Listing regime – latest FCA Primary Market Bulletin

The Financial Conduct Authority (FCA) has published the 33rd edition of its Primary Market Bulletin (PMB No.33). It contains an update on various issues, including the FCA’s review of delayed disclosure notifications.

Feedback on review of delayed disclosure notifications

In November 2020, the FCA published a review of notifications of delayed disclosure of inside information (see our blog post here).

Following publication of the review, the FCA says that it has received a number of queries. It clarifies that the review did not contain any new guidance and was not intended to drive wholesale changes to market practice. In particular the FCA reiterates that:

  • Periodic financial information – Issuers should begin with the assumption that information relating to financial results could constitute inside information and the FCA expects issuers to exercise judgement in assessing whether inside information exists.
  • Board changes – Following feedback on the challenges of complying with the obligation to announce inside information as soon as possible in the context of board changes, the FCA acknowledges that the question of whether information is “precise” requires judgement. The FCA also refers issuers to the guidance in its Technical Note on Assessing and handling inside information.

Major shareholding notifications and total voting rights announcements

In 2020, the FCA conducted a review of the way that UK issuers announced changes to total voting rights and the effect on major shareholding notifications.

DTR 5.6.1 requires an issuer to disclose the total number of voting rights, and the total number of voting rights attaching to treasury shares, at the end of each month if there has been a change in those numbers during the month. If there is a material increase or decrease during the month, an immediate total voting rights announcement may be required under DTR 5.6.1A.

DTR 5 also requires holders of shares and certain financial instruments to notify the FCA and the relevant issuer when certain thresholds are reached or crossed.

Recommendations made by the FCA following its review include:

  • issuers should report changes to total voting rights clearly and on time at the end of each calendar month during which an increase or decrease occurred, even if this information has previously been disclosed in accordance with DTR 5.6.1A; and
  • issuers should report total voting rights figures as a distinct announcement using “Total Voting Rights” as a headline and selecting as the classification for the regulated information “Total number of voting rights and capital”.

The new on-line portal for investors to submit TR-1 notifications of major shareholdings electronically (see our blog post here) is now live and TR-1 notifications must now be sent via the portal.

Payments to governments

In 2020 the FCA conducted a review of disclosures made by those issuers in the extractive sector required to report on their payments to governments in accordance with DTR 4.3A.

The FCA reminds issuers of the key requirements in relation to contents, publication and filing of these disclosures (in particular filing with the National Storage Mechanism in XML format).

The FCA also reminds issuers that no determinations of equivalence have been made by the FCA in respect of DTR 4.3A and so all issuers within scope are required to comply, even if they report similar information in another jurisdiction.

 

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Caroline Rae
Caroline Rae
+44 20 7466 2916

Gareth Sykes
Gareth Sykes
+44 20 7466 7631

 

Further implementation of Shareholder Rights Directive II

New regulations, the Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020, will introduce new provisions into the Companies Act 2006 in relation to shareholder voting at company meetings from 3 September 2020.

The changes are required to implement provisions in the EU directive amending the Shareholder Rights Directive (EU/2017/828) (SRD II). SRD II seeks to enhance transparency and encourage long-term shareholder engagement in companies whose shares are traded on an EU regulated market (which, in the UK, includes the Main Market of the London Stock Exchange, but not AIM). The majority of SRD II, including the introduction of a new related party transaction regime in DTR 7.3 and changes to the directors remuneration reporting regime, was implemented in the UK in June 2019 (see our corporate update 2019/12).

Under the new provisions introduced into the Companies Act by the regulations:

  • where a vote is cast on a poll by electronic means, a traded company must provide a confirmation of receipt of those votes as soon as reasonably practicable (new section 360AA of the Companies Act); and
  • if requested by a shareholder after a general meeting, a traded company must provide information to confirm that the shareholder’s votes have been validly recorded and counted by the company (new section 360BA).
Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Gareth Sykes
Gareth Sykes
+44 20 7466 7631

Ben Ward
Ben Ward
+44 20 7466 2093

New obligation to file details of share rights now in force

Listed companies must file a document disclosing the rights attached to their listed securities with the Financial Conduct Authority (FCA) under a new Listing Rule requirement which came into force on Monday 27 April 2020.

Under new LR 9.2.6E premium listed companies must ensure that accurate information on the rights attached to their listed shares is available on the National Storage Mechanism (NSM). Equivalent requirements elsewhere in the Listing Rules apply the obligation in relation to other securities, such as listed debt securities.

Unless an up-to-date document is already available on the NSM, a listed company must forward to the NSM:

  • the prospectus for the shares;
  • a document that sets out the shares’ terms and conditions; or
  • a description of the rights attached to the shares and how to exercise those rights.

It should also announce that it has done so (in accordance with LR 9.6.3).

If a company has already published a prospectus containing the requisite information, and has not subsequently changed the rights attached to its listed shares, then it will already be in compliance with the new requirement and no action is required.

If it has not filed a prospectus, the company will need to file a document containing the requisite information with the NSM. Most companies are complying by forwarding a copy of their articles of association to the NSM. Others are creating a document describing the rights attached to their listed securities, the limitations on such rights and the procedure for the exercise of such rights.

Each time an issuer changes the rights attaching to the securities, it will need to file an updated document, such as its articles of association, with the NSM.

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Barnaby Hinnigan
Barnaby Hinnigan
+44 20 7466 2816

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Consultation on changes to the Listing Rules

In December 2019, the Financial Conduct Authority (FCA) published its quarterly consultation paper (CP19/33) which proposed changes to the FCA Handbook, including to the Listing Rule requirements on putting documents on display and disclosure of rights attaching to shares.

Documents on display

It is proposed that the requirements in LR 13 on shareholder circulars and putting documents ‘on display’ are amended to make clear that, on a class 1 transaction, a share purchase agreement does not have to be made available online. Following the implementation of the EU Prospectus Regulation in July 2019, and because LR 13 cross-refers to the Prospectus Regulation for some of the disclosure requirements for class 1 circulars, the Listing Rules now require all display documents to be put on a website. The FCA is proposing to reverse that change and reinstate the previous practice in relation to share purchase agreements. A copy of the share purchase will therefore just have to be made available in hard copy for inspection, and the issuer will need to specify where it can be found.

The consultation on this rule change closed on 6 January 2020.

Rights attaching to shares

The FCA is proposing to introduce a new continuing obligation requiring all issuers on the Official List to keep publicly available on the National Storage Mechanism at least one of the following: the securities’ approved prospectus; a document that sets out the securities’ terms and conditions; or a description of the rights attached to the securities and how to exercise those rights.

The consultation closes on 6 February 2020.

Mike Flockhart
Mike Flockhart
+44 20 7466 2918

Sarah Hawes
Sarah Hawes
+44 20 7466 2953

Antonia Kirkby
Antonia Kirkby
+44 20 7466 2700

Gareth Sykes
Gareth Sykes
+44 20 7466 7631

Ben Ward
Ben Ward
+44 20 7466 2093

Stephen Wilkinson
Stephen Wilkinson
+44 20 7466 2038