Regulations and disclosures & Securities Listing Regime Flashcards
What are disclosure requirements and why are they necessary?
In order to ensure that company investors can make investment decisions based upon same information and that no investors have more information than others, listed and other companies with publicly traded shares are required to publish price sensitive information as soon as possible and
to inform their market of any changes to existing forecasts, predictions or market expectations.
What is the minimum disclosure requirements for all companies?
All companies are under an obligation to disclose the following types of information:
constitution and any changes;
directors and company secretaries;
changes of registered details including company name, registered office or SAIL address;
share capital;
accounts;
mortgages and charges;
and persons with significant control.
In addition, companies must notify the Registrar on the incorporation of the company and whenever there are any changes. Plus a confirmation statement annually.
All companies must comply with the business names disclosure requirements on all their business stationery, invoices, emails etc. requiring disclosure of their registered name, registered office address, place of registration and registered number.
What additional disclosure requirements are needed for listed companies?
The CA2006 advises that quoted companies (or listed in the UK) provide the following additional disclosures.
- Strategic Report
- Directors Report
- Directors Remuneration Report
- Auditor’s Report
- Summary information (in place of full statutory accounts) or accounts where applicable
- Directors remuneration policy
What information would you find in the strategic report?
Strategic report - in the annual report and accounts would include:
main trends and factors likely to affect future development, performance or position of the company;
environmental matters;
company employees;
social and community interests;
the company’s strategy;
the company’s business model;
the genders of its directors, senior managers and employees; and
those third parties with which the company has contracts or arrangements essential to its business.
What information would you find in the Directors report?
A listed company’s directors’ report must also include information on the company’s capital and holders of securities and agreements in relation to change of control/takeover.
The directors of a quoted company must include in the directors’ report to the financial statements details of the acquisition by the company of any of its own shares.
What information would you find in the Directors Remuneration report?
A statement by the chair of remuneration committee;
single total figure table of remuneration for each director;
details of any payments to past directors;
where the directors’ remuneration policy is not being put to a resolution at the AGM,
performance targets for the financial year;
details of remuneration committee including an assessment of independence;
a statement of voting on the remuneration report and remuneration policy in the previous year; and
a separate section on the remuneration policy.
A quoted company must put a resolution approving the directors’ remuneration report. The resolution is an advisory one and, if lost, does not invalidate the payment of directors’ remuneration (CA2006 s. 439).
What information would you find in the Auditor’s report?
Auditable sections of the directors’ remuneration report, strategic report, directors’ report and the corporate governance statement.
What is summary information and what does it replace?
Companies are permitted to issue the strategic report and supplemental
material to their shareholders in place of the full statutory accounts.
Any shareholder receiving the strategic report and supplemental material may require that the full accounts be sent to them.
Quoted companies must include, in addition to the material set out in CA2006 s. 426A, a copy of that part of the remuneration report which sets out the single total figure table (s. 426A(2)(e))
Where must quoted companies display their annual accounts and reports and for what time period?
Quoted companies to make available, on their website, their annual accounts and reports until annual accounts and reports for the next financial year are made available on the website.
Access to the website must be:
available to all members of the public (and not just to members of the
company) throughout the period; and be free of charge.
Any member or holder of debentures of a quoted company is entitled to be provided, on demand and without charge, with a single copy of the following documents:
last annual accounts;
last directors’ remuneration report;
last strategic report;
last directors’ report;
and auditor’s report on the accounts
(CA2006 s.432)
When must the Directors’ remuneration policy be received and what processes are in place in connection with this?
A quoted company must, at least every THREE years, put a RESOLUTION to the meeting held to receive the annual report and accounts and a
RESOLUTION to approve the directors’ remuneration policy or any
revisions to the directors’ remuneration policy (s. 439A).
Any changes to the existing, approved, directors’ remuneration policy are NOT EFFECTIVE UNTIL APPROVED by the members.
What additional requirements exist in terms of filing for the Directors’ remuneration report in quoted companies?
CA2006 s. 447
Filing obligations of quoted companies includes a requirement to file the
directors’ remuneration report with the Registrar of Companies together with the auditor’s report on the auditable part of the directors’ remuneration report , in addition to the company’s annual accounts, the directors’ report and any separate corporate governance statement
What is required in traded companies around notice periods for general meetings?
For traded companies, the notice periods to convene a general meeting are:
general meetings where specified conditions (below) met: 14 days;
all other general meetings: 21 days.
In order for a general meeting to be held on 14 days’ notice, the circumstances are as follows:
the meeting is not an annual general meeting (AGM);
members are offered an electronic voting facility;
and
a special resolution has been passed to reduce the notice period to 14 days.
This must have happened at either the immediately preceding AGM or at a general meeting held since the last AGM. If all three conditions are met, the notice period will be 14 days.
In all other cases, 21 days’ notice will be required.
What is a PDMR?
A PDMR is a person discharging managerial responsibilities.
A PDMR is a natural or legal person in an issuer who is either (MAR 1(13) and (25)):
a member of the administrative, management or supervisory body of that entity;
or
a senior executive who is not a member of the administrative, management or
supervisory body of that entity, but who has regular access to inside information relating directly or indirectly to that entity and the power to make managerial decisions affecting the future developments and business prospects of that entity.
What is a PDMRs PCA?
A PCA is a person closely associated with a PDMR.
A PDMRs PCA includes:
spouse or partner considered equivalent to a spouse under national law;
dependent children of the PDMR;
a relative of the PDMR who has shared the same residence for at least one year;
any legal person, trust or partnership, the managerial duties and responsibilities of
which are carried out by the PDMR or PCA;
anyone directly or indirectly controlled by the PDMR or PCA;
anyone established for the benefit of the PDMR or PCA; and
anyone whose economic interests are substantially the same as the PDMR or PCA (MAR 3(1)(26)).
What are the disclosure requirements under the MAR 19 in connection with PDMR share transactions?
MAR 19 contains details of the requirement for PDMRs to notify any
transactions in shares undertaken by themselves or their PCAs.
In addition to notifying the company, PDMRs are now also required to notify
the FCA of any transactions (MAR 19(1)).
There is a prescribed template for the PDMR disclosure to the FCA (MAR 19(6))and this may be completed and submitted online from the FCA website.
Notifiable transactions must be disclosed within three business days:
by the PDMR or PCA to the FCA and the company; and
by the company to the market via an RIS (MAR 19(2) and (3)).
Companies must notify their PDMRs in writing of their obligations under MAR 19 and draw up a list of their PDMRs and PCAs (MAR 19(5)).
PDMRs must notify their PCAs in writing of their obligations under MAR 19 and keep a copy of that notification (MAR 19(5)).
Notifications by PDMRs need not be made until the aggregate of all
transactions in any calendar year exceeds €5,000 although notifications below this limit may be made on a voluntary basis (MAR 19(8)).
