Listing Rules: Disclosure of rights attaching to securities obligations now in force

The Financial Conduct Authority's (FCA) consultation (CP19/23) on the obligation to disclose rights attaching to securities concluded with the publication of Handbook Notice 75 and the related Listing Rules instrument. The new Listing Rules are now in force and relevant issuers should consider whether they need to act in order to disclose and maintain publicly available information in relation to the rights attaching to their listed securities.

Who do the requirements apply to?

The new disclosure requirements apply to both premium and standard listed issuers with either equity or debt securities admitted to the Official List. The requirements to disclose details of the rights attached to shares issued by premium listed companies can be found in Listing Rules 9.2.6E – 9.2.6H, with corresponding provisions set out in LR14.3, LR17.3, LR 18.4, LR 19.4 and LR 20.4 in relation to  the securities of standard listed and debt issuers. 

Why are the requirements necessary?

The purpose of the new requirements is to make sure investors can have ready access to information that allows them to understand the rights attached to the listed securities they own. The FCA believe that where investors do not have access to such information, there is a risk that this can cause market disruption if an issuer announces an action that security holders were not aware was within the issuer’s rights to take. Accurate and relevant information about a security’s rights should be, and remain, publicly available throughout the life of the security. 

Many issuers will have already made such information available: since July 2005, pursuant to the Prospectus Directive, and more recently the Prospectus Regulation, issuers would have had to publish a prospectus that would have had to include a description of the rights attached to the securities. The prospectus would also have had to include information on any limitations of those rights, and the procedure for exercising them. Often, but not always, such prospectuses will remain publicly available. However, for securities issued before 2005, and for securities where the prospectus is not publicly available, this information may not be available at all. 

What action needs to be taken?

Where information relating to the rights attached to the securities has previously been forwarded to the FCA for publication and such information remains up to date, no further action needs to be taken. 

Where a prospectus or other document describing the rights attaching to the securities has not been submitted to the FCA for publication, the issuer must forward to the FCA one or more of the following: 

• the approved prospectus or listing particulars for its listed securities; 
• the relevant agreement or document setting out the terms and conditions on which its listed securities were issued; or
• a document describing the rights attached to the listed securities, any limitations on such rights and the procedure for exercise of such rights (which must be produced in accordance with the relevant Annex of the Prospectus Regulation that would have applied had the issuer been required to produce a prospectus for those listed securities). 

A UK-incorporated issuer will typically be able to satisfy this requirement by forwarding its articles of association for publication by uploading them to the National Storage Mechanism (NSM). The availability of an issuer's articles of association at Companies House and/or via its website does not discharge its publication obligations under the Listing Rules. 

Does all the information need to be available in one document?

No. The requirement is not intended to require listed issuers to produce or maintain a consolidated version of all information related to the rights and obligations attached to its issued securities. The FCA does not expect an issuer to produce anything new if the information is available in other sources. Therefore, if the relevant rights exist in more than one document, an issuer may upload those separate sources to the NSM, where an investor can piece the information together.

Is any further action required going forward?

If the rights attaching to securities change, resulting in the publicly available sources no longer being accurate, issuers are under an obligation to forward to the FCA for publication either: (i) an updated document setting out the rights attached to the securities (e.g. a copy of the updated articles of association or a new prospectus); or (ii) a document setting out the changes to such rights).