FILE PHOTO: Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson/File Photo
April 8, 2020
LONDON (Reuters) – Britain’s markets watchdog set out temporary measures on Wednesday to help companies raise cash quickly to get through the epidemic that has shuttered much of the economy.
The Financial Conduct Authority (FCA) said it was likely that many companies will turn to capital markets to raise money to support the recovery to come.
Under Britain’s lockdown, no more than two people can meet, making it far harder to obtain shareholder approval for a transaction under existing rules.
“In addition, the notice period for general meetings adds to transaction timetables and might also jeopardise an issuer’s ability to complete critical fundraising transactions quickly,” the FCA said.
Companies with a premium listing on the London Stock Exchange can ask the FCA for permission not to hold a general meeting to approve a capital raising, the watchdog said.
To obtain this dispensation, companies will need written undertakings from shareholders that they would back the transaction if a meeting were to be held.
The FCA said companies could also make use of the new simplified prospectus that was introduced last year to speed things up as investors are already familiar with the company.
“We encourage listed companies issuing new equity to recapitalise the company in response to the coronavirus crisis to use this simplified disclosure regime where possible,” the FCA said in a statement.
The FCA has also offered a workaround to companies regarding a rule that they must say in their prospectus that they have enough working capital to stay in business for the 12 months ahead.
“Our aim is to help companies to raise money quickly and effectively, while ensuring they respect the needs of investors, both current and future,” said Christopher Woolard, Interim Chief Executive of the FCA.
The FCA said the measures apply until further notice.
(Reporting by Huw Jones; Editing by Dhara Ranasinghe and Catherine Evans)
