On 8 April 2020, the FCA issued a statement of policy regarding listed companies and recapitalisation issuances during the COVID-19 pandemic. The statement covers smaller share issues, share issues with a prospectus and general meeting requirements under the Listing Rules.
In relation to smaller share issues, the FCA urges market participants to review and consider the statement issued on 1 April 2020 by the Pre-Emption Group, an industry body which promotes best practice in the observance of investors’ pre-emption rights, regarding its expectations for issuances during the pandemic.
As regards prospectuses, the FCA states that issuers and their advisors may wish to consider using the new simplified prospectus which was introduced in July 2019, when the new Prospectus Regulation came into force. This form of the prospectus is tailored for secondary issuances. Disclosures which are not required under the simplified regime include an operating and financial review, disclosures on organisational structure, on capital resources, on remuneration and benefits and board practices. Under the Prospectus Regulation, the regime is available to companies that have been admitted to trading on a regulated market or SME Growth Market for at least 18 months. This will include the considerable majority of listed companies.
The FCA notes that the uncertainty created by the pandemic and the economic impact of the public policy response makes the financial modelling underpinning working capital statements uniquely challenging. The FCA sets out its approach in a technical supplement to the statement of policy.
The FCA also reminds firms that during this period it is as important as ever that issuers and advisors continue to manage and control inside information. The Market Abuse Regulation (MAR) remains in force and companies are still required to fulfil their obligations concerning the identification, handling, and disclosure of inside information. Crucially, in the context of recapitalisation this will include sharing inside information in accordance with MAR and maintaining appropriate insider lists. The FCA will continue to monitor, investigate and enforce against abusive behaviours.