Legal development

Ashurst Governance and Compliance Update Issue 16

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    IN THIS ARTICLE WE COVER THE FOLLOWING:
    Financial reporting

    1. Covid-19: Financial reporting deadline relaxations to come to an end
    ESEF reporting

    2. ESEF and the use of UKSEF 2022 taxonomies

     

    Financial reporting

    Covid-19: Financial reporting deadline relaxations to come to an end

    Companies subject to the FCA Handbook

    The Financial Conduct Authority has announced the removal of the temporary measures introduced in 2020 which allow companies subject to the requirements of Chapter 4 of its Disclosure Guidance and Transparency Rules further time to publish annual and half-yearly reports. The respective announcements in 2020 implementing the temporary measures can be found here (as to annual reports which permitted an extra two months for publication) and here (as to half-yearly reports which permitted an extra month).

    Although the effects of Covid-19 are still being felt, the FCA considers that practice has evolved sufficiently such that issuers and their advisors are now able to return to previous practices and methods of publishing appropriate financial information to support investor decision-making. Thus this additional time will no longer be available for reporting periods ending on or after 28 June 2022 and will mean that annual reports must be published at the latest four months after the end of a company's financial year (DTR 4.1.3R) and half-yearly reports must be published no later than three months from the end of a company's half year-end (DTR 4.2.2(2)R).

    The FCA has also rescinded the temporary measures it introduced regarding working capital statements and general meetings put in place to assist companies raising new share capital. As such the FCA will no longer approve prospectuses or circulars that use the temporarily revised approach to working capital statements after 28 June 2022; nor will the FCA grant dispensations from the requirement to hold general meetings from that date.

    AIM

    Under temporary measures published in March 2020, AIM-quoted companies could apply for a three-month extension to the reporting deadline for publication of their annual audited accounts under AIM Rule 19. In June 2020, a further temporary extension of one month to the deadline for publication of half-yearly reports under AIM Rule 18 was announced.

    The London Stock Exchange has now advised that these temporary measures will no longer be available for any annual financial periods and any half-year financial periods ending after 28 June 2022. On this basis, AIM companies will need to publish their annual reports within six months of the end of their financial year and half-yearly reports within three months of their half-year end.

    ESEF reporting

    ESEF and the use of UKSEF 2022 taxonomies

    The Financial Conduct Authority has published a consultation paper (CP22/5) which sets out proposed changes to the UK Transparency Directive European Single Electronic Format Regulation (EU) 2019/815 to allow companies to use a more up-to-date electronic format for their annual financial reports. By way of reminder, the FCA confirmed the range of taxonomies permitted to be used in December 2021

    Specifically, the proposed changes to the UK TD ESEF Regulation would mean annual financial reports filed with the National Storage Mechanism and prepared in accordance with DTR 4.1.1R:

    • would use the UKSEF 2022 taxonomy v.1.0.0 as the permitted taxonomy until and including 29 April 2022; and
    • would use the UKSEF 2022 taxonomy v.2.0.0 as the permitted taxonomy on and after 3 May 2022.

    For technical reasons, the FCA cannot accept both versions of the taxonomy into the NSM at the same time. Therefore, the last business day it would accept filings using the UKSEF 2022 taxonomy v.1.0.0 would be 29 April 2022. Version 2.0.0 reflects changes in International Financial Reporting Standards for tagging notes to financial statements (which issuers can choose to apply before they become mandatory next year) and a number of 'general taxonomy improvements' such as clearer labels.

    Comments on the consultation should be submitted by 8 April 2022.

    If you would like to receive future updates on Ashursts Governance and Compliance please contact our Data Compliance Team

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.
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