COVID-19 has dramatically altered our lives and the world with a swiftness and ferocity never before seen in most people’s lifetimes. It has upended financial markets, challenged the fundamentals of how companies operate and triggered a re-evaluation of long-held assumptions about the global economy.
While businesses have been scrambling to put plans in place, the Government has acted quickly to give companies some latitude.
A mountain of guidance has been published on corporate actions, reporting and disclosure. If you’re not looking forward to wading through it all, we’ve brought together all the key points and resources you need right now in one place.
The Investment Association (IA) guidance
The IA has sent a letter to FTSE 350 chairs outlining its views in light of COVID-19 on the following areas: engagement and communication, financial reporting, AGMs, dividends, executive pay and long-term capital raising.
On May 14, the Government announced temporary measures to give companies flexibility around Annual General Meetings (AGMs) and other meetings will be made retrospective to 26 March whereby companies can postpone their annual general meetings (AGM) or hold it online. The Department for Business, Energy and Industrial Strategy (BEIS) and the FRC have published an updated Q&A on legislation to assist companies for which COVID-19 restrictions make it difficult to hold meetings and to file documentation on the Companies Register. The Q&A confirms that the legislation will apply to general meetings as well as annual general meetings. Elsewhere, ICSA: The Chartered Governance Institute has published an updated version of its guidance on holding AGMs and guidance on virtual board meetings.
Listed company annual reporting
The Financial Conduct Authority (FCA) has published a statement which gives listed companies an additional two months to publish their annual report and accounts. Under the Transparency Directive companies currently have four months from their financial year end to publish. Now they will have six.
AIM annual reporting
The London Stock Exchange has said AIM companies can apply for a three-month extension to the deadline for publication of their annual reports.
Filing accounts at Companies House
Companies House has said companies will automatically be granted a three-month extension to the filing of their accounts following a fast-track online process. Over 10,000 businesses have already applied for the extension successfully.
On May 20, the Financial Reporting Council (FRC) updated its guidance for companies on corporate reporting during the COVID-19 pandemic by adding sections on interim results, exceptional or similar items and alternative performance measures (APMs). The guidance also highlights some key areas for companies to consider such as the going concern statement and business viability as well as including additional disclosures around risk management and internal control systems.
Gender pay gap reporting
The government has suspended the gender pay gap deadlines for this reporting year (2019/20). There will be no expectation on employers to report their data.
Preliminary results announcements
On March 21, the FCA asked all listed companies to delay the announcement of their preliminary results for at least two weeks. It believes issuing preliminary financial statements in advance of the full audited financial statements could hinder investor trust and put undue strain on auditors given the unprecedented events of the last few weeks. The FCA recently confirmed that the moratorium can end on 5 April 2020.
The LSE has published guidance stating that from 25 March 2020, companies will have a deferral period of up to 30 business days for payment of a dividend, but not more than 60 business days after the record date. The FRC has also provided guidance around the payment of dividends stating that if the company is no longer able to pay a dividend, directors should halt payment and communicate appropriately to the market.
As companies figure out how to respond to the impacts of COVID-19, the measures above are aimed to provide some welcome relief. The picture is continuously evolving, but we’re on hand to provide our clients with the most comprehensive and up-to-date understanding of the shifting landscape – so you can focus on keeping your business on track.
Look out for more updates here, but in the meantime:
- Want to share this with your teams? We’ve produced a simple one-page summary ready and waiting for you to distribute. You can find it here.
- If you’d like more specific help or advice on how to navigate reporting this year, do get in touch.
By Kay Kayachith