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COVID-19 has created unprecedented disruption to business, causing all companies to re-think and re-plan almost all aspects of their business and operations. In order to continue trading companies are needing to adapt many aspects of their business operations. 

Responding to this, regulators and markets have introduced some flexibility and provided guidance on practical steps companies can take to continue to trade without falling foul of meeting regulatory and fiduciary duties owed to shareholders and the market. 

The QCA continues to play an important role in informing regulators and the market of how normal business operations are being affected and offering advice on practical steps regulators and markets can take to help companies overcome these obstacles without compromising market integrity and confidence of investors. 

Below are a number of key announcements companies need to be aware of:

FCA Policy Statement on measures to support companies to raise share capital

The Financial Conduct Authority (FCA) has announced  a series of measures aimed at assisting companies to raise new share capital in response to the COVID-19 pandemic. Details of the statement can be found on the FCA’s website.

The policy statement covers the following:

  • Working Capital Statement 
  • Modification of general meeting requirements under the Listing Rules

  • Reminder for companies to use shorter form prospectus 

  • Reiteration of previous announcements regarding the Pre-Emption Guidelines

The QCA has produced a summary of the policy statement which can be found here


Flexibility for auditors and companies on the preparation of financial reports

View the joint statement by the FCA, Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) here.

As a result, flexibility will be exercised, and guidance has been issued in the following areas: 

  • The FCA will allow companies a further 2 months to publish audited financial reports 
  • The FRC has published guidance for companies preparing financial statements 
  • The FRC has published guidance for audit firms dealing with challenges in obtaining audit evidence. 

The QCA has produced a summary of the announcement and guidance here.


Flexibility for AIM quoted companies in relation to suspension of trading and the engagement responsibilities of nomads

View the Inside AIM statement here, The announcement is summarised below: 

  • Where an AIM company requires more time to issue a fully compliant notification, the Nomad should approach AIM Regulation to discuss whether a temporary suspension is required.
  • Suspended AIM companies – the LSE will cancel the admission of AIM securities which have been suspended from trading for six months, to 12 months.
  • Engagement responsibilities for Nomads – the Exchange will temporarily suspend the requirement for a Nomad to make a physical site visit to a new client where travel restrictions and social distancing measures are implemented, provided the Nomad uses alternative measures, such as a virtual meeting.

The QCA has produced a summary and guidance for companies here.


Guidance from the Pre-Emption Group on Pre-Emption Rights for share capital issuances

The Pre-Emption Group – which issues best practice documents regarding authorities to disapply pre-emption rights – has issued a recommendation that investors consider, on a case-by-case basis, supporting issuances by companies of up to 20% of their issued share capital on a temporary basis, rather than the 5% for general corporate purposes with an additional 5% for specified acquisitions or investments. View the statement here

The QCA has produced a summary and guidance for companies here.


Flexibility from Companies House to apply for a three-month extension to file company accounts without penalty

View the guidance on how to apply for the extension from Companies House here.


Guidance on holding AGMs under Corona Virus Restrictions 

This guidance and an updated supplement can be viewed here.

It has been produced by The Chartered Governance Institute with the support of a collection of legal firms as well as organisations like the FRC, the Investment Association, and the QCA. The Department for Business, Energy and Industrial Strategy has also reviewed the guidance.

The supplement offers additional guidance in light of the ‘Stay at home’ Government measures including: 

  • How to ensure that the meeting is quorate
  • who should chair the meeting
  • which directors will be allowed or expected to attend the general meeting 
  • where to hold the meeting in the event of the planned venue being unavailable or otherwise inaccessible, and
  • encouraging shareholders to vote by proxy.


ESMA Public Statement on Accounting Implications of COVID-19 

The European Securities an Markets Authority (ESMA)  have published a public statement 'Accounting implications of the COVID-19 outbreak on the calculation of expected credit losses in accordance with IFRS 9'.

ESMA has published the statement in order to promote consistent application of International Financial Reporting Standards (IFRS) in the European Union (EU) and avoid divergence in practice on the application of IFRS 9 Financial Instruments in the specific context of the COVID-19 outbreak. The Statement addresses in particular the accounting implications of the measures taken or proposed by national governments and EU bodies to address the adverse systemic economic impact of the COVID-19. The statement can be accessed here 



On 17 April 2020, the FRC in conjunction with BEIS published a Q&A document to provide companies with information to help assist with their reporting and filing activities over the coming months. This includes measures in respect of company filings, AGMs and other general meetings during the current coronavirus outbreak. The intention is to alleviate difficulties in meeting statutory obligations to shareholder meetings and file documentation with Companies House.

In the Q&A, the following guidance is provided:

  • The form that the planned flexibility on AGMs and other general meetings will take.
  • Whether the deadline for holding AGMs will be extended. 
  • Safeguarding shareholder engagement in closed meetings.
  • Dealing with shareholder requests for hard copies of AGM notices or other documentation.

If you wish to view the Q&A, please do so here.


FCA Statement of Policy

On 8 April 2020, the FCA issued a statement announcing a series of measures aimed at assisting companies to raise new share capital in response to the Coronavirus (COVID-19) pandemic. Details of the statement can be found on the FCA’s website.

The package includes a combination of temporary policy interventions that seek to provide certainty for companies and their advisers of the FCA’s expectations during the crisis. It aims to do so in a way that should facilitate new capital being raised in an efficient manner, whilst continuing to ensure that shareholders are properly informed.

The key new measures relate to:

  • Working capital statements:
  • General meeting requirements under the Listing Rules:
    • In order to alleviate some of the challenges faced by companies, the FCA is modifying their Listing Rules so that where a General Meeting is required for Class 1 transactions and Related Party transactions, the company can apply to the FCA for a dispensation from the need to hold the General Meeting.

The FCA also reminded companies to utilise:

  • Shorter form prospectuses:
    • The FCA is encouraging companies issuing new equity to recapitalise to use the new simplified disclosure regime, which is set out in the new Prospectus Regulation that was introduced in 2019. This regime is available to all companies that have been admitted to trading on a regulated market or SME Growth Market for at least 18 months.

If you wish to read the Statement of Policy, please click here.


FCA statement on SM&CR

On 3 April 2020, the FCA set out their expectations for solo-regulated firms in respect of the Senior Managers and Certification Regime (SM&CR) during the coronavirus pandemic. The FCA recognises that firms directly affected by the coronavirus will need to keep their governance arrangements under review and make appropriate changes as circumstances change. Firms are not expected to have a single Senior Manager responsible for their coronavirus response.

Senior managers are responsible for risks in their areas of responsibility and should be considering:

  • Where the current situation might lead to emerging risks; and
  • How it affects existing risks.

The FCA recognises that some firms will need to make temporary arrangements to cover absences or change Senior Management responsibilities in response to the pandemic. As such, the FCA do not intend to enforce the requirement on firms to submit updated Statements of Responsibilities, if the change:

  • Is made to cover multiple sicknesses; and
  • Is temporary and expected to revert back to a firm’s previous arrangements.

Further details can be found on the FCA’s webpage here.


FCA webpage on wet signatures

On 20 April 2020, the FCA set out its expectation of firms when dealing with the need for ‘wet-ink’ signatures (signing a document by hand).

In relation to agreements, the FCA state that their rules do not explicitly require wet-ink signatures in agreements and do not prevent firms from using electronic signatures in agreements. However, the FCA urges firms to consider the legal position themselves as the validity of electronic signatures is a matter of law.

On forms, the FCA state that they will accept electronic signatures for fund-related applications and on all applications from mutual societies. Firms may use electronic signatures for all interactions with the FCA.

Further information can be found on the FCA’s webpage here.


FRC update guidance on modified audit

Further to the guidance issued on 16 March 2020, the FRC has today (21 April 2020) published further guidance on modified auditors’ opinions and reports during the Coronavirus (Covid-19) pandemic. The announcement from the FRC summarises the types of modified audit opinions that can be issued under the International Standards on Auditing (ISA’s) (UK).

As a result of current circumstances, auditors may be required to consider modifying their audit opinion. This may arise due to certain restrictions in place that have meant that audit procedures, such as site visits and physical inventory testing, cannot be performed, which means that the required volume and quality of reliable audit evidence cannot be obtained. Furthermore, management’s judgements in certain areas, such as cashflow estimates underpinning the use of the going concern basis of accounting, may be difficult to support in light of the current pandemic.

The publication of this guidance has important implications for both auditors and companies. In particular, it is a useful document for helping companies understand the nature of modified audit reports, such as when and why an auditor will seek to modify or amend their opinion. Having this knowledge will then allow companies to engage with their auditors and have useful discussions around the reasoning for the modification.

The flowchart provided at the end of the document, will help companies prepare for discussions with their auditors.


FRC have issued further updated guidance for companies on reporting and governance which can be accessed here.


Charles Russell Speechlys has written a regulatory update for listed companies, click here to access. 






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