Once the dominant theme of the 24 hour news cycle, Brexit and the government's increasingly futile attempts to negotiate a trade deal with the EU have understandably slipped from public consciousness in the wake of the Covid-19 pandemic.
AIM companies have faced unparalleled challenges adhering to their regulatory obligations this year – a notable example being the need to figure out how to hold quorate annual general meetings at a time when leaving home for anything other than food or exercise was prohibited.
Short-term legislation providing extensions to filing and deadlines, along with the gradual loosening of social restrictions, have eased some of these pressures and hopefully some semblance of normality will return by the end of 2020.
Now therefore seems to be the time for corporates to refocus on, and prepare for, the end of the transition period on 31 December 2020 – deal or no-deal.
What is the current legislative position?
Broadly speaking, the EU (Withdrawal) Act 2018 ensures that at the end of the transition period, all directly applicable EU law and EU Regulations will be converted into UK domestic law. Any UK law implementing an EU Directive will also be retained.
This legislation should not be confused with the much publicised and precariously positioned Brexit Withdrawal Agreement – which is the treaty signed between the UK and EU that entered into force on 1 February 2020 setting out the terms of the UK's departure.
Some of the key components of the post-transition picture for AIM companies can be summarised as follows:
- AIM Rules – companies who have securities admitted to AIM will continue to adhere to the AIM Rules for Companies and nominated advisers to such companies will still be required to follow the AIM Rules for Nominated Advisers. Only minor amendments are proposed to each set of rules at the moment, however additional amendments may yet be drawn up to accommodate a no-deal scenario.
- Market Abuse – the Market Abuse (Amendment) (EU Exit) Regulations 2019 amended the EU Market Abuse Regulation to ensure that it continues to operate effectively once the transition period expires. The 'new' rules retain the scope of the existing regime with regards to the disclosure of inside information and insider dealing, while the format of PDMR transaction notifications remains unchanged.
- Disclosure Guidance and Transparency Rules (DTR 5) – the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/707) look to, as far as possible, replicate the current disclosure and transparency rules. At the end of the transition period, various functions carried out by the European Commission will be transferred to HM Treasury while other functions under the DTR currently exercised by ESMA will transfer to the FCA. The disclosure obligations requiring AIM companies to notify the market of shareholdings over certain prescribed thresholds will therefore continue to apply.
This should hopefully provide some reassurance to AIM companies that the regulatory landscape they operate within will not be overhauled overnight.
That is not to say that a no-deal Brexit will not create some legal uncertainty and disruption, as some aspects of legal continuity, and some potential future policies, are contingent on the UK government reaching international agreements with the EU, individual EU member states, or non-EU countries.
The future is difficult to predict, but AIM companies can at least rely on some short-term consistency when the UK steps into the unknown at the turn of the year.
Adam Jones is an associate in the corporate team in Manchester at Fieldfisher. For more information on our corporate and capital markets expertise, please visit the corporate pages of the Fieldfisher website.
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