020

Business Meeting 10 Print publication

03/06/2020

May’s news

AQSE launches market consultation

On 1 May 2020, Aquis Stock Exchange (formerly NEX Exchange) launched a Market Consultation on proposed enhancements to the operation of its markets. Responses are requested by 15 June 2020.

FRC publishes update on implementation of audit reviews

On 1 May 2020, the Financial Reporting Council (FRC) published an Update on its progress towards the implementation of the recommendations of the Kingman review on the regulation of the audit industry, the Competition and Markets Authority review and the Brydon review into the quality and effectiveness of audit.

ICMA publishes guide to EU sustainability-related disclosure regime

On 1 May 2020, the International Capital Market Association (ICMA) published a Guide to the EU regime on sustainability-related disclosures. The guide is intended to provide an overview of the regime in light of recent and proposed legislative developments.

FCA publishes Handbook Notice 76

On 1 May 2020, the Financial Conduct Authority (FCA) published Handbook Notice 76, which covers amendments to the FCA Handbook and other materials made on 3 April, 8 April, 23 April and 30 April 2020.

FCA publishes new webpage

On 1 May 2020, the FCA published a new Webpage setting out delays to its activities and regulatory activity as a result of COVID-19. These include extending the closing date for responses to the FCA’s open consultation papers and calls for input until 1 October 2020 and rescheduling most other planned work.

ESMA launches consultation on EU SME growth market regime

On 6 May 2020, the European Securities and Markets Association (ESMA) launched a Consultation on the functioning of the SME growth market regime in the EU. The consultation closes on 15 July 2020.

FRC updates its strategic report guidance

On 11 May 2020, the FRC issued an editorial change to its 2018 Guidance on the Strategic Report. The updates include a Clarification that a public company must include a ‘section 172 statement’ describing how the directors have had regard to the matters set out in s172(1)(a) to (f) Companies Act 2006 in its strategic report, even if it meets the medium-sized company criteria.

ICMA publishes definitions for sustainable finance

On 11 May 2020, the International Capital Market Association (ICMA) published a set of high level Definitions for terms that are commonly used in the sustainable finance field. Definitions are provided for terms such as ‘climate finance’, ‘green finance’, ‘social finance’ and ‘taxonomy’.

FRC updates guidance on corporate governance and reporting

On 12 May 2020, the FRC published a News Story stating that it has updated its guidance for companies on interim reports. It deals, in particular, with the assessment of the going concern assumption at the half-yearly date, and cites issues which might trigger a need to re-examine the going concern assumption and liquidity.

PLSA launches ESG industry group

On 13 May 2020, the Pensions and Lifetime Savings Association (PLSA) issued a Press Release stating that it has established a new industry group to collaborate in producing guidance to help pension schemes to comply with their environment, social and governance (ESG) and stewardship reporting obligations.

FRC publishes additional Q&A regarding general meetings

On 14 May 2020, the FRC published a further Q&A, jointly produced with BEIS, providing companies with additional information to assist them in meeting statutory requirements to hold meetings during the COVID-19 pandemic.

Takeover Panel publishes Moss Bros ruling

On 19 May 2020, the Takeover Panel published Panel Statement 2020/4, setting out the ruling of the Panel Executive on the takeover bid by Brigadier Acquisition Co Ltd for Moss Bros to be implemented by scheme of arrangement. This ruling was confirmed on 26 May 2020.

Restrictions announced for Government loan participants

On 19 May 2020, HM Treasury issued a News Story stating that the size of loans available under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) would be increased from £50 million to £200 million. Companies borrowing more than £50 million through the CLBILS will be subject to certain restrictions on dividend payments, senior pay and buybacks, which will also apply to those companies participating in the Covid Corporate Financing Facility scheme which wish to borrow money beyond 19 May 2021.

FRC updates its Company Guidance

On 20 May 2020, the FRC published a News Story stating that it has updated its Company Guidance to include direction as to how companies should report exceptional items and alternative performance measures in their reports and accounts against the backdrop of the COVID-19 pandemic.

ESMA issues recommendations on interim financial statements

On 20 May 2020, ESMA issued a Press Release stating that it had published a statement on the impact of the COVID-19 pandemic on the half-yearly financial reports of listed issuers. It provides recommendations, in particular, on the preparation of interim financial statements according to IFRS and the interim management reports for the 2020 half-yearly reporting periods.

ICGN publishes anti-corruption guidance

On 21 May 2020, the International Corporate Governance Network (ICGN) published updated Guidance on anti-corruption practices. The updated guidance builds on the original ICGN anti-corruption guidance which was published in 2009.

FCA publishes Handbook Notice 77

On 22 May 2020, the FCA published Handbook Notice 77 which covers amendments to the FCA Handbook and other materials made on 13 and 21 May 2020.

FRC publishes updated implementation guidance on its Ethical Standard

On 26 May 2020, the FRC published updated the Implementation Guidance on its revised Ethical Standard for 2019 for auditors which took effect, in the most part, on 15 March 2020.

European Commission publishes consultation on EU investment

On 26 May 2020, the European Commission launched a public Consultation on the protection and facilitation of cross-border investment within the EU. The consultation closes on 8 September 2020.

QCA publishes NED report

On 26 May 2020, the Quoted Companies Alliance (QCA) published the Report from its Non-Executive Directors Survey 2020. The Report sets out the results of the QCA’s survey of 110 small and mid-sized quoted companies, and 39 of their advisors, in relation to those companies’ non-executive directors

FCA publishes Market Watch 63

On 27 May 2020, the FCA published Market Watch 63 in which it sets out its expectations of market conduct against the backdrop of increased capital raising events and alternative working arrangements which have resulted from the COVID-19 pandemic.

FCA publishes Primary Market Bulletin 28

On 27 May 2020, the FCA published Primary Market Bulletin 28 which includes statements from the FCA on temporary relief for the timing of publication of half yearly financial reports and on market practice on “going concern” assessments. The Bulletin also provides the FCA’s view on issuers’ engagement with shareholders and their role in delivering “soft pre-emption” in placings.

FCA updates Q&A on Covid-19 temporary measures

On 27 May 2020, the FCA also updated its Q&A on delaying annual company accounts and half yearly financial reports during the COVID-19 pandemic.

Council Regulation extends general meeting deadlines

On 27 May 2020, the Council Regulation (EU) 2020/699 on temporary measures concerning the general meetings of European Companies and of European Cooperative Societies was published in the Official Journal of the European Union. It entered into force on 28 May 2020.

Minor changes to FRS 101

On 29 May 2020, the FRC issued a Press Release announcing that it had completed its annual review of FRS 101 Reduced Disclosure Framework and made minor Amendments to the disclosure exemptions relating to the statement of cash flows.

IOSCO statement on fair disclosure

On 29 May 2020, the Board of the International Organization of Securities Commissions (IOSCO) issued a Statement emphasising the importance of investors and other stakeholders being provided with timely and high-quality information, complete with transparent and entity-specific disclosures, about the impact of COVID-19 on issuers’ operating performance, financial position, liquidity and future prospects.

Looking ahead to June 2020

9 June 2020 – date of ICGN’s AGM at which it will submit the revised draft of its Global Stewardship Principles for member approval.

15 June 2020 – closing date for submitting responses to the Aquis Stock Exchange market consultation.

30 June 2020 – deadline for comments on the draft IFRS Standard on presentation and disclosures in financial statements to replace IAS 1.

30 June 2020 – date the temporary suspension of wrongful trading liability ends.

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