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“This Moment is as True a Testament there is to the Human Spirit ”

Updated: Apr 20



The last few months have completely changed the way we operate our lives. As a society we have had to endure many hardships and much uncertainty, and unfortunately that uncertainty is only likely to increase. Experts predict we are to expect ‘lockdown’ at least until the end of June, with the economic impacts of this virus lasting much much longer.


In these times, among those struggling are financial firms across the world. Although in comparison to the individual hardship that many are going through, small and large companies alike may not get too much sympathy. However, no matter the organisation, these are the companies that provide people their income and livelihood, and it is therefore essential that they still run.


One aspect that has become increasingly confusing for such financial firms is regulation- if significant proportion of a workforce can no longer work, or business are not transacting as frequently and going into liquidation, do they still have to comply with the stringent financial regulations that the FCA and more widely, the EU enforces? In short, Yes.


The events surrounding the coronavirus (Covid-19) pandemic are unprecedented and the impact on people’s health and the health of companies in the real economy is significant and widespread. It is likely that many companies will turn to UK capital markets to raise money to support the recovery to come and the UK regulator has introduced some measures in order to aid this. These markets have already been identified by the FCA during its 2019 thematic review of being at risk to money laundering and fraud.


This week, the FCA announced these new measures to help such companies raise new funding, whilst retaining an appropriate degree of investor protection.

The package includes a combination of temporary policy interventions and reminders of some existing options for companies and their current and prospective shareholders. These include, but not inclusive to:


  • ‘Providing clarity on the FCA’s expectations about the due diligence supporting ‘working capital statements’ in share prospectuses given the significant economic uncertainties caused by coronavirus;

  • The ability to apply to the FCA for waivers to ensure that shareholder approval can be sought for certain transactions without the need to hold a general meeting given government guidelines on social distancing;

  • Welcoming recent industry work on placings of new shares to agree sensible steps to balance the pre-emption rights of existing shareholders with the need for these transactions to be done as efficiently as possible given the economic environment; and

  • Encouraging eligible companies to make use of the new simplified prospectus, introduced by the Prospectus Regulation in 2019. These prospectuses, recognising that the investor base has access to a range of information already relating to the issuer, remove the need to include information such as organisational structure, capital resources, remuneration and benefits and board practices’[1].


These measures, taken together, provide certainty for issuers and their advisors on the FCA’s expectations during this crisis. This should facilitate new capital being raised as efficiently as possible in ways that balance the need to support UK listed companies and the wider economy with the need to ensure that shareholders are properly informed, consulted where required, and their rights are respected. The regulators response to the ever- evolving situation surrounding the coronavirus will continue to evolve as the situation develops.


By Lauren Parmenter, Junior Consultant at Lysis Group


[1] https://www.fca.org.uk/news/press-releases/additional-primary-market-measures-aid-listed-companies

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