Capital Markets Update – May 2020

Business Meeting 10 Print publication


April’s news

Pre-Emption Group statement

On 1 April 2020 the Pre-Emption Group published a statement on its expectations for issuances during the Covid-19 pandemic. It recommends that investors, on a case-by-case basis, consider supporting issuances by companies of up to 20% of their issued share capital on a temporary basis, rather than the 5% for general corporate purposes with an additional 5% for specified acquisitions or investments, as set out in the Statement of Principles.

Companies House issues guidance on filing court orders

On 1 April 2020 Companies House published guidance on filing court orders sanctioning schemes of arrangement to reflect the electronic service introduced by HMRC to replace temporarily their usual stamp duty process.

AQSE statement on annual accounts extension

On 1 April 2020, AQSE (formerly NEX Exchange) announced that, for companies admitted to the AQSE Growth Market, it would, as a temporary measure, extend by one month the date by which companies must publish their annual audited accounts.

IA issues press release discussing dividends and executive pay

On 1 April 2020, the Investment Association (IA) issued a Press Release including comments from the Chief Executive on dividend payments and executive pay during the Covid-19 pandemic.

FCA launches new NSM submission portal

On 6 April 2020, the FCA updated its National Storage Mechanism Webpage following the launch of the new NSM submission portal.

ISS publishes guidance on application of its policies

On 8 April 2020, Institutional Shareholder Services (ISS) published guidance on the application of its policies in the light of the COVID-19 pandemic. The guidance covers AGM postponements, virtual-only meetings, director attendance, changes to the board or senior management, compensation issues, share repurchases and share issuances. ISS proposes to update this guidance or provide new information as needed throughout the remainder of the 2020 main proxy season.

FCA publishes policy statement on recapitalisation

On 8 April 2020, the FCA published a statement of policy on listed companies and recapitalisation issues during the coronavirus crisis. The statement sets out a series of measures aimed at assisting companies to raise new share capital in response to the coronavirus crisis while retaining an appropriate degree of investor protection. The FCA has also published technical supplements on working capital statements and the modification of general meeting requirements under the Listing Rules which include further details on those measures.

Investment Association issues letter to FTSE 350 chairs

On 8 April 2020, the Investment Association published a letter addressed to the chairs of all FTSE 350 companies setting out certain views of its members in relation to the COVID-19 pandemic. Matters covered include engagement and communication, financial reporting, AGMs, dividends, executive pay and long term capital raising.

FRC clarification on going concern standard

On 14 April 2020, the Financial Reporting Council (FRC) published a COVID-19 Update clarifying that the accounting and auditing standards on going concern have not changed, nor has FRC’s increased pressure on auditors to be tough. It reminds auditors that they should appropriately challenge management on its judgments and make sure that those judgments are supported by sufficient evidence.

ISCA guidance on shareholder meetings

On 15 April 2020, The Chartered Governance Institute (ICSA) published an article on the disrupted AGM season. The article highlights the guidance that ICSA has already produced, and states that ICSA will provide an update once the new relevant legislation is available.

Taxonomy Regulation adopted

On 15 April 2020, the Council of the EU published a Press Release stating that it had adopted the regulation on the establishment of a framework to facilitate sustainable investment (the 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.

Strike off and late filing at Companies House

On 16 April 2020, Companies House published a News Story stating that it will temporarily pause the strike off process to prevent companies being dissolved, and that it will treat sympathetically any appeals from companies issued with a late filing penalty, in order to help companies navigate the fallout from the COVID-19 outbreak.

FRC publishes Q&A to assist with company meetings and filings

On 17 April 2020, the FRC published Q&A agreed by the FRC and the Department of Business, Enterprise and Industrial Strategy (BEIS) to provide companies with additional information to assist them in meeting statutory requirements to hold meetings and file documentation at Companies House during the COVID-19 pandemic.

ESMA adds to its APM Guidelines

On 17 April 2020, the European Securities and Markets Authority (ESMA) added a new Q&A 18 to its Questions and Answers on the ESMA Guidelines on Alternative Performance Measures (APM Guidelines) to assist issuers in complying with the APM Guidelines during the COVID-19 pandemic. The APM Guidelines address the information that issuers should publish when disclosing Alternative Performance Measures to the market in management reports, prospectuses and other reports.

FCA updates guidance on shareholder meetings

On 20 April 2020, the FCA updated the ‘Shareholder meetings’ and ‘Corporate transactions and admissions’ sections of Primary Market Bulletin 27 (first published on 17 March 2020) to take account of the FCA policy statement and accompanying technical supplements that were published on 8 April 2020.

New guidance published on modern slavery reporting

On 20 April 2020, the Home Office launched a new Web Page providing guidance for businesses on addressing and reporting on modern slavery risks (pursuant to s 54 Modern Slavery Act 2015) during the COVID-19 crisis.

AFME publishes report on the current state of Europe’s capital markets

On 21 April 2020, the Association for Financial Markets in Europe (AFME) published a Report on the impact of COVID-19 on Europe’s capital markets (both the debt and equity capital markets). The research paper also highlights initiatives that the AFME is involved in to support markets during the current crisis.

ICGN issues press release on governance priorities

On 23 April 2020, the International Corporate Governance Network (ICGN) issued a press release stating that it had published an open letter to companies, regulators and stakeholders setting out governance priorities for executive management, board directors and investors which aim to help companies maintain viability during the COVID-19 outbreak and its aftermath.

Consultation launched on ESG disclosure standards

On 23 April 2020, ESMA published a Press Release stating that the three European Supervisory Authorities (EBA, EIOPA and ESMA) have issued a consultation paper on proposed environmental, social and governance (ESG) disclosure standards for financial market participants, advisers and products.

IA publishes guidance on executive pay

On 27 April 2020, the Investment Association (IA) published guidance for listed companies setting out shareholder expectations in relation to executive pay and long-term incentives during the Covid-19 pandemic.

FCA requests fair treatment of corporate customers raising finance

On 28 April 2020, the FCA published a Dear CEO Letter on ensuring the fair treatment of corporate customers preparing to raise equity finance. The FCA expects firms to continue to provide strong support and services to customers during the period of disruption caused by the COVID-19 pandemic.

ISCA publishes guidance on dividend resolutions

On 29 April 2020, the Chartered Governance Institute (ISCA) published a Guidance Note on the issues surrounding the decision to withdraw or amend dividend resolutions at AGMs in the current climate where companies are considering the implications of the COVID-19 outbreak.

Regulation proposed extending meeting deadlines for SEs and SCEs

On 29 April 2020, the European Commission published a Proposal for a Council Regulation on temporary measures concerning the general meetings of European Companies (SEs) and of European Cooperative Societies (SCEs).

Financial Reporting Lab publishes newsletter

On 30 April 2020, the Financial Reporting Lab published issue 1 of its Lab Newsletter 2020, which provides an update on the Financial Reporting Lab’s current projects and includes a round-up of the FRC’s guidance in relation to the COVID-19 pandemic.

Looking ahead to May 2020

4 May 2020 – previous closing date for submitting evidence to the Government inquiry into delivering audit reform which has been extended to 31 July 2020.

11 May 2020 – closing date for the Government’s consultation on the UK funds regime.

14 May 2020 – closing date for the European Commission consultation on its review of the Non-Financial Reporting Directive (2014/95/EU).

19 May 2020 – closing date for the FCA consultation on the proposed 2020/2021 regulatory fees and levies.