The Financial Conduct Authority (FCA) has stepped in to protect shareholder rights as it introduces measures to help listed companies withstand from the fallout of coronavirus.
In an announcement on 8 April, the regulator acknowledged that many companies would turn to capital markets to raise money and recover from the crisis.
As a result, the FCA has introduced a series of measures to help them efficiently raise these funds while still retaining adequate levels of investor protection.
The newly announced measures include a temporary suspension for companies to include working capital statements in their prospectuses. The regulator concedes that these are based on ‘worst case scenario’ models which are difficult to calculate in the current circumstances.
As a result, to make the process more efficient for issuers, any working capital statements only need to apply to the duration of the crisis and not the full 12-months.
Listing rules can also be relaxed, on a case-by-case basis, for certain transactions to be processed without the need for a general meeting.
To help satisfy social distancing guidelines, premium-listed companies can apply for a dispensation from holding general meetings if they receive written consent from shareholders that tabled resolutions would have received approval anyway.
New steps are also being introduced to agree a balance of pre-emption rights of existing shareholders with the greater efficiency that is required.
Eligible companies will also be encouraged to take advantage of simplified prospectus requirements, introduced in regulations last year, by omitting information that existing investors will already be familiar with.
However, the FCA also stressed that disclosures like those under the Market Abuse Regulations are still very much in force.
“The UK’s capital markets will play a vital role providing finance to businesses to help aid the recovery from this crisis,” said FCA interim chief executive Christopher Woolard.
“Our aim is to help companies to raise money quickly and effectively, while ensuring they respect the needs of investors, both current and future. We think this package strikes that balance.”
The FCA has offered other packages of support during this crisis, including giving consumers more time to pay off credit cards and other debts as well as extending deadlines for accounts to be published by two months.
Meanwhile the government has launched a range of grants and wage-support schemes to businesses, as well as offering a deferral on VAT payments due between March and June.
In the US, The Wall Street Journal reported that the Financial Accounting Standards Board would delay the implementation of accounting rules on revenue recognition and leases for certain companies by a year – the regulator’s first major move to ease rules because of the pandemic.
Last Updated: 13 April 2020