Capital Markets Update – November 2020

Business Meeting 10 Print publication


This month’s news

FCA publishes instruments and guidance for Brexit

On 1 October 2020, the Financial Conduct Authority (FCA) published certain final instruments and updated guidance for the end of the Brexit transition period. It also announced that it had published an updated version of the FCA Handbook to show the rules that will apply at the end of the transition period.

FCA publishes policy update

On 2 October 2020, the FCA issued its Policy development update, which provides information on recent publications and quarterly consultations and sets out a timetable for upcoming publications.

New rules for European crowdfunding

On 5 October 2020, the European Parliament approved proposed new rules for European crowdfunding service providers. The new rules will apply one year following their publication in the Official Journal of the European Union (see below) and comprise a new Regulation applying to European crowdfunding service providers and a Directive making related amendments to MiFID II in relation to crowdfunding.

FRC publishes review of AGMs

On 6 October 2020, the Financial Reporting Council (FRC) published a Review of UK listed companies’ AGMs during the first half of 2020. The review considered the different approaches taken by those companies to holding their AGMs during the COVID-19 pandemic, whether the approaches taken best served the interests of shareholders and makes suggestions as to how companies can improve engagement with stakeholders as they look forward to the 2021 AGM season.

FRC Lab publishes report on video use in corporate reporting

On 7 October 2020, the FRC Lab published a Report which considers how companies currently use video for communication with investors and stakeholders, and how companies could use it more effectively in the future. In particular, the report provides guidance on how video can be used to hold virtual AGMs.

FRC proposes a new corporate reporting system

On 8 October 2020, the FRC announced that it had published a discussion paper entitled A Matter of Principles – The Future of Corporate Reporting.  The paper explores a potential new principles-based corporate reporting system, with a view to making it more agile, effective and engaging for all stakeholders. The FRC has asked for comments on its proposals by 5 February 2021.

Demand for transparency on ethnic diversity

On 9 October 2020, the Investment Association issued a press release entitled Ethnic diversity on boards, which notes that investors are calling for greater transparency on ethnic diversity on company boards.

Commission adopts IFRS 16 amendment

On 12 October 2020, Commission Regulation (EU) 2020/1434, which amends IFRS 16 Leases, was published in the Official Journal of the European Union. The regulation adopts the amendment published on 28 May 2020 providing optional temporary practical relief to lessees accounting for rent concessions granted because of COVID-19. The amendment applies to reporting periods beginning on or after 1 June 2020.

FRC Lab publishes guidance on ‘section 172 statement’

On 14 October 2020, the FRC Lab published Section 172 statements: How to make them more useful which sets out tips for companies on the process, presentation and content of a ‘section 172 statement’ within the strategic report.

ISS publishes benchmark policy consultation

On 14 October 2020, Institutional Shareholder Services (ISS) published its 2021 benchmark policy consultation, seeking views on its proposed new and amended voting policies for 2021. The comment period closed on 26 October 2020.

ISS announces 2021 benchmark voting policy consultation

On 14 October 2020, ISS issued a Press Release requesting comments on its proposed benchmark policy changes for 2021. The comment period closed on 26 October 2020.

FRC Lab publishes guides on disclosure expectations

On 15 October 2020, the FRC Lab published two guides which consider current practice in relation to corporate reporting during the COVID-19 pandemic and how disclosures in areas of particular investor concern need to develop going forward (COVID-19 – Resources, action, the future and COVID 19 – Going concern, risk, and viability).

LSE publishes 2021 Dividend Procedure Timetable

On 16 October 2020, the London Stock Exchange (LSE) published Market Notice N16/20 which withdraws the temporary measures for payment dates under the 2020 Dividend Procedure Timetable with effect from 2 November 2020. The notice also indicates that the 2021 Dividend Procedure Timetable is now available.

IA reviews progress in alignment of pensions

On 17 October 2020, the Investment Association (IA) issued a Press Release reviewing the steps that remuneration committees have taken on the alignment of executive director and workforce pension contributions. The press release indicates that significant progress has been made in bringing executive pension contributions in line with those received by the rest of the workforce.

ESMA publishes thresholds below which an EU prospectus is not required

On 19 October 2020, the European Securities and Markets Authority (ESMA) published an updated list showing the national thresholds below which an offer of securities to the public does not need a prospectus in each EU Member State under the Prospectus Regulation.

New crowdfunding rules published

On 20 October 2020, new rules applying to European crowdfunding service providers were published in the Official Journal of the European Union following their approval by the European Parliament on 5 October 2020 (see above).

FRC publishes corporate reporting review

On 21 October 2020, the FRC published its Annual Review of Corporate Reporting 2019/20 which sets out the FRC’s top ten areas where improvements to reporting quality are required so that users of accounts are provided with a clearer understanding of company performance and position.

FCA publishes Handbook Notice 81

On 23 October 2020, the FCA published Handbook Notice 81, which covers amendments to the FCA Handbook and other materials made on 23 July, 30 September and 22 October 2020.

Commission consults on sustainable corporate governance

On 26 October 2020, the European Commission published Consultation: Sustainable corporate governance seeking views from a range of stakeholders, including non-EU companies active in the EU market, on a possible sustainable corporate governance initiative. The consultation closes on 8 February 2021.

FCA issues final notice for publication of misleading information

On 26 October 2020, the FCA published a final notice publicly censuring Aviva plc for breaching the Listing Rules and the Disclosure Guidance and Transparency Rules by failing to take reasonable care to ensure that information in an announcement on 8 March 2018 concerning its preliminary year-end results was not misleading and did not omit anything likely to affect the import of the information in the announcement.

Takeover Panel proposes amendments to the Takeover Code

On 27 October 2020, the Code Committee of the Takeover Panel published Public Consultation Paper 2020/1 which sets out proposed amendments to the Takeover Code in relation to offer conditions and offer timetable. Comments on the proposals are invited by 15 January 2021.

ESMA issues enforcement priorities

On 28 October 2020, ESMA published its annual Public Statement on European Common Enforcement Priorities, which sets out the priorities that European enforcers will consider when examining the 2020 annual financial reports of listed companies.

BEIS publishes research on non-financial reporting frameworks

On 28 October 2020, the Department for Business, Energy and Industrial Strategy (BEIS) published its Final Report setting out findings from a research project aimed at gathering views on the preferences of UK stakeholders around non-financial reporting standards.

ESMA issues report on MAR amendments

On 29 October 2020, ESMA published its final report on the amendments to the Market Abuse Regulation (MAR) for the promotion of the use of SME growth markets.

Looking ahead to November 2020

2 November 2020 – issuers announcing cash dividends should revert to the standard 30 business day period from the record date within which the dividend should be paid.

4 November 2020 – closing date for FCA’s consultation on various proposed minor amendments to the FCA handbook.

9 November 2020 – new rules applying to European crowdfunding service providers come into force.

30 November 2020 – end date for Pre-Emption Group’s recommendation that institutional investors continue to consider supporting non pre-emptive issuances by companies of up to 20% of their issued share capital.