Included in this issue: London Stock Exchange introduces International Securities Market rulebook; Gender pay gap information now available online; Pre-Emption Group monitoring report and appendix of best practice and more... 

Equity Capital Markets

London Stock Exchange introduces International Securities Market rulebook

The LSE has published the new International Securities Market (ISM) rulebook. The ISM opened for applications for admission to trading on 8 May 2017. LSE has also published revised Admission and Disclosure Standards to reflect the introduction of the ISM.

MAR: ESMA updated Q&A (May 2017)

The European Securities and Markets Authority (ESMA) has published an updated version of its Q&A on the Market Abuse Regulation (MAR). Two new Q&A have been added since the last version:

  • A new question (Qn.5) which deals with the disclosure of inside information related to Pillar II requirements – i.e. whether relevant institutions are required to publish systematically the results of a Pillar II prudential assessment. In its answer, ESMA reminds issuers which are credit or financial institutions of their ability under Article 17(5), with the prior consent of the relevant competent authority and provided certain other conditions are met, to delay the disclosure of inside information in order to preserve the stability of the financial system. This is in addition to the general ability of all issuers to delay the disclosure of inside information under Article 17(4) where, among other conditions, immediate disclosure would prejudice the issuer's legitimate interests. However, ESMA underlines the need for an issuer to evaluate whether information meets the criteria of inside information in each case. If it does constitute inside information and neither the provisions of Article 17(4) nor Article 17(5) are satisfied, an issuer would be required to publish that information as soon as possible. 
  • ESMA also takes the opportunity to remind issuers of their obligations as regards rumours in the market which relate explicitly to inside information which exists within the issuer. In doing so it makes it clear that a policy of silence or issuing "no comment" statements is not acceptable and that any reaction or response should be made publicly available without undue delay using the same mechanisms as those used for the communication of inside information.

A new question (Qn.4) on whether a policy under which, after coming into possession of inside information, a person / firm should immediately and without the exercise of discretion cancel all orders relating to that information (a blanket order cancellation policy) is compliant with the prohibition on insider dealing under MAR. ESMA confirms that, where a firm decides to adopt a blanket cancellation policy for its proprietary trading, the fact that the cancellation may or may not constitute insider dealing will have to be assessed on a case-by-case basis by determining whether or not the cancellation was performed without using the inside information.


AG's M&A Today newsletter and M&A Trends Report

The second edition of our M&A Today newsletter has been published. The newsletter deal with various issues and contains a link to our M&A Trends Report. If you would like to discuss any of the findings, please let us know. 

Corporate Governance 

Gender pay gap information now available online

The Government's gender pay gap results site is now up and running (in beta format), showing the results of the few employers who have decided to report their results. By way of reminder, the new regulations require employers to publish their median and mean pay gap figures by April 2018. Employers must also publish the proportion of men and women in each quartile of the pay structure and the gender pay gaps for any bonuses paid out during the year.

PIRC Shareholder Voting Guidelines 2017

PIRC has published the latest edition of its UK Shareowner Voting Guidelines which can be purchased on request. Changes to the March 2016 version of the Guidelines include: 

  • PIRC will oppose the re-election of an executive chairman except in exceptional circumstances;
  • PIRC supports the Hampton-Alexander Review and Davies Review recommendations of 33% of board positions in FTSE 350 companies to be held by women by 2020 and will not support the re-election of a nomination committee of a FTSE 350 company where current female representation on its board falls below these expectations with no clear and credible proposals for reaching these objectives; and
  • in respect of remuneration consultants, PIRC now calls on companies to disclose the consultants used and remuneration consultants' fees on an annual basis. 

Financial Reporting

Investors reminded of developments in financial reporting

The Financial Reporting Council (FRC) has written to institutional investors ahead of the 2017 shareholder meeting season in order to highlight recent developments in narrative and financial reporting. In particular, the letter focuses on issues relating to:

  • the strategic report;
  • governance reporting;
  • audit committee reports; and
  • financial statement disclosures. 
IA guidance on long-term reporting

The Investment Association (IA) has published guidance on long-term reporting directed at companies with shares admitted to the premium segment of the Official List. Other listed companies and those on AIM have been encouraged to adopt the guidance as best practice. The guidance follows the publication in November 2016 of a public position statement in which the IA called for companies to cease reporting quarterly in favour of meaningful long-term reporting. For further information on the IA's guidance, please see our Governance & Compliance update. 

FRC discussion paper on preliminary announcements

The FRC has issued a discussion paper focussing on the use and value of preliminary announcements, and the role of the auditor in respect of them. The FRC intend to use responses to the discussion paper when updating its current auditor guidance. The paper contains an evaluation of the current auditor guidance in relation to preliminary announcements, reviews current market practice across the main market and AIM and makes various proposals for change. For further information, please see our Governance & Compliance update.

Company Law

ICAEW updated guidance on realised and distributable profits

The Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland has published TECH 02/17, which provides updated guidance on realised and distributable profits under the Companies Act 2006 and all relevant secondary legislation.


Pre-Emption Group monitoring report and appendix of best practice

The Pre-Emption Group (Group) has published a monitoring report in which it reviews the implementation of its 2015 Statement of Principles (Principles) for disapplying pre-emption rights and on the use of its template resolutions for disapplying pre-emption rights which were published in May 2016. 

The Principles attempt to provide a framework for early and effective dialogue and is supported by the Investment Association and Pensions and Lifetime Savings Association. While the Group believes that the Principles and template resolutions have generally been adhered to, possible examples of poor consultation or disclosure have been brought to their attention. For that reason, the Group has included in the report an Appendix of Best Practice in Engagement and Disclosure. For further information, please see our Governance & Compliance update.