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Directors' know how' is a monthly article which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.

A win in the Central Securities Depositories Regulation

Following our response to the European Securities and Markets Authority's (ESMA) consultation on the Central Securities Depositories Regulation, ESMA has reduced the penalties for settlement fails, paying particular attention to trading in small and mid-size quoted companies stocks. 

ESMA's basic cash penalty rate proposal originally neglected the differences in liquidity of shares, which would, in effect, disproportionately penalise small and mid-size quoted companies and the trading of their shares. After we stressed this unintended effect and provided evidence to support it, ESMA amended the technical advice to the European Commission in its final report, recommending that penalty rates should duly consider the liquidity of the instruments and significantly reducing the penalty rates for illiquid shares and SME Growth Market shares.

Seeking views on the IASB's Conceptual Framework

The International Accounting Standards Board is consulting on the revision of their Conceptual Framework for Financial Reporting. The Conceptual Framework describes the objective of, and the concepts for, general purpose financial reporting. Its purpose is:

  • to assist the IASB to develop standards that are based on consistent concepts
  • to assist preparers to develop consistent accounting policies when no standard applies to a particular transaction or event, or when a Standard allows a choice of accounting policy; and
  • to assist others to understand and interpret the standards.

We are seeking views from our corporate members to find out what they would like to see changed in the Conceptual Framework. Please send any comments you may have on this to Maria Gomes by 19 October 2015.

TheCityUK publishes its review of the European listings regime

In July 2015, TheCityUK published Capital Markets for Growing Companies: A review of the European listings regime, which was done in response to the Chancellor's specific request in the March 2015 Budget. The report makes several recommendations on how to make capital markets more attractive to growing companies, including:

  • Creating more awareness of capital market amongst SMEs;
  • Decrease the regulatory requirements on companies seeking to raise funds via public equity, specifically through numerous simplifications of the Prospectus Directive;
  • Make information available to investors sooner during the IPO process; and
  • Reduce the disclosures needed in the case of secondary offers through changes to the Prospectus Directive.

A number of these recommendations echo concerns that we raised in our response to the European Commission's recent consultation on the Prospectus Directive.

BIS encourages companies to tweet to them about regulations

As part of the cutting red tape initiative, the Department of Business, Innovation and Skills (BIS) has created a twitter account to discuss business's concerns about regulation. BIS is keen for businesses to follow @CutRedTapeUK and to use the hashtag – #cutredtape – in your tweets.

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