Ashurst Governance & Compliance Update – Issue 71

Equity Capital Markets

1. PISCES: Updated Admission and Disclosure Standards and Rules of the London Stock Exchange for new Private Securities Market

The London Stock Exchange has published amended versions of its Admission and Disclosure Standards and Rules of the London Stock Exchange. The rulebooks have been updated to reflect the creation of the Exchange's new Private Securities Market (PSM) - a Private Intermittent Securities and Capital Exchange System (PISCES) established under the PISCES Regulations. The amendments are as proposed in August in Market Notice N09/25. The updated rulebooks are now in force.

In addition to amendments to its existing rulebooks, in August the Exchange also published the following draft rulebooks for the PSM:

• PSM Rules: a new rulebook for companies seeking to join the PSM; and
• PSM Handbook: a new rulebook relating to compliance, actions, decisions and appeals under the PSM Rules.

Whilst the updates to the Exchange's existing rulebooks have now taken effect as originally proposed, responses in relation to the consultation on the new PSM rulebooks are being considered and an update will be provided in due course. The Exchange is yet to provide a specific launch date for the PSM, although this is expected later this year.

The Exchange is the first operator to be granted a PISCES Approval Notice by the Financial Conduct Authority. It will operate the PSM as a recognised investment exchange, using its existing trading infrastructure to enable private companies to facilitate trading of their securities at intervals through an auction facility.

Further information on PISCES can be found in our snapshot, client update and podcast.

2. FCA publishes Market Watch 83 with a focus on advisers' handling of inside information

The Financial Conduct Authority has published Market Watch 83 in which it sets out its observations on corporate finance firms’ systems and controls for handling inside information about their corporate clients. In turn, these observations will be of interest to those responsible within issuers for disclosure policies and systems and procedures relating to UK MAR generally.

Over a five-year period, the FCA undertook a series of ‘deep dive’ UK MAR systems and controls reviews of firms that provide advisory and corporate broking services to small and mid-cap companies. In this Market Watch, the FCA comments on market practices identified in its reviews and areas where it saw a heightened risk, focusing on market soundings, the control environment and personal account dealing.

The FCA's aim in sharing its observations is to help firms benchmark their systems and controls and consider whether their arrangements align with the FCA's expected standards.

Market soundings

The FCA's observations on market soundings include the following:

(a) Managing the number of Market Sounding Recipients (MSRs)

The FCA notes that the number of MSRs that a firm contacts in the context of a market sounding will vary depending on the transaction, and typically a broker acting as the Disclosing Market Participant (DMP) will work with the issuer to identify the investors or types of investors that need to be contacted to facilitate the particular transaction.

In its reviews, the FCA saw DMPs extending their market soundings to a relatively large number of MSRs without a process for considering the appropriateness or the number of MSRs contacted. As a result, the FCA encourages firms to consider whether their policies and procedures effectively manage the number of MSRs in order to control the flow of inside information.

(b) Risk of unlawfully disclosing inside information during a market sounding

In the context of gatekeeper arrangements where gatekeepers are the first point of contact for DMPs to approach and request consent to undertake a market sounding, the FCA identified a specific risk of unlawful disclosure after the DMP has received consent from the gatekeeper to undertake the sounding. The FCA references examples of DMPs sharing information with individuals at the MSR via e-mail and the list of recipients on the e-mail chain expanding without obvious control over who was added. The FCA highlights that DMPs and MSRs should consider and address the risk of unlawfully disclosing inside information as a result of sharing market sounding information with individuals at a MSR who have not been wall-crossed.

(c) Sharing a standard set of deal-specific information

The FCA observed varying practices for identifying and agreeing the deal-specific information to share with the MSR, noting that UK MAR Technical Standard 2016/960 requires the DMP to ensure all potential investors sounded receive the same level of information.

The FCA stresses that firms’ policies and procedures should make sure the same level of information is shared with every MSR. Best practice involved the DMP using an approved script for all market soundings, which helped to minimise differences in information shared.

Control environment

The FCA also highlights that firms should conduct a regular review of their systems and controls, considering factors such as whether they are proportionate to the nature, scale and complexity of their business. An example of good practice in this context was having structures in place, including oversight of compliance by the board, an internal committee or an external compliance consultant.

3. Aquis consults on launch of Aquis Support Services

Aquis Stock Exchange has published a consultation on the introduction of a new service - Aquis Support Services – to help companies comply with their continuing obligations under the Aquis Growth Market rulebooks. By way of reminder, the Aquis Stock Exchange is a junior marketplace which is designed specifically for growth enterprises.

To address feedback on whether the responsibilities of the corporate adviser following admission remain appropriate, the new product offering introduces an alternative to the retained corporate adviser. To implement this flexibility for issuers, the Aquis Growth Market Rulebooks will be amended to allow for an admitted company to elect to retain a corporate adviser on an ongoing basis or utilise Aquis Support Services. Admitted companies electing to utilise Acquis Support Services will receive direct support from a participating law firm.

The consultation follows the London Stock Exchange's Discussion Paper – Shaping the Future of AIM in which market engagement was sought to support the continued development of AIM, including proposals to streamline the nominated adviser role with a view to reducing unnecessary frictions and costs for companies. For an overview of the Discussion Paper, see AGC Update, Issue 64 – Item 9.

A number of other minor amendments are proposed to the Aquis Growth Market Rulebooks. Responses to the consultation are requested by 31 October 2025 and it is envisaged that revisions to the Rulebooks will come into effect in November 2025.

4. Share buyback reporting – FCA consults on rulebook changes

The FCA has published Quarterly Consultation CP25/24 in which it is consulting on various amendments to the FCA Handbook, including share buyback reporting obligations under UKLR 9.

In response to feedback from the FCA's listing reforms consultation process and its multi-firm review on share buybacks (see AGC update, Issue 7 - Item 8), the FCA is proposing to amend the deadline for notifying the market about share buyback transactions in UKLR 9.6.6R so that it is aligned with the deadline in article 2(3) of the UK Buyback and Stabilisation Regulation.

Under UKLR 9.6.6R, listed companies are required to notify purchases of own shares as soon as possible, and in any event no later than 7.30 am on the next business day after the day on which the purchase occurred. The proposed amendment would require notification to be made by the end of the seventh daily market session following the date of execution of such purchase. The FCA is not proposing to change the nature of the information to be disclosed under UKLR 9.6.6R.

In relation to the FCA's proposal to use the same terminology for the deadline as is used in article 2(3) of the UK Buyback and Stabilisation Regulation, the FCA is interested in views on whether this is helpful or requires further explanation, as well as how the market currently interprets ‘daily market sessions'.

Comments on the consultation should be submitted by 15 October 2025.

5. Dividends: LSE publishes 2026 Dividend Procedure Timetable

The London Stock Exchange has published its Dividend Procedure Timetable 2026. By way of reminder, the Dividend Procedure Timetable is published annually as a guide for companies with shares listed on the LSE's Main Market or admitted to trading on AIM on setting their interim and final dividend programmes. Where an issuer’s dividend timetable does not follow the Dividend Procedure Timetable, that dividend timetable must be approved by the LSE’s Corporate Actions team in advance of the announcement of the dividend in accordance with the Admission and Disclosure Standards.

As in the past, the latest timetable sets out a series of ex-dividend dates, its associated record date and the corresponding latest announcement date.

The LSE also reminds issuers that dividend information must be disseminated under the correct announcement headline category: dividends can be announced as part of an Interim or Final Results announcement, or under the headline category 'Dividend Declaration'.

 FCA launches new Handbook website

The FCA has launched its new Handbook website following a period of beta testing. No changes have been made to the structure or content of the Handbook as part of the website redesign and the previous Handbook website will remain live for a short period. Both versions will be updated as usual.

The new Handbook website is intended to offer improved functionality and ease of navigation. To that end, the FCA has published video guides to supplement its User Guides for the new website.

7. FCA publishes details of its arrangements for Christmas and New Year 2025/26

The FCA has published details of its approach to reviewing and processing listing applications over the Christmas and New Year period 2025/26. This includes the process for listing hearings.

Narrative and Financial Reporting

8.  FRC publishes Annual Review of Corporate Reporting

1. Impairment of assets
2. Cash flow statements
3. Use of financial instruments
4. Presentation of financial information
5. Revenue
6. Disclosures in strategic reports and Companies Act 2006 issues
7. Judgements and estimates
8. Income taxes
9. Consolidated financial statements (new entrant for 2024/25)
10. TCFD, CFD and climate-related narrative reporting

• queried the lawfulness of dividends which were not supported by the company's last audited accounts or where interim accounts had not been filed at Companies House;
• asked questions in relation to significant differences between the share premium balance disclosed in the consolidated and parent company financial statements, and the timing of the recognition of a distribution;
• asked companies for more information when the description of the business model and strategy in the strategic report disclosure was unclear and where a parent company heading a large group had taken advantage of the small companies' exemption from presenting a strategic report; and
• reminds reporting teams to refer back to the basic expectations for the strategic report, including those for quoted companies, as well as the statutory requirements for the payment of dividends.

• states that it continues to work with the FCA in relation to TCFD reporting in line with the supervisory strategy explained in Primary Market Bulletin 36 whilst reviewing for the first time the extent of compliance with Climate-related Financial Disclosures (CFD);
• raised fewer substantive queries in respect of such reporting than last year, with most questions being raised in relation to AIM and larger private companies;
• questioned companies that did not provide a qualitative or a quantitative analysis of the resilience of the company’s business model and strategy considering different climate-related scenarios in line with the CFD requirements and challenged a parent company that headed a large group that incorrectly applied the small companies’ exemption from presenting a strategic report (including the CFD disclosures); and
• asked a company to explain an apparent inconsistency between the reporting boundary used for its principal greenhouse gas (GHG) emissions target disclosed under the TCFD framework, and that for GHG data reported elsewhere in the annual report and accounts, and to confirm the basis of calculation of this target.

• tells a consistent and coherent story throughout the narrative reporting and financial statements;
• is clear, concise and understandable;
• includes all material and relevant information, including information not specifically required by standards, where it is necessary for users’ understanding; and
• includes only material and relevant information – good quality reporting does not necessarily require a greater volume of disclosure.

Economic Crime and Corporate Transparency Update

9. Identity verification

10. Statutory registers

11. Register of Overseas Entities

12. Access to WebFiling accounts to move to GOV.UK One Login

Corporate Crime

13. HM Treasury publishes policy note and draft amendments to the Money Laundering Regulations

• Clarifying due diligence requirements
  
  Under the proposals, the definition of "high-risk third countries" – which trigger a requirement for Enhanced Due Diligence (EDD) for money laundering purposes – will be limited to countries on the Financial Action Taskforce's (FATF) "call for action" list. Countries on FATF's "increased monitoring" list will no longer be within the definition of "high-risk third countries" that trigger an EDD requirement.
  
  The amendments also clarify that EDD is only required in relation to "unusually complex or unusually large" transactions (relative to the sector or nature of the transaction), which refines the previous requirement to apply EDD to all “complex or unusually large” transactions. Clarifying amendments are also proposed to the customer due diligence triggers for certain businesses (e.g. art market participants), including in relation to Pooled Client Accounts.
• Information sharing and system coordination
  
  The amendments seek to strengthen cooperation between AML supervisory bodies and other public bodies, by bringing Companies House and the Financial Regulators Complaints Commissioner into the scope of existing information sharing provisions.

• Aligning due diligence requirements
  
  Compliance with the regulations will be simplified by converting all monetary thresholds from euros to sterling to reflect the UK market, and aligning the criteria for registration and change in control for cryptoasset firms with those under the Financial Services and Markets Act 2000. Trust and Company Service Providers that sell off-the-shelf firms will also be brought into scope of the MLRs and will therefore be required to conduct customer due diligence and ongoing monitoring.

Audit

14. Financial Reporting Council launches programme to build capability and support growth in small UK audit firms