Summary

The FCA, in Primary Market Bulletin No.20 (‘PMB’), confirms the phasing out of the name “UKLA”; the creation of a one-stop shop portal for transaction reviews and issuer management interactions; publication of new technical notes and further consultation on five procedural/technical notes.  Comments are requested by 22 March 2019.

What’s new

Retiring the “UKLA” name – for clarity the name will be phased out over time and instead reference will be to the FCA’s ‘primary market’ functions.  It is advisable to use the name FCA instead of UKLA in prospectuses and shareholder circulars in the future but the Listing Transactions Department will not comment or insist upon this.  As previously announced, the FCA’s former UKLA Department has been reorganised into the Primary Market Oversight and Listing Transactions Departments working together with Secondary Market Oversight Department.

New portal for submissions to the Issuer Management Team – the portal provides a one-stop shop for transaction reviews and issuer management interactions and removes the need for physical sign-off (advisers can confirm approval on behalf of issuers).

Insufficient distributable reserves – in PMB, the FCA reminds issuers of their Listing Rules obligations where an unlawful dividend has been paid and action is taken to rectify the position.  For example, when a dividend has been paid but the company failed to file interim accounts so the last annual accounts do not show sufficient distributable reserves.  To rectify this situation, an issuer can ratify the payment by seeking shareholder approval to release any liabilities that may attach to the shareholders and any directors.  However, premium listed companies should consider, in this scenario, whether the transaction falls within the related party rules in LR 11 (e.g. because the parties benefitting from these steps are significant shareholders or directors) and if it does, a related party and its associates must not vote on the relevant resolution.

Publication of new/amended technical notes - of note, the FCA has recognised that not all buyback programmes fall within the MAR exemption in Article 5; the FCA has officially formalised (although previously under consultation these notes had been treated as if in force) five new/amended technical notes for sponsors regarding their obligations on financial position and prospects procedures, their duties regarding directors of listed companies, sponsors’ responsibility for establishing procedures, systems and controls and their obligations when reviewing and challenging the work done by the applicant (ie. no adverse impact). The FCA notes that it has received feedback requesting further guidance about ‘mix and match’ schemes of arrangement and their interaction with the exemptions from the requirement to prepare a prospectus (a contentious area) and that they will consider this as a further piece of guidance.

New procedural/technical notes - the FCA is consulting on further changes to the Knowledge base including (i) a new procedural note on the Sponsor Service Enquiry Line.  The FCA will accept calls on this line from a sponsor’s key contacts or another senior member of a firm’s sponsor team who has recent and relevant experience on sponsor services and the Listing/Prospectus Rules.  This system would replace the existing ‘Nominated Caller’ concept; and (ii) a new technical note on schemes of arrangement and the different approaches issuers may take for these types of transactions when listing and cancelling securities from the Official List.

Primary Market Bulletin No. 20