26 Mar 2020

Financial information: further regulatory announcements

In these extraordinary circumstances, the regulators have recognised that market practices relating to the timing and content of financial information and the audit work that is done must change, albeit temporarily.

On 26 March 2020, the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and the Prudential Regulation Authority (PRA) announced a series of actions to ensure information continues to flow to investors and support the continued functioning of the UK’s capital markets during the COVID-19 outbreak.  The LSE also issued guidance on publication of audited accounts of AIM-listed companies.

A summary of these measures is detailed below:

FCA: Temporary relief for the publication of annual audited financial statements
This temporary relief will allow listed companies which need extra time to complete their audited financial statements an additional two months in which to publish them. Currently, under the Transparency Directive, companies have four months from their financial year end in which to publish audited financial statements. Under the temporary relief, the FCA will forbear from suspending the listing of companies if they publish financial statements within six months of their year-end.

Additional information on the duration, scope and applicability of this temporary relief is set out in a Q&A which is available on the FCA website.

Market practice on reporting calendars
The FCA has strongly recommended that LSE main market listed entities review all elements of their timetables for publication of financial information.  The FCA want entities to make appropriate use of the time available within regulatory deadlines to ensure accurate and carefully prepared disclosures are made.

Moratorium on preliminary statements of accounts
The previous statement issued by the FCA recommending a moratorium of at least two weeks on the publication of preliminary financial statements will end on 5 April 2020.

The FCA is still of the view that the practice of issuing financial statements earlier than required adds unnecessary pressure on companies and auditors at this present time.

Suspension of securities
Provided the audited annual financial statements are published within 6 months (under the temporary relief measures set  out  above),  the FCA does not expect issuers to request a suspension of their securities if they breach DTR 4.1.3R. Issuers subject to those rules will not face enforcement action so long as the results are published within 6 months of the financial year-end.

AIM-listed entities
The London Stock Exchange has published details of temporary measures for the publication of annual audited accounts of AIM-listed entities.

AIM listed entities with financial year-ends between 30 September 2019 and 30 June 2020 can apply for a three-month extension to the reporting deadline for publishing their annual audited accounts. At present, AIM Rule 19 requires AIM listed entities to publish their annual audited accounts within six months of the end of the financial year.  Under this temporary measure, this time period can be extended to nine months so long as:

  • • The financial year end of the AIIM listed entity is between 30 September 2019 and 30 June 2020; and
  • • The request for the extension is made to AIM Regulation by the Nominated Advisor prior to the AIM company’s current AIM Rules reporting deadline.

Reporting deadlines for half yearly reports under AIM Rule 18 currently remain unchanged.

For further information and advice on these and any other Capital Market issues speak to our Capital Markets team.