On 26 March, the Financial Conduct Authority, Financial Reporting Council and Prudential Regulatory Authority announced a series of actions to help companies during the coronavirus pandemic.
Among these was a relaxing of the rules around corporate reporting. Here we look at what this means for corporates and what requirements they now have to meet.
Changes to the financial reporting timetable
The announcement gives temporary relief for listed companies which were due to complete their audited financial statements.
It gives companies that need extra time to complete their statements an additional two months in to publish them.
The usual rules require companies to publish audited financial statements within four months of their financial year end. Under the temporary relief, companies will have up to six months to do so. The regulators will hold off usual actions – including suspending the listing of companies that fail to publish statements in time – under the temporary relief.
Although many companies may want to keep to the four-month calendar, the regulator is urging ‘all those companies that feel it appropriate to utilise the additional 2 months to do so’ and for market participants not to adversely judge companies that do so.
The financial regulator is also ‘strongly’ recommending that listed companies review all elements of their timetables for publication of financial information.
This will enable them to make appropriate use of the time they now have available within regulatory deadlines ‘to ensure accurate and carefully prepared disclosures’, while recognising that ‘the practical challenges of completing financial statements during the coronavirus pandemic are significant’.
Moratorium on preliminary statements of account
On 21 March 2020, the FCA published a statement asking companies to observe a moratorium of at least two weeks on the publication of their preliminary statements of account ('prelims').
The 26 March announcement confirmed that this moratorium can end on 5 April 2020.
What rules are not being relaxed?
The 26 March announcement also makes clear the regulations that continue to apply during the pandemic, saying that at this time ‘it is as important as ever that the market is kept up to date with information’.
The Market Abuse Regulation (MAR) remains in force and companies are still required to fulfil their obligations concerning inside information as soon as possible, unless there’s a valid reason to delay disclosure under the regulation.
The announcement also says that:
‘Companies must continue to assess carefully what information constitutes inside information at this time, recognising that the global pandemic and policy responses to it may alter the nature of information that is material to a business’s prospects’.
Where can companies get more information?
The temporary relief is anticipated to last as long as the UK ‘faces the extreme disruption of the coronavirus pandemic and its aftermath’.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.