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Publication
United Kingdom | Publication | December 2020
On December 3, 2020, the Financial Conduct Authority published Primary Market Bulletin No 32 (PMB 32) to remind issuers, investors and other market participants of the changes that will take place when onshored legislation comes into force, as well as to provide an update on the FCA’s work to implement some aspects of onshored legislation.
The FCA points out that it is continuing to update its website with new Brexit material, including an updated version of the FCA Handbook which allows users to ‘time travel’ to a date beyond the end of the Transition Period (TP), being December 31, 2020, to see what rules will apply to them. The Handbook incorporates amendments made by all of the FCA’s Brexit-related instruments to the end of September 2020.
PMB 32 reiterates key messages in Primary Market Bulletin No 21 (PMB 21) on the new regulatory requirements that will need to be implemented to comply with the changes introduced by the Short Selling (Amendment) (EU Exit) Regulations 2018. It looks in particular at the new requirements for the market making exemption and gives an update on how the net short position reporting will work from the end of the TP.
As discussed in PMB 21, at the end of the TP, the Market Abuse Regulation (MAR) will be converted into UK law and amendments made under the Market Abuse (Amendment) (EU Exit) Regulations (UK MAR) will take effect. UK MAR retains the same scope of financial instruments admitted to trading or traded on UK and EU trading venues. Key changes relate to Article 17 (Public Disclosure of Inside Information) and Article 19 (Managers’ (PDMR) transactions). These changes take effect from the end of the TP:
As previously clarified by the FCA, prospectuses passported in to the UK before the end of the TP will remain valid in the UK until their expiry (i.e. one year from the date of the original approval of the prospectus) but it will not be possible to passport prospectuses into an EEA country after the end of the TP.
The FCA strongly encourages issuers and their advisers to arrange any passporting request with the relevant EU national competent authorities well in advance of December 31, not least because ESMA’s new prospectus register systems will change the way that national competent authorities (NCAs) send and receive passported prospectuses.
The FCA refers to a statement published by ESMA in September 2020 on its work on the Prospectus Q&A and states that in relation to any Q&A published by ESMA between now and the end of the TP, the FCA’s approach will be as follows: ‘We will continue to have regard to other EU non-legislative material where and if they are relevant, taking account of Brexit and on-going domestic legislation. Firms, market participants and other stakeholders should also continue to do so.’ In relation to ESMA Q&A published after the TP, the FCA will consult where appropriate in relation to the treatment of such Q&A in the UK. In relation to disclosure requirements under the Prospectus Regulation after the end of the TP for UK approved prospectuses, the FCA refers issuers and advisers to the ESMA CESR recommendations.
The FCA refers to its Technical Note (TN/602.3) in relation to these exemptions, particularly the statement; ‘Where applicable, issuers will have to submit their application for approval of an exemption document to the FCA.’
On December 2, 2020, the Financial Reporting Council (FRC) published the results of research it commissioned which involved interviews with 50 chairs of the Audit Committees of public interest entities (including FTSE 350 companies and smaller listed entities) to explore their views on, and approach to, audit quality. These views will help inform the FRC’s work to support Audit Committee’s in their work on driving high quality audits.
The FRC notes that the key theme that emerges from this research is that Audit Committee chairs have different views on, and approaches to, audit quality and the findings suggest that while some Audit Committees may be very focused on the quality of an audit, there could be inconsistencies in how they go about promoting audit quality. The FRC states that this lends weight to proposals for reforms in the audit sector, including the introduction of standards for Audit Committees.
Other key themes include the following:
(FRC, Audit Committee chairs’ views on, and approach to, audit quality, 02.12.2020)
The Financial Conduct Authority (FCA) has published Handbook Notice No 82 which sets out changes to the FCA Handbook made in October and November 2020. These include changes to the Disclosure Guidance and Transparency Rules (DTRs) and to the Prospectus Regulation Rules (PRR).
So far as the DTRs are concerned, Disclosure Guidance and Transparency Rules Sourcebook (Electronic Reporting Format) Instrument 2020 Technical Standards (Electronic Reporting Format) Instrument 2020 have made amendments to the Glossary and TP 1.2.7.
In summary, these Instruments have pushed back by one year mandatory requirements related to the European Single Electronic Format and will come into force on IP completion day as defined in the European Union (Withdrawal Agreement) Act 2020. The changes were consulted on in CP20/12 and the results of the consultation were set out in PS20/14.
In relation to the PRR, the Prospectus Regulation Rules (Amendments) Instrument 2020 has made changes to PRR 2.2, 2.3, 2.5, 2.6, 3.1 and 3.4 This Instrument ensures the copy-out of EU legislation in the PRR sourcebook accurately reflects the underlying EU legislative framework it is based on. This instrument will also come into force on IP completion day as defined in the European Union (Withdrawal Agreement) Act 2020.
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Marta Giner Asins and Arnaud Sanz of our Paris office are the authors of a chapter on product denigration that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences.
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Miranda Cole, Julien Haverals and Emma Clarke of our Brussels/ London offices are the authors of a chapter on procedural issues in merger control that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences. This covers a number of significant procedural developments that have affected merger review of life sciences transactions.
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