New guidance for issuers and market participants on capital raising events and alternative working arrangements, and additional time allowed for filing half-yearly financial reports.

By James Inness, Nicola Higgs, Connor Cahalane, and Anna Lewis-Martinez

On 27 May 2020, the FCA published its Primary Market Bulletin 28, which provides an update for issuers on temporary relief for the timing of the publication of half-yearly financial reports, going concern assessments, and shareholder engagement.

Additionally, the FCA has published its Market Watch 63 newsletter on market conduct and transaction reporting issues, setting out its expectations for issuers and market participants in relation to identifying, handling, and disclosing inside information in the context of increased capital raising events, alternative working arrangements, and the additional challenges created by the pandemic. The FCA has also provided guidance on short selling activities, managing conflicts, and market conduct in relation to credit default swaps.

Additional month for publication of half-yearly results

In its Primary Market Bulletin 28, the FCA has confirmed additional temporary relief for listed companies facing the challenges of corporate reporting during the COVID-19 crisis. Issuers will now have an additional month to file half-yearly financial reports, so four months from the end of the half-year period. The FCA has also published a Q&A on this topic and notes that its approach is consistent with ESMA’s guidance. The FCA’s approach is temporary and will continue for the duration of the pandemic.

Going concern assessments

Primary Market Bulletin 28 also provides a statement on market practice on going concern assessments. The FCA states that it understands the difficulties issuers face where an auditor’s going concern assessment gives rise to a need to include remarks in their audit opinion. The FCA is encouraging investors and lenders to take into account the unique set of circumstances that might result in uncertainty in issuers’ financial positions when assessing their responses to such disclosures.

Shareholder engagement

The FCA encourages issuers to engage with their shareholders through disclosures to the market about the implications of COVID-19 on their business. When making alternative arrangements to physical general meetings, the FCA believes it is good practice for issuers to look for ways to allow shareholders to ask questions of management, such as through virtual meetings.

Issuers with large numbers of smaller shareholders are recommended to consider when conducting placings if there are routes that may be available to make participation in a capital raising available to those shareholders. However, the FCA recognises that this may not be feasible due to time pressures on issuers or legal risks.

Market conduct during the COVID-19 crisis

In Market Watch 63, the FCA highlights that an increase in primary market activity, along with the alternative working arrangements that many issuers and market participants are facing, make it important to have the right controls in place around market abuse and conduct. The FCA encourages particular focus on:

  • Appropriately identifying and handling inside information so that it is not misused for insider dealing or for commercial advantage
  • Ensuring inside information is appropriately disclosed by listed companies so investors are not misled
  • Maintaining robust market surveillance and suspicious transaction reporting by relevant market participants
  • Meeting requirements under the Short Selling Regulation
  • Identifying and managing conflicts of interest by market participants in relation to capital raising events

Treatment of inside information

The FCA states that controls must continue to effectively protect against unlawful disclosure in working from home environments in the same manner as in the office. Issuers and market participants should also consider repeating or updating training to refresh staff on how they should be handling inside information. Issuers should ensure that those with access to inside information are on insider lists and that they understand their legal and regulatory duties. Issuers also need to be alert to the possibility of leaks and rumours in light of changed working arrangements, and should prepare holding announcements to be used if there is an actual or likely breach.


Inside information disclosed as part of wall-crossings should be strictly controlled. Disclosing participants should maintain appropriate records and recipients should only communicate information received internally to those persons that are fulfilling a specific duty.

Short selling

Market participants must ensure that they continue to meet their obligations under the Short Selling Regulation, in particular in relation to the restrictions on uncovered short sales in shares and net short position reporting.

Managing conflicts in capital raisings

The FCA has heard reports of banks failing to treat their corporate customers fairly when negotiating debt facilities, as set out in its Dear CEO Letter on 28 April 2020. The FCA reminds issuers that it will take action if it finds that banks are in breach of the FCA’s rules or Principles.

Market conduct during credit events

With regards to the use of credit default swaps, the FCA, SEC, and CFTC have previously set out their shared concerns about “opportunistic strategies”. The FCA expects market participants to comply with their obligations under MAR.