FCA announces additional primary market measures to aid listed companies

The Financial Conduct Authority (FCA) has announced a series of measures to help listed companies to raise new funding while retaining an appropriate degree of investor protection. 

FCA announces additional primary market measures to aid listed companies

The measures include providing clarity on the FCA’s expectations about the due diligence supporting ‘working capital statements’ in share prospectuses given the significant economic uncertainties caused by coronavirus.

Firms will also be able to apply to the FCA for waivers to ensure that shareholder approval can be sought for certain transactions without the need to hold a general meeting given government guidelines on social distancing.

The watchdog has also said that it will welcome recent industry work on placings of new shares to agree sensible steps to balance the pre-emption rights of existing shareholders with the need for these transactions to be done as efficiently as possible given the economic environment.

The FCA has also said it will encourage eligible companies to make use of the new simplified prospectus, introduced by the Prospectus Regulation last year. These prospectuses, recognising that the investor base has access to a range of information already relating to the issuer, remove the need to include information such as organisational structure, capital resources, remuneration and benefits and board practices.

These measures, taken together, provide certainty for issuers and their advisors on the FCA’s expectations during this crisis. 

This should facilitate new capital being raised as efficiently as possible in ways that balance the need to support UK listed companies and the wider economy with the need to ensure that shareholders are properly informed, consulted where required, and their rights are respected. 

This guidance will apply from April 8 and the FCA has said that is not conducting a formal consultation in this instance but welcomes feedback from stakeholders on these measures.

Christopher Woolard, interim chief executive of the FCA, said: “The UK’s capital markets will play a vital role providing finance to businesses to help aid the recovery from this crisis. 

“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.”

Read all of our articles relating to COVID-19 here.

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