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Essential Corporate News: Week ending March 13, 2020

Publication March 2020

Companies House: Coronavirus – If your company cannot file accounts with Companies House on time

On March 11, 2020, Companies House published advice for companies affected by COVID-19 (coronavirus), resulting in them not being able to meet the filing deadlines in the Companies Act 2006 for their reports and accounts. The filing period is nine months from the end of the relevant accounting reference period for private companies and six months for public companies. Companies House advises that in such circumstances, companies should apply to extend the filing period.

Companies House advise that an application for an extension should be made before the filing deadline, with reasons for the extension request provided, and that accepted applications normally receive an extension of 30 days. If an extended filing deadline is agreed, companies should file their accounts before the new due date to avoid any late filing penalty.

(Companies House, Coronavirus: If your company cannot file accounts with Companies House on time, 11.03.20)

ESMA: Public statement on action by financial market participants for COVID-19 impact

On March 11, 2020, the European Securities and Markets Authority (ESMA) issued a public statement which includes a number of recommendations to financial market participants in light of COVID-19 (coronavirus). This follows monitoring by ESMA and National Competent Authorities of the continuing impact of COVID-19 on EU financial markets.

The recommendations are as follows:

  • Business continuity planning – Financial market participants should be ready to deploy their contingency plans to ensure operational continuity in line with regulatory obligations.
  • Market disclosure – Issuers should disclose as soon as possible any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under the Market Abuse Regulation.
  • Financial reporting – Issuers should provide transparency on the actual and potential impacts of COVID-19, to the extent possible, based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance in their 2019 year-end financial report if not yet finalised, or otherwise in their interim financial reporting disclosures.
  • Fund management – Asset managers should continue to apply the requirements on risk management and react accordingly.

ESMA notes that it will continue to monitor developments and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.

(ESMA, Public Statement – ESMA recommends action by financial market participants for COVID-19 impact, 11.03.20)

FCA: Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations – CP20/3

On March 6, 2020, the Financial Conduct Authority (FCA) published Consultation Paper CP20/3, which sets out the FCA’s proposals for a new rule and guidance for certain listed issuers to make climate-related disclosures consistent with the recommendations in the final report of the Financial Stability Board’s Task Force on Climate-Related Disclosures (TCFD) published in June 2017 (TCFD Final Report). This follows a commitment by the FCA to consult on such new rules in FS19/6 published in October 2019.


The FCA intends to introduce a new climate-related disclosure rule, LR9.8.6R(8), in the Listing Rules. This will require commercial companies with a UK premium listing (including sovereign-controlled commercial companies) to include a statement in their annual financial report, setting out:

  • Whether they have made disclosures consistent with the TCFD’s recommendations and recommended disclosures (as set out in Section C of the TCFD Final Report).
  • Where they have not made disclosures consistent with some or all of the TCFD’s recommendations and recommended disclosures or have included some or all of their disclosures in a document other than the annual financial report, an explanation of why.
  • Where in the annual financial report (or other relevant document) the various disclosures can be found.

To support issuers in implementing the new rule, the FCA also proposes introducing guidance in LR9.8.6 to specific TCFD publications (also published in June 2017), namely its “Guidance for all sectors”, its “Supplemental guidance for the financial sector” and its “Supplemental guidance for non-financial groups”. Proposed LR 9.8.6BG provides that in determining whether climate-related financial disclosures are consistent with the TCFD’s recommendations and recommended disclosures, listed companies should have regard to these publications. Proposed guidance in LR9.8.6CG states that the TCFD Final Report, TCFD Annex and TCFD Technical Supplement (all to be defined in the FCA Handbook Glossary and an Appendix to the Listing Rules) will also be relevant.

The FCA considers that asset managers and insurance companies with asset management businesses, and which have a premium listing and so will be within the scope of the new rule, should prepare enterprise-level disclosures in their capacity as issuers, rather than in their capacity as regulated firms. The FCA will separately clarify its approach to enhancing climate-related disclosures by asset managers as FCA-regulated firms.

So far as assurance is concerned, the FCA does not currently propose introducing mandatory requirements around verification or assurance of climate-related disclosures as it considers that that would be premature, particularly given ongoing external reviews of the role of audit and the fact that reporting practices among listed companies are still evolving. However, the FCA points out that by requiring the statement of compliance about climate-related disclosures (and the explanation of where those disclosures are) to be in the narrative reporting sections of the annual financial report, auditors will need to satisfy themselves of the internal consistency of the narrative reports with the wider set of financial statements and some directors may choose to instruct professional firms to provide additional due diligence on their company’s climate-related disclosures.

So far as the duties of sponsors are concerned, the FCA points out that sponsors will need to consider whether companies have established procedures to enable them to comply with the new rule as part of the work they undertake to make the declarations required of sponsors under the Listing Rules.

Proposed timing of implementation

The FCA proposes that the new rule takes effect for accounting periods beginning on or after January 1, 2021, so first reports complying with the new rule would be published in 2022.

New Technical Note clarifying existing disclosure obligations

Since listed issuers are already required to consider environmental, social and governance-related risks and opportunities under existing disclosure obligations arising, among other things, under the Listing Rules, Prospectus Regulation, Disclosure Guidance and Transparency Rules and the Market Abuse Regulation, the FCA proposes issuing a new Technical Note which sets out relevant provisions and explains their application. The aim of this is to provide guidance on existing obligations. The proposed text of the new Technical Note is set out in CP20/3.

Next steps

Comments are requested by June 5, 2020. Subject to feedback received, the FCA aims to publish a Policy Statement with the finalised rules and new Technical Note later in 2020.

The FCA states that, over time, as further industry guidance on implementation of the TCFD’s recommendations is finalised, and relevant data becomes more widely available, it expects to consult on expanding the issuer scope of the proposals and strengthen their compliance basis.

(FCA, Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations, CP20/3, 06.03.20)

FCA: Open-ended investment companies - Proposals for a more proportionate listing regime: CP20/5

On March 9, 2020, the Financial Conduct Authority (FCA) published Consultation Paper CP20/5 which sets out necessary changes to the Listing Rules to offer a more proportionate listing regime for open-ended investment companies (OEICs). The consequence of the proposed changes would be that all premium listed requirements would be disapplied for OEICs and the listing segment for OEICs would be relabelled as standard listing.


Feedback following publication of a Discussion Paper on the Effectiveness of Primary Markets in February 2017, which considered, among other things, whether the premium listing obligations of OEICs should be disapplied and OEICs listed in the standard segment, supported this proposal. As a result, this consultation sets out how the FCA proposes to make the necessary changes to the Listing Rules to achieve this. This includes changes to the Listing Rules for OEICs set out in Chapter 16 (to be incorporated in a new Chapter 16A) to align more closely with the standard listing segment and changes to other Listing Rule provisions that apply to OEICs. These include the listing applications process and the rules for transferring to a different listing category or cancelling a listing.  

The changes would result in a number of governance and transparency requirements which apply to OEICs with a premium listing being disapplied, including the following:

  • The additional Listing Rules requirement for an OEIC to exercise operational control over the business it carries on as its main activity
  • The related party rules
  • The rules on further share issuances
  • Voting requirements in relation to their interactions with shareholders
  • Identification and transparency of large shareholders
  • Notifications to the market via an RIS
  • Additional disclosure requirements in annual financial reports
  • The Premium Listing Principles
  • The need for new applicant OEICs to publish FCA-approved listing particulars
  • The need to appoint a sponsor

Chapter 16A of the Listing Rules would become a bespoke and only listing segment for OEICs.

As far as existing premium-listed OEICs are concerned, the new rules would apply to them once they come into force and premium-listed OEICs would automatically have their premium listing changed into a standard listing.

Next steps

Feedback is requested by June 9, 2020. The new rules would come into force three months after their publication.

(FCA: Open-ended investment companies - Proposals for a more proportionate listing regime: CP20/5, 09.03.20)

ISS: 2020 Climate Proxy Voting Guidelines

On March 9, 2020, Institutional Shareholder Services (ISS) announced the launch of a new thematic specialty Climate Voting Policy to assist investors in integrating climate-related factors into their voting decisions at annual general meetings in 2020. ISS plans to update the Climate Voting Policy Guidelines annually in light of emerging trends on climate change and other related environmental, social and governance (ESG) issues, and recent developments in market standards and regulations, as well as investor feedback. They apply to all global markets except the United States.

The model for assessment of a company’s climate-related performance and disclosures draws on frameworks including the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and ISS states that it balances the need for good disclosure on climate-related risks with a company’s performance on key climate-related factors. It includes a view on a company’s greenhouse gas emissions, its climate strategy, and the impact of its activities on the climate, putting these into context within its sector and incident-based climate risk exposure.

There are five main categories of factors used to evaluate a company’s climate-related performance:

  • Climate norms violations
  • Disclosure indicators
  • Current performance indicators, including greenhouse gas emissions data
  • Future performance indicators drawing from the ISS Carbon Risk Classification
  • Carbon Risk Classification

These are used to assess a company’s risks associated with the impacts of climate change, along with its preparedness to face and mitigate those risks. Voting recommendations are then provided in relation to resolutions covering operational matters, director elections, capital structure resolutions, remuneration and other matters. By way of example, in the event of material ESG failures at a company, the Climate Policy recommendation is to vote against or abstain on the election/re-election of individual directors, those on a board committee or potentially the entire board.  

(ISS, 2020 Climate Proxy Voting Guidelines, 09.03.20)

(ISS, ISS launches climate voting policy, 09.03.20)

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