FCA Additional primary market measures to aid listed companies
The events surrounding the coronavirus (Covid-19) pandemic are unprecedented. It is likely that many companies will turn to UK capital markets to raise money to support the recovery to come.
The FCA announced a series of measures to help these companies to raise new funding while retaining an appropriate degree of investor protection.
The package includes a combination of temporary policy interventions and reminders of some existing options for companies and their current and prospective shareholders. These include:
- Providing clarity on the FCA’s expectations about the due diligence supporting ‘working capital statements’ in share prospectuses given the significant economic uncertainties caused by coronavirus.
- The ability to apply to the FCA for waivers to ensure that shareholder approval can be sought for certain transactions without the need to hold a general meeting given government guidelines on social distancing.
- Welcoming recent industry work on placings of new shares to agree sensible steps to balance the pre-emption rights of existing shareholders with the need for these transactions to be done as efficiently as possible given the economic environment.
- Encouraging eligible companies to make use of the new simplified prospectus, introduced by the Prospectus Regulation last year. These prospectuses, recognising that the investor base has access to a range of information already relating to the issuer, remove the need to include information such as organisational structure, capital resources, remuneration and benefits and board practices.
These measures, taken together, provide certainty for issuers and their advisors on the FCA’s expectations during this crisis. This should facilitate new capital being raised as efficiently as possible in ways that balance the need to support UK listed companies and the wider economy with the need to ensure that shareholders are properly informed, consulted where required, and their rights are respected.
The FCA response to the coronavirus will continue to evolve as the situation develops. This guidance came into force on 8 April 2020. The FCA did not conduct a formal consultation in this instance but would welcome feedback from stakeholders on these measures, and on any future actions or clarifications which stakeholders consider would further support effective UK capital markets.
During the period in which these temporary measures apply, market participants and issuers continue to be subject to the requirements set out in the Market Abuse Regulation which, among other things, require important disclosures to investors.
Statement of Policy: listed companies and recapitalisation issuances during the coronavirus crisis