Essential Corporate News - Week ending March 25, 2022

FCA: Primary Market Bulletin No. 39

On March 23, 2022 the Financial Conduct Authority (FCA) published Primary Market Bulletin 39 (PMB 39) in which it announces the removal of the temporary measures introduced in 2020 allowing for delayed annual and interim financial reporting, as well as rescinding the temporary measures regarding working capital statements and general meetings.

Corporate reporting for listed companies

In March 2020, the FCA announced temporary relief to allow issuers an additional two months to publish their annual financial reports. This was followed in May 2020 with further temporary relief to allow issuers an additional month to publish their half yearly financial reports (interims). These temporary reliefs will no longer be available for reporting periods ending on or after June 28, 2022. Issuers that cannot nmeet the deadlines in DTR 4.1.3R or DTR 4.2.2R will be expected to request a suspension of their listed securities.

Working capital statements

In April 2020, the FCA temporarily amended its approach to the disclosure of working capital statements in prospectuses and circulars it approved in light of the uniquely challenging circumstances created by the outbreak of the  pandemic. This temporarily revised approach permitted issuers, under certain circumstances, to disclose their key assumptions on business disruption during the pandemic without requiring the inclusion of a qualified working capital statement. This was set out in more detail in a technical supplement. Given both the reduction in disruption and the experience of issuers and their advisers in working through it, the relevant technical supplement will no longer be applied and the FCA will no longer approve prospectuses or circulars that use the temporarily revised approach to working capital statements after June 28, 2022.

General meeting requirements under the Listing Rules

To address the challenges faced by issuers in holding general meetings during the pandemic, in April 2020 the FCA announced a temporary modification to the Listing Rules on a case by case basis with regards to Class 1 transactions (LR 10.5.1R(2)) and Related party transactions (LR 11.1.7R). Premium listed companies undertaking a transaction within the scope of this policy could apply to the FCA for a dispensation from the requirement to hold a general meeting, subject to certain conditions. This was set out in more detail in a technical supplement, and was intended to only apply for the duration of the pandemic.

The FCA will no longer grant dispensations from the requirement to hold general meetings on this basis from June 28, 2022 and the relevant technical supplement will no longer be applied. However, the FCA draws attention to the joint guidance issued by the Chartered Governance Institute and the City of London Law Society (CLLS) with the support of the Department for Business, Energy and Industrial Strategy and the Financial Reporting Council. It aimed to help public companies plan for an AGM or other general meeting in 2021 and the FCA states that it is supportive of both industry and government action in this area to consider different ways of effectively engaging with shareholders.

(FCA, Primary Market Bulletin No.39, 23.03.2022)

LSE: Inside AIM - Coronavirus and update of financial reporting deadlines

On March 23, 2022 London Stock Exchange plc issued an Inside AIM article updating previous temporary guidance for financial reporting deadlines required by the AIM Rules for Companies (AIM Rules) that were implemented in in light of the Coronavirus (COVID-19) situation. This Inside AIM advises that the temporary measures announced in March 2020 and June 2020 for both half-yearly reports (pursuant to AIM Rule 18) and annual audited accounts (pursuant to AIM Rule 19) will no longer be available for any annual financial periods and any half-year financial periods ending after June 28, 2022.

(LSE, Inside AIM, Coronavirus – Update of financial reporting deadlines, 23.03.2022)

Takeover Panel: Updated and new guidance for advisers

On March 24, 2022 the Takeover Panel (Panel) published two new guidance notes for advisers (relating to the disclosure of information on Rule 9 of the Takeover Code (Code) and to Rule 2.8 statements) and one updated guidance note (relating to re-registering a public company as a private company).

Disclosure of information on Rule 9 of the Takeover Code

Where the Panel is asked to grant a Rule 9 waiver in accordance with Note 1 of the Notes on Dispensations from Rule 9 and Appendix 1 of the Code, shareholders are required to be given certain information in relation to Rule 9. A company that is, or will become, subject to the Code can provide similar information in relation to Rule 9 to potential investors when seeking the admission of its shares to trading on a stock exchange if a person or group of persons acting in concert will be interested in shares which carry 30% or more of the voting rights of that company following admission. The guidance note includes pro forma drafting that may be used when providing such information in relation to Rule 9.

Re-registering a public company as a private company

If a public company is to re-register as a private company, it must pass a resolution to that effect. If the re-registration becomes effective, the Code will no longer apply to the company, provided it does not fall within one of the categories described in sections 3(a)(ii)(A) to (D) of the Introduction to the Code. As described in section 3(e) of the Introduction to the Code, the Panel expects shareholders, before voting on the re-registration, to be given an adequate explanation of the Code and the Code protections that they will be giving up if the re-registration becomes effective. The Panel Executive has updated its guidance note which, among other things, sets out pro forma drafting for inclusion in the re-registration circular or explanatory memorandum to be sent to shareholders before the relevant resolution is passed.

Rule 2.8 statements

Rule 2.8 of the Code  imposes various restrictions on a person who has made a statement that it does not intend to make an offer for a company that is subject to the Code (a “Rule 2.8 statement”). Except with the consent of the Panel, these restrictions will apply to that person, and persons who acted in concert with it, for six months from the date of the Rule 2.8 statement unless circumstances occur that the person specified in its Rule 2.8 statement as being circumstances in which the statement may be set aside. Note 2 on Rule 2.8 sets out the circumstances that can be specified as being circumstances in which a Rule 2.8 statement may be set aside. The permitted circumstances differ depending on whether a third party has announced a firm intention to make an offer before the Rule 2.8 statement is made. The guidance note sets out two examples of Rule 2.8 statements which relate to situations where, at the time the Rule 2.8 statement is made either: (a) no third party has announced a firm intention to make an offer; or (b) a third party has announced a firm intention to make an offer. These examples were originally published in Appendix D to RS 2017/1 (Asset sales and other matters). Advisers are reminded that any person considering making a Rule 2.8 statement should consult the Panel Executive in advance.