Included in this issue: MAR, preliminary announcements and closed periods; The communication and distribution of information during an offer; Changes to the FCA Handbook and more...

Implementation of the Market Abuse Regulation (MAR)

MAR, preliminary announcements and closed periods

The Financial Conduct Authority (FCA) has updated the statement it made as regards the interaction of the 30-day closed period requirement under Article 19(11) of MAR and the announcement of preliminary results in light of the European Securities and Markets Authority's (ESMA) updated MAR Q&A. The update does not substantively alter the FCA's previous view that a preliminary announcement can bring a closed period under MAR to an end to the extent that the announcement contains all inside information.

For further details, please see our CQC Update

The AIM Regulation team has published an Inside AIM update on the same issue. In addition, AIM Regulation confirms that it does not propose to amend the AIM Rules in this regard but continues to support the use of Listing Rule 9.7A.1 (preliminary statement of annual results) by AIM companies as a benchmark in relation to the preparation of a preliminary results announcement.

ESMA final guidelines on market soundings and legitimate interests in the context of the disclosure of inside information

ESMA has published final guidelines clarifying the implementation of MAR in relation to the market soundings regime and on what it considers are legitimate interests which an issuer may seek to protect and which may, in turn, permit a delay in the disclosure of inside information. The FCA must now confirm whether or not it intends to comply with the guidelines.

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AIM Regulation publishes MAR FAQs

AIM Regulation has also published FAQs for AIM companies and nominated advisers. The FAQs set out where to find various MAR implementing technical standards, how to notify the fact of a delayed disclosure of inside information and where to find more information on the regime as a whole.

The FAQs do not alter the substance of previous statements and guidance issued by the AIM Reg team on the implementation of MAR.


The communication and distribution of information during an offer

The Takeover Panel (Panel) has published a response statement in relation to the consultation it issued in February regarding the communication and distribution of information and opinions during an offer the primary purpose of which was to ensure that the rules are clear, appropriate and reflect changes in methods of communication. The changes will take effect, including in relation to ongoing offers, and revised pages of the Code will be published, on Monday 12 September 2016. The existing requirements of the Code will continue to apply until that time and the amendments will not have retroactive effect.

The Chairman of the Panel's Code Committee has also published a new instrument correcting a minor error in Instrument 2016/1.

As a result of the changes, the Panel has amended seven Practice Statements and withdrawn one more. Amendments to the Practice Statements will come into effect from 12 September 2016.

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Equity Capital Markets

Changes to the FCA Handbook

The FCA has published amendments to its handbook following its most recent quarterly consultation, together with the implementing instrument. The principal changes made:

  • amend the definition of a reverse takeover to ensure that issuers cannot artificially break up a transaction to avoid it being classified as such; and
  • set out the prescribed reporting format for reports on payments to governments.

All changes are now in force. The new DTR 4.3.10 (filing of reports on payments to governments) applies to financial years beginning on or after 1 August 2016.

Prospectuses: ESMA Q&A amended

ESMA has published a revised version of its Q&A on prospectuses. Changes include two new questions addressing:

  • Advertisements: the extent to which the requirements under Article 11(3) of Commission Delegated Regulation (requirement to disseminate an amended advertisement) apply to information provided in a roadshow. ESMA confirms that although a new roadshow does not need to be organised, the general requirement to amend the roadshow advertisement still applies - see Question 99; and
  • Alternative performance measures (APMs): how an issuer, offeror or person seeking admission to trading should proceed when a participant at a live presentation, for example a roadshow or interview, requests information about an APM which is not included in a prospectus – see Question 100.

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Executive remuneration

Executive Remuneration Working Group's final report

The Executive Remuneration Working Group was established by the Investment Association to address the concern that executive remuneration has become too complex and is not fulfilling its purpose. A detailed overview of the recommendations can be found in the July edition of our Employee Incentives update.

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QCA remuneration committee guide for small and mid-size quoted companies

The Quoted Companies Alliance (QCA) has published a revised Remuneration Committee Guide for Small and Mid-size Quoted Companies.

The guide contains best practice guidance aimed at assisting the remuneration committees of smaller and mid-cap quoted companies in developing a bespoke approach to remuneration which supports the implementation of company strategy and effective risk management.

The guide is a companion publication to the QCA's Corporate Governance Code for Mid-size Quoted Companies and to its Audit Committee Code.

Financial Reporting – FRC updates

Reporting by smaller listed and AIM quoted companies

The Financial Reporting Council (FRC) has published an update to its discussion paper on improving reporting by smaller listed and AIM quoted companies. It provides a summary of the feedback received and the FRC's response in the key areas of reporting requirements and practices, audit practices and company governance.

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Developments in Audit: An Overview 2015/16

This FRC report assesses confidence in UK audit and summarises the current "state of play" in the market as seen by the FRC and its stakeholders. The report is supplemented by a more detailed report of the FRC’s audit related activities and evidence gathering.

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Reminders for half-yearly and annual financial reports following the EU referendum

The FRC has also published a note on matters for directors to consider when preparing their half-yearly and annual financial reports, the aim of which is to stimulate thinking and encourage companies to enter into early dialogue with their auditors in light of the impact of the vote to leave the EU on certain key areas of disclosure.

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Corporate Governance

FRC report on corporate culture and the role of boards

Last year, the FRC announced its plans to launch an initiative to gather practical insight into corporate culture and the role of the board in shaping and embedding a healthy culture. The FRC has now published the results of its study, exploring the relationship between corporate culture and long-term business success.

"Corporate Culture and the Role of Board" (July 2016) sets out the FRC's observations of the key elements that boards should consider to help create a culture that can deliver long-term sustainable growth.

The FRC's key findings can be found in our CQC update


Investment Association revises share capital management guidelines

The Investment Association (IA) has updated its share capital management guidelines to reflect the publication of template resolutions by the Pre-Emption Group. They state that IA members are supportive of the Pre-Emption Group's approach to the issue of the disapplication of pre-emption and expect any company seeking the enhanced 10% disapplication authority to use the template resolutions.

The guidelines also state that IA members have asked the IA's research arm, the Institutional Voting Information Service, to "amber top" any company seeking a 10% disapplication authority which does not use the template resolutions as from 1 August 2016, and to "red top" any such company which does not do so from 1 January 2017.

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