On March 29, 2016 the Financial Conduct Authority (FCA) published the thirteenth edition of its Primary Market Bulletin, which consults on a large number of changes to the UKLA Knowledge Base.
The proposals include the following changes:
- As a result of the amendments to the Prospectus Rules arising from Commission Delegated Regulation (EU) No. 2016/301 regarding the approval and publication of prospectuses and advertisements, which came into force on March 24, 2016, the FCA proposes changes to several Procedural Notes to ensure they are in line with this Regulation and the updated Prospectus Rules. These Procedural Notes are UKLA/PN/901.3 (eligibility process), UKLA/PN/903.3 (review and approval of documents), UKLA/PN/904.3 (public offer prospectus – drafting and approval), and UKLA/PN/905.2 (passporting).
- As changes have recently been made by Directive 2014/51/EU to the requirements of the Prospectus Directive regarding the filing and communication of final terms, the FCA proposes including additional text in UKLA/PN/902.2 (listing securities via final terms) which explains the interaction of these different requirements.
- Under the concurrency provisions in the Financial Services and Markets Act 2000 (FSMA), the FCA has competition law powers, including powers under the Competition Act 1998 in relation to agreements and conduct relating to the provision of financial services (which includes the provision of sponsor services). The FCA is bound by statutory provisions to give ‘primacy’ to Competition Act enforcement in certain situations. The FCA aims to exercise its functions as transparently as possible, recognising the importance of ensuring that appropriate information is provided on its decision-making process and being open and accessible to stakeholders. As such, the FCA has updated UKLA/PN/910.2 (additional powers to supervise sponsors) and UKLA/TN/712.2 (additional powers to supervise and discipline sponsors) to include reference to the Competition Act primacy obligation whenever considering using its powers under FSMA.
The FCA also proposes the addition of several new Technical Notes as follows:
- UKLA/TN/312.1 – Shareholder votes in relation to hypothetical transactions, clarifying the position on early production of circulars required for voting purposes;
- UKLA/TN/314.1 - Reverse takeovers and uncapped consideration, clarifying how uncapped consideration may affect the classification of a transaction as a reverse takeover;
- UKLA/TN/242.1 - Removal from the Official List of listed equity shares of individual funds of Open-Ended Investment Companies (OEICs), which makes the position of OEICs clearer, and removes listed equity shares of individual sub-funds from the Official List;
- UKLA/TN/425.1 - Open-ended investment companies and transfer restrictions, which highlights a scenario in which an issuer may not be able to meet Listing Rule requirements; and
- UKLA/TN/717.1 - Sponsors: Record keeping requirements, providing additional guidance on the application of the record keeping requirements in LR8.6.16AR and supplements the guidance in LR8.6.16BG and LR8.6.16CG.
The FCA is also re-consulting on the addition of new Technical Note, UKLA/TN/713.1 (Sponsors: Application of principle to deal with the FCA in an open and co-operative manner), which was initially proposed in Primary Market Bulletin No. 7 and has been amended, following feedback received and the FCA's resulting update of the guidance.
Additionally, the FCA confirms that it has made changes to the Knowledge Base as proposed in Primary Market Bulletin No.12, including the amendment of one existing Procedural Note, the re-consultation on one new Technical Note, initially proposed in Primary Market Bulletin No. 11, and the amendment of thirteen existing Technical Notes.
The FCA also notes that it is giving further consideration to the feedback received on Technical Note UKLA/ TN/541.2 (Scope and application of vote holder and issuer notification rules) in Primary Market Bulletin No.12 and intends to respond to it in the next Primary Market Bulletin.
The FCA has requested comments on these proposals by May 10, 2016.
(FCA, Primary Market Bulletin No. 13, 29.03.16)