Osborne Clarke's quoted company legal news update: March 2015

Welcome to the latest edition of Osborne Clarke’s quoted company legal and regulatory news update.
We hope that you find it interesting. If you would like to discuss any of the content, or have a subject that you would like us to cover in next month’s edition, please let one of us know. Our contact details are set out below.

Wall-crossings and inside information: Guidance on good practice, poor practice from the FCA

What is good practice in handling inside information? How should “wall-crossings” best be done? The Financial Conduct Authority has published a paper discussing these questions, following its recent review of how asset management firms control the risk of committing market abuse.

Although primarily aimed at asset management firms, what the paper has to say about the handling of inside information and avoiding market abuse will be of particular interest to corporate brokers, to advisers and to company compliance teams. We’ve summarised the main messages of the FCA’s paper.

Click here to read more.

Fifty years on: The EU announces its plans for a true “Capital Markets Union”

More than fifty years ago, the Treaty of Rome enshrined the “four freedoms”: that goods, people, services and capital could move freely across the internal borders of what was then the European Economic Community and is now the EU.

Of those freedoms, the one that has been the most difficult to put into practice has been the freedom of movement of capital. So, 57 years after its founding treaty, the EU has launched an effort finally to create its “Capital Markets Union”. The principal aim of the CMU is, in the words of the European Commission, “to create deeper and more integrated capital markets in the 28 Member States”.

We discuss the EU’s multi-year initiative to improve, amongst many other capital market areas, debt private placements, securitisation, crowdfunding, multi-lateral trading facilities, fund managers and corporate law and governance.

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The Prospectus Directive: EU to review its operation as part of its Capital Markets Union initiative

The European Commission has published a consultation paper on the operation of the Prospectus Directive. Part of its new work on the Capital Markets Union, the paper invites comment on particular elements of the PD regime.

We list those elements and look in more detail at the three general questions the Commission poses: when is a prospectus needed, what information should it contain and how should be prospectuses be approved?

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FCA to study the investment banking market as part of wholesale sector competition review

As part of its review of the wholesale financial markets launched in summer 2014, the Financial Conduct Authority has announced a market study into investment and corporate banking services. The study will assess whether competition in the market is working properly. The formal scope of this study will be set out when it is formally launched later this spring. However, the FCA has indicated that the study will focus on:

• transparency over price and quality; and
• bundling and cross-selling of investment and corporate banking services.

Within those parameters, the regulator suggests that the study will examine various specific aspects of the securities and investment markets and related activities, such as corporate broking. We list these aspects in our note.

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Social media, financial promotions and a growing market: New FCA paper discusses crowdfunding and its regulation

The regulator last month published a paper looking at the regulatory regime for crowdfunding and the “promotion of non-readily realisable securities by other media”.

This is not a consultation paper and doesn’t invite responses: it is a review of some aspects of crowdfunding regulation and of the growth of the crowdfunding market. Of particular interest in the paper are discussions of: the FCA’s supervision of the market; website and financial promotion reviews; social media; and mini-bonds.

With both equity and debt crowdfunding receiving much media attention, this will be of interest to all looking at this growing and potentially disruptive market.

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Disclosing the shareholder register: Court rules that listed company does not have to open its register to an asset search agent

Many UK listed companies contract with an asset search agency to locate missing shareholders and reunite those shareholders with unclaimed dividends, cash or shares. Asset search agencies also operate on a freelance basis, without authorisation from the company itself.

This month a listed company succeeded in frustrating a freelance asset search agent (the company already had an appointed search agency), with the court ruling that the listed company did not have to disclose its shareholder register to the freelance agent.

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AIM subsidiaries will be able to use the “small company reporting regime” under new Government proposals

The Government has published its response paper on the implementation of the EU Accounting Directive, which is required to be implemented into UK law by July 2015.

A point of interest in the response paper for listed companies is that, for the first time, private UK subsidiaries of AIM-traded companies meeting the relevant size criteria will be able to report under the small company regime in respect of their individual company accounts. The small company regime allows companies to benefit from accounting and reporting exemptions, and from exemption from audit.

Click here to read more.

Seen elsewhere

• Key priorities for corporate governance from The Institute of Directors here.
• The UK Crowdfunding Association’s list of those equity crowdfunds which have raised £1million or more from private investors here.
• The Financial Reporting Council’s review of the first year of extended auditor reports here.

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