COVID-19 | AGMs and financial reporting for publicly traded companies
COVID-19 | AGMs and financial reporting for publicly traded companies
In light of the uncertainty and disruption caused by COVID-19, the FCA, FRC and PRA have joined forces to announce a series of temporary actions to ensure that information continues to flow to investors and to ensure that this supports the continued functioning of the UK’s capital markets. In addition, London Stock Exchange plc has provided some clarification for AIM companies, too.
In this webinar, we will look at how publicly traded companies’ AGMs and financial reporting might be capable of responding to these recent changes, relaxations and comments from government and regulators responding to the pressures which Covid-19 has brought to our world.
Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us.
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Good afternoon. I'm Catherine moss in the corporate finance team here at Shakespeare Martineau. Welcome to today's webinar on ATMs and financial reporting for publicly traded companies cast in light of the covid-19 pandemic and its impact on businesses.
You'll see on your screen that you're able to ask questions. So, please do ask them along the way and answer as many as I can and will also share a summary of questions with everyone after the webinar. So what are we looking at today?
Well on the 26th of March was a coordinated announcement from the FCA the FRC and they pra providing a response on covid-19, which is designed to protect accurate information flow to investors and support the continued functioning of the pays Capital markets both the Elysee and the 8 USC which is formally next providers and clarification to for aim and qse companies around about the same time. So consequently today we'll cover the impact on a GM's accounts financial reporting and disclosure obligations on the 23rd and March 2020. The government implemented a compulsory stay at home measure prohibiting Gatherings of no more than two people.
Consequently, it's become very difficult to hold a GM's and other forms of company meetings in this situation. We advise companies firstly to check their articles Association and determine what they can and they cannot do if they have any questions, they should speak to their company secretary and also potentially to their legal advisers the two most common positions that we have seen as either that AGM venues are inaccessible.
People or that companies are not clear about what to do about convening in a GM and what to say in their notices.
In the first instance, if you're a GM venue is an accessible and you do not have virtual high bid meeting Provisions in your our schools consider postponing adjourning or moving your menu to a more secure venue.
You should encourage the use of proxies by shareholders and you should seek to ensure a quorum.
most notably we have found a companies are ensuring that shares are held by a director and employee or a fellow householder in order to ensure the minimum core requirements are met If you haven't yet published your ATM notice and you're about to consider doing so ensure that you include unambiguous language to dissuade attendance at any meeting to encourage shareholders to use their proxies and remind them of the current law and the chairs ability to use powers at common law or within the Articles to prevent their attendance on accounts and financial reporting. There have been a number of measures implemented.
Which is some of the financial reporting obligations upon companies.
Firstly companies house have given companies a further three months to file their annual accounts provided that they file the apply for an extension.
The FCA has granted a temporary moratorium on publishing preliminary financial statements until the 5th of April 20 24 official list companies.
And many aim companies. We know followed this to this was to enable companies to determine exactly what they wanted to say. And what risks they wanted to highlight furthermore. The FCA has permitted listed companies to delay publication of that orders Daniel Financial reports from four months to six months from the end of their financial year.
I'm regulation followed suit and will allow on request a three-month extension on publication of audited annual Financial reports with companies with year ends between the 30th September 2019 and June 2020 aqs C has a in addition provided a one-month extension from the 31st of March 2020. The publication of annual audited accounts and is considering further requests where necessary and currents and financial reporting.
The FRC published information about what they would require within the contents of your and accounts and any reports.
And said two companies that they should consider additional specific risk disclosures taking into account the company itself and how it might be affected by covid-19.
Any mitigating steps taken by the board should also be included.
Further cut more the flcs companies to disclose any judgements and assumptions made by the board which shape the company's outlook for the future.
You should fully disclosed possible events and scenarios other than those which are the most remote which could lead to corporate failure.
You should also look at your corporate governance codes and your reporting obligations under those and consider was you need to disclose.
Finally, you should consider strengthening your regular reporting lines adding internal and external people and lines of report by necessary and finally the FR FCA and the FRC reminded companies of their disclosure obligations under the market abuse regulations.
Where time of Rapid change and they noted that companies may find themselves in possession of inside information as a company's actual expected performance its Financial condition and or stress or debt repayment are adversely affected in addition your board and we're inside a committee. If you have one should keep this under review and consult your Brokers or financial advisor and legal advisors if in doubt somewhat should be disclosed.
Aimed to reminded companies that time your disclosure is crucial but should time be needed to ensure an education is fully compliant and then companies Nomad should discuss with aim, whether a temporary suspension of the share price would be needed. Thank you for listening to this webinar. I hope you found it useful and relevant in the current circumstances.
I would answer a couple of questions now and we'll also send a note of will qas along with the recording of the webinar itself turning now to Since we have been asked whether the government is going to legislate to make it easier to hold virtual shareholder meetings.
We understand that primary legislation is considered to be needed by the government and this will need to be brought before a parliamentary session with the wrongful trading legislation, which was signed posted once parliament's being recalled.
The legislation is unlikely however to be retrospective.
Until then companies need to be carefully advisor what's permitted under the Articles and common law powers in relation to calling and holding meetings if there are any doubts as to what to do aboard should take advice.
We've also been asked whether directors can withdraw a dividend resolution typically included within an AGM notice if they wish to conserve cash any company May announce that it will not put that resolution to the meeting and thereby not provide a dividend we've been asked whether and why the FCA and al-farsi provided more time to report prelims.
Effectively here the FCA and I'll see a very keen to ensure effective information floating Market companies need time to determine what effects covid-19 may have on any audit opinions their banking covenants.
They Capital maintenance and dividend flows financing needs stress test and we're making disclosure to the market they need to do so with as much certainty as they're able to On a cool last week the FRC reminded companies that notwithstanding the pressure which you may be being put upon by your Brokers and your Bankers. You must take the time you need to do the work you need to do to produce the financial results, which you required to disclose. Thank you for all the great questions. I will follow from these after the session and share them with you.
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