Corporate governance reforms: Government reply to Parliamentary Committee proposals

The FCA has set out its expectations under the Listing Rules that require sponsors to:

• satisfy themselves that directors understand their responsibilities and obligations under the Listing Rules, disclosure requirements and Transparency Rules (LR 8.3.4R);

• come to a reasonable opinion that directors have established procedures which enable the issuer to comply with the Listing Rules, disclosure requirements and Transparency Rules (LR 8.4.2R(3)); and

• come to a reasonable opinion that certain transactions will not have an adverse impact on the issuer’s ability to comply with the Listing Rules, disclosure requirements or Transparency Rules (8.4.12R(2)).

These expectations of sponsors are set out in three new technical notes which the FCA is consulting on in Primary Market Bulletin No.18. The consultation period ends on 11 October 2017.

The main theme of the proposed technical notes is that the FCA expects sponsors to demonstrate due and careful enquiry in the discharge of their obligations. All three notes warn sponsors not to apply a “one size fits all” approach and caution against relying on generic documents and/or work done by the issuer or other advisers, without challenge. It is also important for sponsors to note that the FCA expects them to record their assessments and retain any documentary evidence they have relied upon.
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