Locations
Market reCap
- Inside the wall
- FSA consultation on PDMR transactions – issues for brokers
- Significant changes to the listing regime
- The end of "no names" calls to the UKLA? And the first edition of Primary Market Bulletin
- AIM Regulation and directors participating in a secondary fundraising
- QCA remuneration committee guide for smaller quoted companies
- Kay Review of UK equity markets – interim report published
On 7 March, the Financial Services Authority ("FSA") published its quarterly consultation paper CP12/05, which included proposed changes to the Listing Rules and the Supervision manual.
The proposed amendments to chapter 9 of its supervision manual would remove the ability of the UKLA to provide individual guidance to market participants on a “no names” basis. Instead, under the proposal, requests for guidance would need to be made in writing on a named basis, save in cases of exceptional urgency.
The proposed changes were formulated after a review of the UKLA helpdesk by the FSA in 2011. The findings of the review exercise are set out in the first edition of Primary Market Bulletin, the document the FSA is now publishing instead of List!.
The first edition of the Primary Market Bulletin focussed exclusively on the UKLA helpdesk review exercise. In future publications, the bulletin will consist of a section which contains a consultation in respect of proposed revisions to Technical Notes and Procedural Notes and other factual communications, and the second section will set out the text of any proposed amendments that are being consulted on.
From the findings of the helpdesk review, it appears that many of the calls received are of a non-technical nature. Even the technical calls were often in relation to straightforward issues that could be dealt with by reference to the relevant rulebooks or the UKLA website. Very few of the calls that were received were deemed by the FSA to be "reasonable requests" for guidance. The majority of the calls were also made on a no names basis, where the caller did not wish to tell the helpdesk of the identity of the issuer to which the query related. One of the more surprising findings from the review was that some of the callers did not even wish to disclose their names or the firms that they were calling from. The FSA has decided that this is not an acceptable basis upon which to communicate and the UKLA's staff have been instructed that, with immediate effect, they should no longer deal with calls of this nature.
Interestingly, Primary Market Bulletin also states that the UKLA would welcome requests for written confirmation of the guidance given by it.
Overall, the FSA’s view is that the proposed helpdesk model removes the risk, for both the UKLA and issuers and advisers, of providing advice on a no names basis. It believes that submitting requests for individual guidance in writing would result in those requests being "reasonable requests" for guidance and that the UKLA would be less likely to be used as the first port of call for technical advice. Issuers and their advisers would, in turn, benefit from receiving guidance from the UKLA which is binding and in written form.
Many issuers and their advisers are likely to disagree with the proposal, since the no names facility is an extremely valuable resource to have in situations where the application of the relevant rules is not clear. In addition, issuers are often reluctant to have a named discussion with the UKLA in the early stages of the consideration of a potential transaction.
In the quarterly consultation paper, there was also a proposed amendment to the definition of “substantial shareholder” for the purposes of the related party transaction regime. "Substantial shareholder" is currently defined in the Glossary to the Handbook as "any person who is entitled to exercise or control the exercise of 10% or more of the votes able to be cast on all or substantially all matters at general meetings of the company". This definition is left unaltered but the proposed LR 11.1.4AR(2) describes certain conditions in which voting rights being held by a person will be disregarded for the purpose of calculating voting rights. These conditions are where:
- the securities to which the voting rights are attached are held for a consecutive period of five trading days or less; and
- voting rights are not exercised within the period the securities are held; and
- no attempt is made directly or indirectly by the person to intervene or exert influence on the management of the issuer within the period the securities are held.
The consultation closed on 6 May 2012.
Amerjit Kalirai is a Partner in the Corporate Group of Field Fisher Waterhouse LLP in London.