FCA announces reforms to ensure UK primary markets remain effective

The Financial Conduct Authority (FCA) has published a package of measures (namely feedback statement FS17/3, policy statement PS17/22 and policy statement PS17/23) designed to ensure that the UK’s primary capital markets remain effective.

Feedback statement FS17/3 provides an overview of the feedback received in response to FCA discussion paper DP17/2. It identifies three areas that the FCA thinks merit further exploration and stakeholder engagement, including the relative positioning of standard versus premium listing, the provision of patient capital to companies that require long-term investment and retail access to debt markets. The FCA will publish proposals for consultation on these areas where appropriate in due course.

Policy statement PS17/22 makes a number of enhancements to the Listing Regime including clarifying the eligibility requirements for a premium listing, introducing a new concessionary route to premium listing for some property companies, updating how premium listed issuers may classify transactions and changing the FCA’s approach to the suspension of listing for reverse takeovers. These proposals received overwhelming support from market participants. These rule changes come into force on 1 January 2018.

Following consultation paper CP 17/5, which consulted on changes to improve the range, timeliness and quality of information available to investors during the IPO process, policy statement PS17/23 sets out final rules which seek to ensure that, before any connected research is released, a prospectus or registration document is published and providers of unconnected research have access to the issuer’s management. The policy statement also sets out new guidance to address the underlying conflicts of interest arising when analysts within prospective syndicate banks interact with the issuer’s representatives when an underwriting or placing mandate and subsequent syndicate positioning are being considered. These provisions will require changes to be made to the FCA’s Conduct of Business Sourcebook (COBS) and will take effect on 1 July 2018 in order to minimise potential disruption to existing or prospective IPOs.

For further information, see LNB News 26/10/2017 108.

ESMA sets out priorities for listed companies and auditors for 2017 financial statements

The European Securities and Markets Authority (ESMA) has published the priorities which listed companies and their auditors must consider when preparing and auditing their 2017 financial statements. These priorities are designed to reflect the relevance of the changes introduced by new accounting standards and to reflect the issues identified in the course of its enforcement activities.

The priorities are set out in the annual ‘Public statement on European common enforcement priorities’, through which ESMA aims to promote the consistent application of the International Financial Reporting Standards (IFRS).

ESMA also highlights that the 2017 year-end will be the first time that the requirements of the amended Accounting Directive (as transposed into national law) to disclose non-financial and diversity information will become applicable for certain large groups and undertakings. ESMA is of the view that issuers should meet these requirements in a way that provides the most useful information to users.

For further information, see LNB News 27/10/2017 58.

ESMA issues new Q&As on its alternative performance measures guidelines

The European Securities and Markets Authority (ESMA) has published six new questions in its Q&As on the implementation of its guidelines on the alternative performance measures (APMs) for listed issuers. The new Q&As clarify definitions, scope, reconciliation and how to apply the fair review principle. The guidelines apply to APMs disclosed by issuers or persons responsible for drawing up a prospectus.

APMs are financial measures of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.

See LNB News 30/10/2017 89.

ISS issues draft voting policy on the holding of virtual/hybrid shareholder meetings

Institutional Shareholder Services (ISS) is inviting comments on proposed new voting policies or policy changes in 13 voting policy areas.  One new proposed voting policy for 2018 relates to the holding of virtual and hybrid shareholder meetings. Comments on the new policy proposals are requested by 9 November 2017.

Under the proposed policy, ISS will generally recommend a vote for proposals that allow for the convening of a hybrid shareholder meeting and will generally recommend a vote against proposals that allow for the convening of virtual only shareholder meetings. This is to address concerns from some investors that completely virtual meetings could hamper meaningful discussions between shareholders and management.

See LNB News 30/10/2017 69.

Prime Minister urges companies to act to close gender pay gap

The Prime Minister has announced a drive to improve workplace equality and called on companies to publish their gender pay gap data and take action to close it. The move comes as new figures published by the Office for National Statistics (ONS) show that, while the gender pay gap for full-time workers has fallen to a low of 9.1% (down from 9.4% in 2016), the UK’s overall gender pay gap has risen slightly to 18.4%.

All employers with over 250 employees are required to publish their gender pay and bonus data by April 2018. While some companies have already published their data and outlined how they will take action to close it, the Prime Minster has called on more companies to do the same and encouraged businesses with fewer than 250 employees to voluntarily publish their pay gap too.

See LNB News 30/10/2017 36.

Determining the period of director disqualification (Secretary of State for Business, Innovation and Skills v Rahman)

Discussing the judgment in Secretary of State for Business, Innovation and Skills v Rahman, Omar Ensaff, a barrister at No 5 Chambers in Birmingham, points out that the issue of the period of disqualification is very fact-specific. See News Analysis: Determining the period of director disqualification (Secretary of State for Business, Innovation and Skills v Rahman).

New Toolkit

We have published a guide to private equity management buyout (MBO) transactions in the form of a transaction workflow toolkit:

1. Private equity buyout transaction toolkit

New Precedents

We have published the following new Precedents into our Partnerships and Public company takeovers topic areas:

1. Limited partnership agreement—private fund limited partnership
2. Offer document—securities exchange offer provisions

Updated Precedents

In our Private M&A (share purchase) topic, we have updated both the buyer’s version and seller’s version of our short form share purchase agreement precedents to include a short form tax covenant (as a schedule) and short form tax warranties:

1. Share purchase agreement—short form (buyer’s version)
2. Share purchase agreement—short form (seller’s version)