Reed Smith Client Alerts

The UK Financial Conduct Authority (FCA) has announced a series of measures aimed at assisting listed companies to raise new share capital in response to the COVID-19 crisis while retaining an appropriate degree of investor protection, noting that it expects equity capital markets to play a vital role in providing finance to businesses to help aid recovery from the crisis. The measures are set out in a statement of policy and newly published technical supplements on working capital statements and the modification of general meeting requirements under the FCA’s Listing Rules.
empty board room table and chairs

The key measures announced by the FCA include:

  • An endorsement by the FCA of the recent statement issued by the Pre-Emption Group which recommended that investors consider, on a case-by-case basis, supporting listed companies seeking to issue up to a further 20 per cent of their issued share capital without making a formal rights issue or open offer to existing shareholders. The FCA acknowledges this is important for listed companies considering making use of the exemption in the Prospectus Regulation to issue shares representing up to 20 per cent of share capital without publishing a prospectus (and without making a public offer) to raise relatively significant amounts of new capital quickly to repair balance sheets damaged by COVID-19-related disruption. The FCA also provides further guidance on how listed companies can deliver the “soft pre-emption” encouraged by the Pre-Emption Group when undertaking placings of new shares.
  • A reminder of the recently introduced simplified prospectus regime for eligible listed companies considering secondary fundraisings. Such simplified prospectuses do not require the inclusion of an operating and financial review or disclosures on organisational structure, capital resources, remuneration, benefits and board practices, although these may not be an option for fundraisings involving non-EU jurisdictions, in particular where an offering has a U.S. element. The FCA encourages listed companies issuing new equity to recapitalise in response to the COVID-19 crisis to use this simplified prospectus regime where possible.
  • A concession for the duration of the COVID-19 crisis allowing key COVID-19-related modelling assumptions underpinning the reasonable worst-case scenarios to be disclosed in otherwise "clean" working capital statements included in prospectuses or shareholder circulars published by listed companies. This is to avoid many listed companies publishing "qualified" working capital statements as a result of the significant uncertainty created by COVID-19, which the FCA doubts would be useful to existing and potential investors. The FCA provides a detailed technical supplement on this topic and guidance on the FCA's expectation in terms of the due diligence undertaken to support such working capital statements.