As the UK entered COVID19 lockdown last week, Minerva wrote to regulators asking for their intervention to create an orderly market in AGMs. Today a letter has been sent to quoted companies asking them to clarify their AGM proposals, alerting them to the risk of bunching meetings in June.

With AGM season about to get underway, some corporate lawyers have suggested that UK companies could push their AGMs back to June – the last possible date, by law, that they could hold it. But the prospect of a flurry of AGMs being packed into one month before the July cut-off would not be in the best interests of investors and shareholders, especially when there are other options available.

As the coronavirus crisis deepens, the UK’s financial regulator, the FCA has asked listed companies that are set to issue their next set of preliminary results to press pause to help relieve the pressure posed by the ongoing disruption.

The
unprecedented request from the Financial Conduct Authority (FCA), which was
announced on Sunday, arrived in a letter to companies that were set to publish
reports over the next few days. The move comes as businesses and employees
across the country are left in a state as limbo due to the Covid-19 pandemic.

The FCA is
“strongly requesting” that all listed companies observe a moratorium on the
publication of preliminary financial statements for at least two weeks.

While publishing preliminary financial statements is common among UK-listed companies, it is not required by either the Listing Rules or the Transparency Directive. Rather, the requirement is that companies publish full, audited financial statements within four months of the financial year end. The FCA's statement does not apply to AIM companies. It is understood that AIM has written to nominated advisers on this matter.

Although the
FCA’s moratorium is entirely voluntary, it warns these
unprecedented times mean that the basis on which companies are reporting and
planning is changing rapidly.

“Investors in capital markets rely on trustworthy
information on the companies whose instruments they trade,” the regulator said.
“We ask companies to observe the
moratorium so that they can give due consideration to recent events. Observing
timetables set before this crisis arose may not give companies the necessary
time to do this.” 

The FCA said the practice of
issuing preliminary financial statements in advance of the full audited ones would
unnecessarily add to the pressure on both the companies and auditors in an
already tense situation.

The regulator added that it is aware
that changing UK government policy and interventions will represent a material
consideration for some companies but would be less material for others. 

As such, each board must make its
own decision to delay, based on its own circumstances.

“We are seeking to relieve the
burden on companies while maintaining flows of information to investors,” the
FCA said. “In some individual circumstances, delay may add to the burden on the
company, and, if so, boards may choose not to observe the moratorium.”

The FCA is
also in talks with the Financial Reporting Council (FRC) and Prudential
Regulation Authority (PRA) regarding a package of measures aimed at
ensuring companies prepare appropriate disclosures and address current
practical challenges. The three bodies intend to announce details shortly.

“The FCA
reminds companies that the Market Abuse Regulation remains in full force and
listed companies are still required to announce inside information to the
market as soon as possible unless a valid reason to delay disclosure under the
regulation exists,” the regulator stated.

The FRC said it fully supports
the FCA’s moratorium.

“It is important that due
consideration is given by companies to these events in preparing all reporting,”
the FRC said in a statement.

“The FRC therefore encourages
listed companies and their auditors to consider carefully whether they should
delay other corporate reports for the next two weeks, such as interim financial
statements and final audited financial statements, except where necessary to
meet a legal or regulatory requirement.”

The request to delay company results
comes as global stock markets continue to fall as the coronavirus crisis
worsens.

The FTSE 100 opened nearly 5
percent down this morning (Monday 23 March), while US stocks have fallen by nearly a third since mid-February.

Meanwhile, the secretary general of
the Organisation for Economic Co-operation and Development (OECD), Angel
Gurría, has warned it will take years to recover from the coronavirus pandemic. Mr Gurría said the economic shock was already bigger than the
financial crisis, according to a BBC report.

Minerva
previously reported that an increasing number of UK-listed companies are
cutting or suspending dividend payments in order to preserve cash and protect
their balance sheets in response to the economic impact of coronavirus.

However, others have said they may pay an interim dividend later in the year.

Minerva will be monitoring the proposals and will keep you posted as new information is published.