Pen & Graph

Essential Corporate News – Week ending December 16, 2016

Publication December 16, 2016


Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.

LSE: Inside AIM – Interaction of social media with disclosure obligations under the AIM Rules

On December 12, 2016 the London Stock Exchange (LSE) published an edition of Inside AIM in which it discusses the interaction of social media with disclosure obligations under the AIM Rules for Companies (AIM Rules). It notes that social media and other forms of electronic communication are powerful tools which can be of significant value to AIM companies when communicating with investors and stakeholders. However, the LSE points out that whatever the form of public communication, it is subject to the rules regarding disclosure of regulatory information. Therefore, with the increased use of forms of communication such as twitter, non-regulatory news feeds and company websites, AIM companies should consider with their nominated adviser how to manage social media in the context of their obligations under the AIM Rules.

The main points set out by the LSE include the following:

  • The fact that information released through other outlets may be, or may eventually become publically available, is not a substitute for making a notification under the AIM Rules no later than it is disclosed elsewhere. So, disclosure by social media alone will not meet an AIM company’s disclosure requirements and an AIM company must continue to use traditional means of regulatory dissemination which take precedence.

  • An AIM company should have regard to the Market Abuse Regulation (MAR) which is within the remit of the Financial Conduct Authority (FCA) and must be considered separately to its AIM Rules obligations. Where premature or selective disclosure has been made, or where communications are designed to cause share price volatility (eg through a tip or leak of confidential information about the AIM company) this may also give rise to issues beyond the AIM Rules, and which are within the remit of the FCA’s powers relating to market abuse.

  • The systems, procedures and controls an AIM company puts in place (as required by AIM Rule 31) should take into account the use of social media and other forms of electronic communication used by the company in order to manage its’ disclosure obligations under the AIM Rules. Inside AIM sets out examples of matters to be considered by an AIM company in relation to its communication policies.

  • Consideration should be given by an AIM company and its nominated adviser as to how to be kept reasonably informed about social media posts. This is important in the context of enabling the nominated adviser to be alerted to potential disclosure issues for its AIM companies such as whether a false market might be developing in an AIM company’s securities, as well as indicating a leak of confidential information. Nominated advisers are reminded to make the LSE aware of significant rumours or problems relating to internet discussions which could impact on the orderly market in an AIM company’s securities.

(LSE, Inside AIM: Interaction of social media with disclosure obligations under the AIM Rules, 12.12.16)

LSE: AIM Disciplinary Notice (AD 15) - Responsibility under AIM Rule 31

On December 15, 2016, the London Stock Exchange (LSE) announced that the AIM Disciplinary Committee (ADC) has privately censured and fined an AIM company £75,000 for a breach of AIM Rule 31. The ADC determined that the AIM company breached AIM Rule 31 by failing to provide its nomad with information reasonably required to carry out the nomad’s responsibilities owed to the LSE, and by failing to seek its nomad’s advice regarding compliance with the AIM Rules when it was appropriate to do so.

The ADC held that the AIM company ought to have informed its nomad and sought advice regarding a series of business developments. It further held that it was not appropriate for the AIM company to decide whether or not the business developments were disclosable based solely on its own assessment of its obligations under the AIM Rules, without reference to its nomad. The ADC considered that this was precisely the type of issue that falls within AIM Rule 31 and where an AIM company should be seeking advice from its nomad.

Further the ADC found that:

  • The AIM company’s obligation to inform its nomad and seek advice regarding business developments covered a wider range of developments than would be required to be announced under AIM Rule 11.
  • It was not sufficient for the AIM company simply to send agendas and minutes of board meetings to its nomad, without any context or conversation, and assume that such actions discharged the AIM company’s AIM Rule 31 responsibilities. Developments within the business need to be shared openly and fully with the AIM company’s nomad, and advice sought from the nomad.
  • Contractual obligations between an AIM company and its nomad do not override an AIM company’s AIM Rule responsibilities.

The LSE notes that AIM Rule 31 should not be narrowly interpreted but should be interpreted purposively, requiring an AIM company to provide full, timely and regular information to its nomad, given that the fundamental purpose of AIM Rule 31 is to ensure that the nomad is kept fully aware of developments and can fulfil its regulatory role and responsibilities to the LSE, to advise and guide an AIM company for which it acts.

(LSE, AIM Disciplinary Notice (AD 15): Responsibility under AIM Rule 31 – 15.12.16)

Takeover Panel: Panel Statement 2016/9 – New checklists

On December 14, 2016 the Takeover Panel released a Panel Statement noting that the Panel Executive has published checklists and supplementary forms to be completed and submitted to the Executive by the financial adviser to an offeror or an offeree company (as appropriate). They should accompany any final form firm offer announcement, offer document, offeree board circular, scheme circular or Rule 15 offer/proposal required to be sent to the Takeover Panel before or at the time of publication in accordance with Rules 30.5(a) or 30.5(b) of the Takeover Code (as appropriate).

The checklists and supplementary forms can be downloaded from the Checklists page of the Takeover Panel’s website and should be used with immediate effect. Guidance is provided on the website as to how to complete the checklists and send them to the Takeover Panel.

(Takeover Panel, New checklists – 2016/9, 14.12.16)

FRC: Amendments to FRS 101 and FRS 102 – Notification of shareholders requirements

On December 13, 2016 the Financial Reporting Council published amendments to FRS 101 (Reduced Disclosure Framework) and FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland), together with an impact assessment and feedback statement. The amendments remove the requirement for a qualifying entity to notify its shareholders in writing that it intends to take advantage of the disclosure exemptions in FRS 101 and FRS 102 and have not changed significantly from the draft amendments published in July 2016.

The amendments will apply to accounting periods beginning on or after January 1, 2016.

(FRC, Amendments to FRS 101 Reduced Disclosure Framework and FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland: Notification of shareholders, 13.12.16)

FRC: 2017/18 thematic reviews expected to prompt improvements

On December 15, 2016, the Financial Reporting Council (FRC) issued a press release announcing that it will, in 2017, undertake thematic reviews of certain aspects of companies’ corporate reports and audits, where it believes there is scope for improvement and particular shareholder interest.

The following topics are to be covered: 

Corporate reporting 

The FRC will write to a number of companies prior to their year-end, informing them that it will review disclosures in their next published reports, specifying the topic under review. The FRC will also monitor and report on companies’ disclosures relating to: 

  • The impact of new IFRSs; including the timeliness and usefulness of the information provided
  • Principal risks and uncertainties relating to Brexit and the low interest rate environment and the extent to which they are company specific.


  • Auditors’ responsibilities relating to other information
  • Audit firm governance and culture
  • Materiality: update on 2013 thematic review

The FRC will consider the six largest audit firms’ policies and procedures and will review a number of audits in these specific areas to make a comparison with a view to identifying both good practice and scope for improvement.

Priority sectors

As well as the thematic reviews in its corporate reporting and audit monitoring activities, the FRC will give priority to reports and audits in the property, travel and leisure and support services sectors. Audit monitoring will additionally also focus on the financial services sector and audit monitoring will pay particular attention in the audits reviewed to changes in auditor appointment, audit of pension balances and disclosures and the audit of impact of currency fluctuations.

(FRC, 2017/18 thematic reviews expected to prompt improvements – 15.12.16)


Financial Stability Board: Recommendations of the Task Force on climate-related financial disclosures

On December 14, 2016, the Task Force set up by the Financial Stability Board in December 2015 to design a set of recommendations for consistent disclosures to help market participants understand their climate-related risks, published those recommendations.

For more information click here.

(TCFD, Recommendations of the Task Force on climate-related financial disclosures – 14.12.16)

Recent publications

Subscribe and stay up to date with the latest legal news, information and events...