Corporate weekly highlights—4 October 2018

This week’s edition of Corporate highlights includes news of NASDAQ being added as a qualifying market for the NEX Exchange’s fast track admission procedure, International Capital Markets Association’s response to the European Securities and Markets Authority (ESMA) consultation on risk factors under the Prospectus Regulation, changes to the AIM Disciplinary Procedures and Appeals Handbook coming into effect, and new ESMA MAR Q&As in relation to credit and financial institutions.

In this issue:

Useful information

Equity capital markets

NEX Exchange adds NASDAQ as qualifying market for purposes of fast track admission procedure

The NEX Exchange has announced that it has revised the list of qualifying markets for issuers wishing to apply for admission to the NEX Exchange Growth Market under the fast-track procedure. The NASDAQ Capital Market, NASDAQ Global Market and NASDAQ Global Select Market segments of NASDAQ US have been added to the list. Companies admitted to these markets are now eligible to apply under the fast-track procedure.

The list of qualifying markets maintained on the NEX Exchange website can be found here.

For further information, see LNB News 01/10/2018 24.

ICMA responds to ESMA consultation on risk factors under the Prospectus Regulation

The International Capital Markets Association (ICMA) has responded to the European Securities and Markets Authority (ESMA) consultation under the new Prospectus Regulation on proposed guidelines for national competent authorities (NCAs) to consider in their review of risk factors included in a prospectus (and whether disclosure is material and specific). ICMA says many of the draft guidelines appear to be flexible and proportionate, and the position set out in the consultation paper is a helpful starting point.

ICMA identify two key areas of concern, however:

  1. the need for NCAs to tailor their review of risk factors depending on whether the prospectus is aimed at retail or wholesale investors, and
  2. the disclosure of quantitative information to illustrate the potential negative impact of a risk factor in a manner that is not misleading for investors is likely to be very difficult (ICMA suggest recalibrating the need for quantitative information under the guidelines so as to allow for greater use of qualitative information)

ICMA also called for NCAs to treat the risk factors given in the proposed guidelines as examples only, and not templates against which risk factor disclosure should be matched.

The ESMA consultation closes on 5 October 2018 and ESMA will deliver technical advice to the European Commission and publish final reports by 31 March 2019.

For further information, see LNB News 03/10/2018 47.

LSE confirms changes to the AIM Disciplinary Procedures and Appeals Handbook

The London Stock Exchange plc (LSE) has issued AIM Notice 54 and published feedback to its consultation on proposed changes to the AIM Disciplinary Procedures and Appeals Handbook (the Handbook). AIM Notice 54 confirms the resulting changes to the Handbook, as well as consequential amendments to the AIM Rules for Companies and AIM Rules for Nominated Advisers (together, the AIM Rules). The revised Handbook will have immediate effect.

On 24 July 2018, the LSE issued AIM Notice 53 which proposed changes to the Handbook (see further, LNB News 25/07/2018 45). The changes were not intended to represent a change to the LSE’s overall approach to investigation and enforcement. Some overriding provisions and new appendices were introduced and the LSE also reformatted the Handbook for ease of navigation. Earlier proposals for automatic fines for non-compliance were dropped following earlier consultation in December 2017 (see LNB News 11/12/2017 114).

The LSE received four responses to the consultation and, overall, respondents were supportive and welcomed the proposed changes designed to enhance the efficiency and transparency of the LSE’s disciplinary and non-disciplinary procedures.

Updated versions of the Handbook can be downloaded (in clean and marked-up versions) from the LSE’s website here.

For further information, see LNB News 01/10/2018 89.

Financial services regulation for corporate lawyers

ESMA updates its Market Abuse Regulation Q&As

The ESMA has updated its Regulation (EU) 596/2014, Market Abuse Regulation (MAR) Q&A document with the addition of three new Q&As (5.3–5.5) clarifying the conditions for a credit institution or financial institution to delay disclosure of inside information under Article 17(5) of Regulation (EU) 596/2014, MAR.

Article 17(1) of Regulation (EU) 596/2014, MAR sets out the general requirement for issuers to inform the public as soon as possible of inside information which directly concerns themselves.

ESMA’s three new Q&As relate to the exemption under Article 17(5) of Regulation (EU) 596/2014, MAR which provides that, in order to preserve the stability of the financial system, an issuer that is a credit institution or a financial institution, may, on its own responsibility, delay the public disclosure of inside information, including information which is related to a temporary liquidity problem and, in particular, the need to receive temporary liquidity assistance from a central bank or lender of last resort, provided that all conditions are met (as set out in Article 17(5)(a)–(d)).

The three new Q&As address:

  1. the elements that a credit/financial institution should consider when it intends to delay disclosure of inside information under Article 17(5) of MAR (ESMA set out conditions that should be met)
  2. whether credit/financial institutions are required to notify the NCA of the expected duration of the delay under Article 17(5) of MAR (ESMA confirm that credit/financial institutions are required to notify the NCA with their assessment of the expected length of the delay and the details of expected trigger events)
  3. where the NCA does not consent to the delay of disclosure under Article 17(5) of Regulation (EU) 596/2014, MAR, whether a credit/financial institution can resort to Article 17(4) of Regulation (EU) 596/2014, MAR to delay disclosure (ESMA confirm that they will not be able to do so and will have to disclose immediately)

For further information, see News Analysis: ESMA updates its Market Abuse Regulation Q&A.

Additional news—daily and weekly news alerts

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New and updated content

New Precedents

We have published the following Precedents in our Corporate joint ventures topic (standalone clauses containing provisions are otherwise covered within our joint venture shareholders’ agreement and articles of association precedents):

  1. Deadlock board control provisions—joint venture shareholders’ agreement and articles of association
  2. Compulsory transfer provisions—articles—corporate joint venture
  3. Conflict matters provisions—joint venture shareholders’ agreement
  4. Majority/minority board control provisions—joint venture shareholders’ agreement and articles of association
  5. Reserved matters list—joint venture shareholders’ agreement—deadlock (50:50)
  6. Share transfer provisions—joint venture shareholders’ agreement
  7. Reserved matters list—joint venture shareholders’ agreement—majority or minority

    Dates for your diary

    Date Development
    5 October 2018 Deadline for feedback on the consultations launched by the ESMA under the new Prospectus Regulation. ESMA is seeking views on (i) its technical advice on exempt documents produced for the purpose of offers/admission of securities connected to a takeover, merger or division and (ii) its proposed guidelines on risk factors.
    See further: LNB News 13/07/2018 91.

Relevant Articles
Area of Interest