FCA primary market bulletin 49 

June, 2024 - Shoosmiths LLP

In its Primary Market Bulletin 49 (PMB 49) (published in May 2024), the UK Financial Conduct Authority (FCA) issues a reminder to premium listed companies incorporated in the UK of their continuing disclosure obligations under the Listing Rules (LR).

FCA issues reminders to listed companies on disclosure obligations

The reminders emerged following a thematic 2023 review (the review) looking at disclosures made pursuant to LR 9.4 and LR 13.8 by a select sample of 25 premium listed companies over a three-year period. Designed to bolster corporate transparency, the FCA reiterates that LR 9.4 and LR 13.8 disclosures aim to increase the “transparency of the links between senior executive remuneration and company performance”— which should — in turn, “enable shareholders to play a greater role in corporate decision-making”. 

Review findings

The review assessed the extent of the 25 select listed companies’ respective disclosures in relation to Long Term Incentive Plans (LTIPs) and/or Long Term Incentive Schemes (LTISs) as well as the nature of LTIP/LTIS metrics and performance conditions.

At a high-level, the review found that:

  1. All 25 companies complied with LR 9.4.1 R (2), requiring — subject to the exceptions at LR 9.4.2 (R) ¬— the LTIP/LTIS be approved by an ordinary resolution of the listed company’s shareholders at a general meeting before it is adopted.
  2. All 14 companies proposing a new LTIP/LTIS released a notice of AGM/circular to shareholders in accordance with LR 13.8.11 R (1) with a description of its principal terms of the LTIP/LTIS, prior to the shareholders’ vote. 
  3. At 14 companies, the notice of AGM accompanying the circular contained resolutions proposing a new LTIP — referring either to the LTIP/LTIS itself, which was circulated to shareholders, or the summary of its principal terms included in the circular, as required under LR 13.8.12 R.
  4. All 11 companies proposing amendments to an LTIP/LTIS released a circular providing an explanation of the effect of the proposed amendments — together with a statement that the full text of the LTIP/LTIS, as amended, would be available for the inspection before the shareholders’ vote—as required by LR 13.8.14R.   

On metrics, the review concluded that:

  1. Financial metrics such as total shareholder return, return on capital employed, and earnings per share have been the most used LTIP/LTIS performance metrics. 
  2. The use of non-financial metrics has doubled between 2020 and 2022, despite no specific LR requirements for LTIPs/LTISs to include non-financial metrics.  Non-financial metrics used by 8 of the 25 companies in their 2022 LTIPs/LTISs have a particular focus on sustainability-linked issues such as CO2 emissions reduction; water conservation; pollution; waste; and employee safety. 

Annual Financial Reports (“AFRs”)

In line with the theme of bolstering good corporate governance, the FCA used PMB 49 to also remind listed companies of their disclosure and filing requirements for AFRs.  Under the Disclosure and Transparency Rules (DTRs), listed companies must publish their AFR at the latest four months after the end of each financial year (DTR 4.1.3R) — unless they fall within one of the exemptions set out in DTR 4.4 and DTR TP1 19.  Importantly, all AFRs must be publicised and submitted in Extensible Hypertext Markup Language (XHTML) format in accordance with DTR 4.1.15R.

The FCA found that, whilst AFRs have been made public via regulatory announcements, they have not been filed on the national storage mechanism (NSM). Announcements have also omitted to mention that that the full AFR is available on the NSM or company website, thus falling foul of the filing requirement in DTR 6.2.10R. In the absence of non-compliance with the relevant DTRs by the prescribed timeline, the FCA has warned that it will suspend the listings of companies, until they comply with their periodic financial reporting obligations (in accordance with LR 5.1.1R).

Practical steps

The FCA makes use of PMB 49 to remind premium listed companies of their disclosure obligations under LR 9.4 and 13.8, highlighting that this also extends to establishing and maintaining adequate procedures, systems and controls to meet ongoing disclosure obligations (Listing Principle1).

As the FCA “envisages continuing to use thematic reviews to assess how companies have complied with LR requirements”, it is key for premium listed companies to ensure they have robust monitoring tools and compliance processes in place so as to enable them to meet their continuing disclosure obligations in a timely manner.

With the FCA continuing to closely monitor listed companies’ compliance with AFR obligations, listed companies should be mindful of their DTR obligations and ensure they have the appropriate processes in place to comply with AFR disclosure obligations in good time — in the absence of which the FCA will take appropriate supervisory action, including suspension of trading.


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