Measures to help UK listed companies raise equity

The Financial Conduct Authority (FCA) issued Wednesday a series of measures for UK listed companies raising money on UK capital markets in order to support recovery after the current coronavirus crisis.  

The guidance will apply from 8 April until the FCA advises otherwise, and while there is no consultation on the measures, the regulator said it welcomed feedback from stakeholders.

The rules differ depending on the size of the share issue, so the FCA has differentiated its policy notice accordingly.

Smaller share issues

The FCA urges market participants to review and consider carefully new guidance from the Pre-Emption Group (PEG), the listed company, investor, and intermediary group that promotes best practice in the observation of investors’ pre-emption rights.

The PEG’s guidance, set out on 1 April, is intended to help companies raise equity in the current difficult circumstances. It recommends that investors, “on a case-by-case basis, consider on a temporary basis supporting issuances by companies of up to 20% of their issued share capital, rather than the 5% for general corporate purposes, with an additional 5% for specified acquisitions or investments, as set out in the Statement of Principles that would normally apply”.

This change of policy is important for companies considering making use of the ability in the Prospectus Regulation to issue up to 20% of share capital without a prospectus. 

Share issues with a prospectus

  • Shorter-form prospectuses. The FCA encourages listed companies issuing new equity to recapitalise the company in response to the coronavirus crisis to use the simplified disclosure regime where possible.

    Under the Prospectus Regulation, which came into force in 2019, the regime is available to companies that have been admitted to trading on a regulated market or SME Growth Market for at least 18 months. This means it includes the majority of listed companies.

  • Working capital statements. The FCA issued a technical supplement concerning working capital statements in prospectuses and circulars during the coronavirus pandemic.

General meeting requirements under the listing rules

The FCA proposes temporarily to modify its Listing Rules on a case-by-case basis with regards to class 1 transactions (LR 10.5.1R(2)) and related-party transactions (LR 11.1.7R).

“Premium listed companies undertaking a transaction within the scope of this policy may apply to the FCA for a dispensation from the requirement to hold a general meeting,” the regulator said. It issued a technical supplement explaining the modifications to the rules.

Where issuers have provisions in place for holding virtual general meetings, the FCA said it will continue to support this as a means for gaining shareholder approval.

Inside information

The FCA pointed out that the Market Abuse Regulation (MAR) remains in force and companies are still required to fulfil their obligations concerning the identification, handling, and disclosure of inside information. It added: “Crucially, in the context of recapitalisation, this will include sharing inside information in accordance with MAR and maintaining appropriate insider lists.”

For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit FM’s coronavirus resources page.

Oliver Rowe ( is an FM magazine senior editor.