Included in this update: more time for AIM companies to publish Interims; best practice guidance for AGMs and more…
More time for the publication of half-yearly reports for AIM companies
The London Stock Exchange (LSE) has announced further temporary measures to provide flexibility for AIM companies in light of COVID-19. In ordinary circumstances, an AIM company must notify its half-yearly report without delay and in any event within three months of the end of the period to which it relates (AIM Rule 18). AIM Regulation has now temporarily granted AIM companies an additional one month in which to publish. By way of reminder, the LSE has already extended the period in which AIM companies can publish annual audited accounts under AIM Rule 19. The LSE will announce an "orderly transition" to standard reporting periods under both AIM Rules 18 and 19 in due course.
An AIM Company wishing to utilise the additional one month period must notify via an RIS its intention to do so prior to its reporting deadline under AIM Rule 18 and the company’s nominated adviser must separately inform the AIM Regulation team.
BEIS and FRC update AGM Q&As to incorporate best practice guidance
The Department of Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) have published an updated version of their Q&As which deal with company filings, AGMs and other general meetings during COVID-19.
The Q&As now include guidance on best practice for AGMs in light of the publication of the Corporate Insolvency and Governance Bill (CIGB) which is currently making its way through the Parliamentary process. By way of reminder, the CIGB contains various temporary measures to make it easier for companies, mutuals and incorporated charities to reconcile, on the one hand, their obligations to hold AGMs (and other general meetings) and, on the other, restrictions on movement and public gatherings imposed by COVID-19 related regulations, and government social distancing guidance. Measures include the suspension of certain statutory and constitutional rights, such as the right of attendance, and requirements, such as the need to specify a physical place for a meeting. The measures apply until 30 September 2020 unless extended further.
The guidance notes that not all organisations will want, or need, to use all of the temporary flexibilities. Companies should monitor and review their position and take a view on what approach best balances the safety of members and their legitimate expectation to be afforded engagement with the board. The guidance then sets out issues to consider when a full meeting cannot be held, which might include the possibility of convening a physical meeting with a representative cross-section of members and enabling member participation by virtual means. The guidance also suggests that where member engagement in the AGM has been limited, organisations should give "full consideration" to the range of ways in which they might accommodate members through events later in the year, either online or physically (if permissible).
The guidance also sets out "Best Practice Essentials" to be considered in relation to member communications, including:
- issuing communications in a timely fashion to ensure members can consider the matters to be voted on;
- ensuring that clarity is given on proxy voting;
- explaining the procedure for both the meeting and any communications prior to the meeting;
- giving all members the opportunity both to ask questions and receive responses to those questions prior to voting either at a real time online meeting or via proxy;
- making answers to any questions raised available to all both in the meeting and in written form following the meeting. This could be in real time in the case of virtual meetings; and
- offering a physical meeting to all shareholders once government restrictions are lifted.
The guidance states that, over the longer term, bodies and their members may benefit from a move to a hybrid AGM format that enables attendance both in-person and online. The FRC will work with companies and shareholders to produce an assessment of best practice later this year.
BEIS issues paper on directors' sign-off of accounts in context of ESEF
BEIS has published a position paper on the effect of the use of the European Single Electronic Format (ESEF) on directors' sign-off of the accounts of UK-incorporated issuers.
By way of reminder, the requirement to comply with the EC Regulation on the use of ESEF applies to consolidated annual accounts prepared in accordance with IFRS by companies with securities admitted to trading on a regulated market. When published, these accounts must be prepared in electronic format (XHTML format with iXBRL tagging). This applies to relevant issuers in relation to financial years beginning on or after 1 January 2020.
BEIS states that the ESEF electronic formatting requirements can be applied after sign off of the annual accounts by the directors. In practical terms, this means the directors’ confirmation that the accounts meet the requirements of the Companies Act 2006, and give a true and fair view of the company’s financial position, does not extend to consideration of the iXBRL tagging. This is the case even if the company chooses to tag the accounts before submitting them to be signed off by the directors. Therefore, notwithstanding the various approaches that companies may take, in all cases, the directors' confirmation relates to the human-readable version of an annual report and not to consideration of the iXBRL tagged data.