Capital Markets Update – March 2020

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.

February’s news

Updated report into ethnic diversity is published

On 5 February 2020, the Parker Review, which considered the ethnic and cultural diversity of UK boards, published an updated report, Ethnic Diversity Enriching Business Leadership. This follows the publication of the original Parker Review report in October 2017.

Shareholder priorities statement published by the Investment Association

On 5 February 2020, the Investment Association published Shareholder Priorities for 2020, setting out shareholder priorities for 2020 at listed companies. The priorities focus on four areas namely: responding to climate change, audit quality, stakeholder engagement and diversity.

New prospectus regulations published

On 5 February 2020, the Financial Services and Markets Act 2000 (Central Counterparties, Investment Exchanges, Prospectus and Benchmarks) (Amendment) Regulations 2020 (SI 2020/117) were published. They amend the Financial Services and Markets Act 2000 (Prospectus) Regulations 2019 so as to designate the FCA as the supervisory authority for issuing prior approval of documents.

Takeover Panel publishes new checklists

On 5 February 2020, the Takeover Panel published two new checklists to assist practitioners in preparing: (i) a revised offer document or a revised response document subject to Rules 32.1 and 32.6 respectively; and (ii) a revised scheme circular pursuant to Rule 32.1. You can download the checklists here.

ESMA publishes sustainable finance strategy

On 6 February 2020, the European Securities and Markets Authority (ESMA) published a Report setting out its strategy on sustainable finance. The strategy sets out how ESMA will place sustainability at the core of its activities.

FCA issues policy development update

On 7 February 2020, the Financial Conduct Authority (FCA) issued its Policy Development Update which provides information on recent publications and quarterly consultations and sets out a timetable for upcoming publications.

One third of FTSE 100 board positions held by women

On 8 February 2020, the Department for Business, Energy and Industrial Strategy (BEIS) issued a Press Release announcing that a third of all board positions in the UK’s FTSE 100 companies are now held by women, ten months ahead of the December 2020 target set by the Hampton-Alexander Review.

AFME equity selling restrictions updated

On 9 February 2020, the Association for Financial Markets in Europe (AFME) published an updated version of its model equity selling restrictions for use from 31 January 2020 until the end of the transitional period. The new versions now refer to the UK in addition to EEA States and use the defined term Relevant State instead of Member State. To view the restrictions click here.

IOSCO reports on key considerations for regulating cryptoasset trading platforms

On 12 February 2020, the International Organization of Securities Commissions (IOSCO) issued a Press Release stating that it had published a report on the key considerations for regulating cryptoasset trading platforms.

FRC publishes guidance on revised Ethical Standard

On 13 February 2020, the Financial Reporting Council (FRC) published Implementation Guidance on its revised Ethical Standard which has effect from 15 March 2020.

MiFID and MiFIR consultation launched

On 17 February 2020, the European Commission launched a Consultation on possible reforms to MiFID II and MiFIR. The Commission is required to provide a report and, if necessary, a legislative proposal to the European Parliament and the Council of the EU on how the rules have been functioning during the two years since coming into force.

ESMA updates Prospectus Regulation Q&As

On 18 February 2020, ESMA updated its Q&As document on the Prospectus Regulation, creating two new Q&As. The new Q&As clarify the number of additional pages that can be included firstly, in a summary where there is more than one guarantor and secondly, in a summary relating to several securities, in accordance with Article 7(7) of the Regulation.

Non-Financial Reporting consultation launched

On 20 February 2020, the European Commission launched a Consultation on its review of the Non-Financial Reporting Directive. The consultation ends on 14 May 2020.

IA publishes 2019 voting trends

On 20 February 2020, the Investment Association (IA) issued a Press Release announcing a new analysis of voting trends during the 2019 AGM season. The analysis focuses on data from the IA’s public register which tracks significant shareholder dissent.

FRC launches review of climate change reporting

On 20 February 2020, the FRC issued a Press Release announcing a major review of how companies and auditors evaluate and report on the effects of climate change on their business.

PLSA publishes Stewardship Guide

On 21 February 2020, the Pensions and Lifetime Savings Association (PLSA) published its Stewardship Guide and Voting Guidelines for 2020. The guide provides practical guidance to pension schemes considering how to exercise their voting rights during the 2020 AGM season and this year includes extra material on climate change and sustainability.

Draft Registration of Overseas Entities Bill

On 27 February 2020, the Government responded to a Written Question querying what the timetable is for introducing the Registration of Overseas Entities Bill. The response notes that the Bill has undergone pre-legislative scrutiny by a House of Lords and House of Commons Joint Committee  and that the final Bill will be introduced when Parliamentary time allows.

Corporate transparency and register reform

On 27 February 2020, the Government replied to a Written Question querying when it intends to publish its response to the consultation on corporate transparency and register reform, which closed on 5 August 2019. The reply states that there were a significant number of responses to the consultation and that the Government plans to publish its response in due course.

FCA publishes Handbook Notice

On 28 February 2020, the FCA published Handbook Notice 74 which covers changes to the FCA Handbook and other material made on 30 January and 27 February 2020.

ISCA publishes guidance on terms of reference

ISCA (the Governance Institute) has published updated guidance on terms of reference for Nomination, Remuneration and Audit committees. The guidance includes model terms of reference for committees of a company seeking to comply with the UK Corporate Governance Code.

Looking ahead to March 2020

1 March 2020 – ESMA to publish final report on its review of the Market Abuse Regulation.

15 March 2020 – revised Ethical Standard and Auditing Standards take effect.

16 March 2020 – consultation on amendments to FRS 101 Reduced Disclosure Framework closes.