FCA confirms rule changes on cancellation of listing and disclosure of post balance sheet events

The Financial Conduct Authority has published an instrument which effects a number of amendments to the Listing Rules and Disclosure and Transparency Rules. This includes increased protection for minority shareholders by making it more difficult for a controlling shareholder to cancel an issuer's listing and some changes relating to the EU Accounting Directive. These changes were consulted on in September and took effect on 29 January 2016.

Disclosure of important events since year end

The FCA has elected to retain one rule that goes beyond the requirements of the Accounting Directive (2013/34/EU). The requirement for issuers to disclose important post-balance sheet events in the management report has been deleted from both the Accounting Directive and the Transparency Directive although the Accounting Directive still requires issuers to include details of important post-balance sheet events in the notes to the accounts. To prevent mismatch of disclosures between issuers subject to the Accounting Directive and non-EU issuers, who are not, the FCA has retained the obligation to make such a disclosure in the management report in DTR 4.1.11R(1). However, there is a new exemption so that the management report does not have to disclose those events if they are reflected in the issuer's profit and loss account or balance sheet, or disclosed in the notes to the accounts.

Miscellaneous amendments have also been made to remove and update out of date references in the LR and DTR and some minor changes have been made to DTR 7.2 in relation to presentation of the corporate governance statement.

Cancellation of listing after a takeover offer

LR 5.2.11DR has been deleted. This disapplied the requirement for a majority of votes of independent shareholders to support an application for a cancellation of listing of an issuer with a controlling shareholder in cases where a controlling shareholder had made a takeover offer for the issuer and held 80% of the voting share capital of the issuer. The FCA found that this disapplication had "potentially significant consequential and unintended implications for investor protection". If an offeror already held 80% of the issuer's voting share capital, it had the ability to cancel the issuer's listing without either independent shareholder approval or its offer being accepted by any independent shareholders.

There are no transitional provisions but if any current or planned transaction may be affected by the removal of LR 5.2.11DR you should contact the FCA to discuss the particular circumstances.

Click here for Handbook Notice No 29 and here for the Listing Rules and Disclosure and Transparency Rules (Miscellaneous Amendments) Instrument 2016 (FCA 2016/6).