Reminders for issuers in latest FCA bulletin
The Financial Conduct Authority has published Primary Market Bulletin No. 33 which includes various points for issuers to note. This includes making sure total voting rights announcements under DTR 5 are made in the correct way, further views on announcement of board changes, and reporting on payments to governments for issuers in extractive industries.
Major shareholding notifications and changes to total voting rights
The FCA sets out its findings from a review of the way that UK issuers announced changes to total voting rights and the effect on major shareholding notifications under DTR 5.
While the FCA found that a high proportion of issuers had made their total voting rights available in some form, the review suggested that a significant number of major shareholding notifications were not submitted, and that a lack of clarity from issuers regarding their total voting rights contributed to the level of missing notifications.
As a result, the FCA reminds investors that they need to assess whether their position has changed as a result of an event changing the breakdown of voting rights under DTR 5.1.2R(2).
Issuers are also reminded to report changes to total voting rights clearly and on time as required by the DTR:
- to report total voting rights at the end of each calendar month during which an increase or decrease has occurred, even if this information has already been disclosed before, and
- to report total voting rights figures as a distinct announcement, to use 'Total Voting Rights' as a headline and to select the proper classification of regulated information as 'Total number of voting rights and capital'.
Further feedback on review of delayed disclosure of inside information notifications
The FCA published a review of delayed disclosure notifications in November 2020 and has since received various queries which it seeks to clarify, as follows.
Periodic financial information: The review repeated existing FCA guidance which encourages issuers to begin with the assumption that information relating to financial results could constitute inside information. The review was not intended to change this guidance. The FCA expects issuers to exercise judgement in assessing whether inside information exists.
Board changes: The FCA notes that, while issuers may wish to present an orderly transition where there are board changes, it is vital that issuers disclose all inside information they have in accordance with MAR and do not attempt to delay the publication of negative news until there is offsetting positive news (i.e. waiting to announce a departure until they can announce the replacement).
Review of payments to governments disclosure by issuers in the extractive industries
The FCA sets out its findings from a review of disclosures by UK issuers for the financial year ending 2019 for the requirements set out in DTR 4.3A (Reports on payments to governments). Several shortcomings were identified, including that nearly a fifth of Payments to Government Reports reviewed were missing sufficient breakdowns by project.
Overall, the FCA is concerned that there was no marked improvement in compliance since its previous review. It therefore intends to revisit this review in the future and assess whether stronger interventions are required, including, where appropriate, enforcement investigations. The FCA states it has already opened preliminary enquiries into several issuers' compliance.
Brexit update: Audit of financial statements by EEA audit firms:
The FCA reminds third country issuers with securities admitted to trading on a UK regulated market using EEA auditors, that those auditors will have to register as 'third country auditors' with the Financial Reporting Council in time for the publication of annual financial statements for financial years beginning on or after 1 January 2021.
Technical note on schemes of arrangement
The FCA is still considering responses to its consultation on a draft technical note looking at when a prospectus is required where securities are issued pursuant to schemes of arrangement which was published in August 2020. The FCA notes that respondents felt that a prospectus should not be required even where a scheme includes a mix and match facility.
Click here for FCA Primary Market Bulletin No. 33.
