Capital Markets Update: January 2023

December’s news

ISS announces proxy voting guidelines for 2023

On 1 December 2022, Institutional Shareholder Services (ISS) announced updates to its proxy voting guidelines for 2023. The updated proxy voting policies will generally be applied for shareholder meetings taking place on or after 1 February 2023. Key changes include executive remuneration, board diversity, audit committees and resolutions disapplying pre-emption rights.

FRC publish audit quality indicators

On 6 December 2022, the Financial Reporting Council (FRC) published its new firm-level audit quality indicators, intended to provide stakeholders with comparable indicators on audit quality. The requirements will apply to all firms that audit more than 20 Public Interest Entities or at least one FTSE350 company.

FCA issues decision notices for market manipulation

On 7 December 2022, the Financial Conduct Authority (FCA) published decision notices issued to three bond traders in relation to market manipulation in 2016 contrary to the EU Market Abuse Regulation. The three individuals are prohibited from performing any functions in relation to regulated activity in the future and have been fined nearly £600,000.

FCA fines three regulated firms for failures in market abuse controls

On 8 December 2022, the FCA announced that it had imposed fines totalling nearly £4.8 million on three inter-dealer brokerage firms for failing to ensure appropriate systems and controls were in place to monitor and detect market abuse in breach of the EU Market Abuse Regulation and provisions of the FCA Handbook.

Financial Services and Markets Bill makes progress

On 8 December 2022, the Financial Services and Markets Bill 2022-23 had its first reading in the House of Lords.

Chancellor announces reforms to financial services sector

On 9 December 2022, Chancellor Jeremy Hunt announced a package of reforms to drive growth and competitiveness across the financial services sector.

HM Treasury publishes illustrative statutory instrument

On 9 December 2022, HM Treasury published an illustrative statutory instrument, Financial Services and Markets Act 2000 (Public Offers and Admissions to Trading) Regulations 2023, to show how Government will make its proposed changes to the existing prospectus and public offers regime using the powers set out in the Financial Services and Markets Bill.

FCA publishes Primary Market Bulletin 42

On 12 December 2022, the FCA published Primary Market Bulletin 42, its newsletter for primary market participants. The bulletin looks at climate-related financial disclosures and reminds listed companies of FCA guidance and expectations.

FCA publishes final notice for Metro Bank

On 12 December 2022, the FCA published a final notice imposing a fine of £10,002,300 on Metro Bank plc for its contravention of Listing Rule 1.3.3R (misleading information not to be published).

FRC sets out what makes a good annual report

On 13 December 2022, the FRC published a report setting out its view on what makes a good quality annual report and set of accounts.

FCA outlines its position on insider lists

On 13 December 2022, the FCA published issue 71 of its Market Watch newsletter, setting out information on insider lists. The newsletter highlights the importance of providing personal information and issues relating to contractors, national identifiers and data protection.

Changes to ‘acting in concert’ presumptions published

On 14 December 2022, the Takeover Panel published Panel Statement 2022/21 announcing the publication of amendments to the Takeover Code. The amendments relate to the presumptions of the definition of ‘acting in concert’ and take effect on 20 February 2023.

New sustainability reporting introduced in the EU

On 16 December 2022, the Corporate Sustainability Reporting Directive (CSRD) was published in the Official Journal. The CSRD introduces new requirements for large companies, and all companies listed on EU regulated markets, to report on sustainability issues. The requirement to provide a sustainability report will apply to non-EU companies that have a net turnover in the EU greater than €150 million and at least one subsidiary or branch in the EU exceeding certain thresholds. Application of the CSRD will be phased in, with the requirements applying to in scope non-EU companies for financial years from 1 January 2028.

FRC announces areas of supervisory focus for 2023/2024

On 16 December 2022, the FRC announced its areas of supervisory focus for corporate reporting reviews and audit quality inspections. The FRC will prioritise the following sectors: travel, hospitality and leisure; retail and personal goods; construction and materials; and industrial transportation. In addition, the FRC’s Corporate Reporting Review team will carry out four thematic reviews during the year: large private companies, climate-related financial disclosures, insurance contracts and fair value measurement.

FRC publishes draft three year plan

On 16 December 2022, the FRC published its draft Three Year Plan 2023 to 2026, setting out its priorities and intended expenditure for 2023 to 2026.

Looking ahead to January 2023

1 January – provisions of the Financial Services Act 2021 (Commencement No 4) Regulations 2022 come into force.

13 January – closing date for responses to the Takeover Panel’s public consultation papers on amendments to the Takeover Code.

25 January – closing date for responses to the FCA’s consultation paper on the UK sustainable disclosure requirements.

31 January – closing date for overseas entities which already own or lease property or land in the UK to register information about the entity itself and any beneficial owners with Companies House.

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