Engagement feedback on the new public offers and admissions to trading regime

The Financial Conduct Authority (FCA) has issued an „Engagement feedback paper“ which outlines the responses the Authority has received to a number of so-called „engagement papers“ it published earlier this year to collect views on aspects to be considered in the design of a new public offers and admissions to trading regime.
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##### Background
To recall, in May and July 2023, the FCA issued a total of six engagement papers all addressing possible new rules to improve the current admissions to trading regime, reduce regulatory burdens of listed firms, and apply a more proportionate approach towards market supervision, while maintaining the highest possible standards for consumer protection. The engagement papers are briefly summarized below:
Engagement Paper 1: In this engagement paper, the FCA primarily sought feedback in relation to a „new“ UK prospectus regime, particularly regarding the preparation and issuance of prospectuses, including the scope of application (who should be required to prepare a prospectus, who should be exempt), the content of the prospectus (summary document, historical financial data, ESG data), a possible calibration to align prospectus requirements with disclosure requirements of listed companies, or the validity period of a prospectus (EventID 21231).
Engagement Paper 2: In this engagement paper, the FCA sought comments on the prospectus requirements for subsequent stock issues (the issuer already has issued stock) under the „new“ prospectus regime with the main goal of fostering capital raising activities and reducing the burdens of issuers while maintaining a high level of investor protection. Key issues addressed in this document included the protection of investors, particularly retail investors, the transfer of basis information on subsequent issuances to the market, and the scope of information that shall be presented in subsequent stock issuances (EventID 21241).
Engagement Paper 3: In this engagement paper, the FCA sought feedback on the inclusion of a so-called „Protected Forward-Looking Statement (PFLS)“ in the prospectus of an issuer to encourage the disclosure of forward-looking information that would otherwise not be made. The FCA thereby addressed the design and content of a PFLS, the delineation to the already required forward-looking information in prospectuses, the content of an accompanying „disclaimer“, and the disclosure of assumptions underlying a PFLS (EventID 21328).
Engagement Paper 4: In this engagement paper, the FCA requested comments on the functioning of the current prospectus regime for non-equity securities in light of the FCA’s aim to encourage listing and increase access to listings. The FCA also sought views on some proposals to achieve these objectives, e.g. the removal of the dual disclosure standards, the implementation of a new issuance scheme for „simple standardised unsubordinated unsecured corporate bonds“, or the enhancement of prospectus disclosures as regards ESG-bonds (EventID 21331).
Engagement Paper 5: In this engagement paper, the FCA sought views on requirements pertaining to the due diligence obligations of „Public Offer Platform“ operators and disclosures to be made by them and by the firms offering securities via the platform, including the obligation to review an offering company’s business registrations, evaluate its financial situation, or assess the fitness of senior personnel. As far as disclosures are concerned, the FCA suggested that platform operators share general information about their services and the risks involved. They should also disclose their policies and procedures, including those related to due diligence and costs. Furthermore, platform operators should disclose all relevant information about the companies offering securities on their platform, which may include financial information, information on business models, and security details (EventID 22251).
Engagement Paper 6: In this final engagement paper, the FCA sought views on prospectus and other advertisement requirements that shall be implemented by a primary MTF with a view of promoting investor participation and providing quality information to investors. Key issues addressed in this paper included the circumstances in which a primary MTF should require the publication of an MTF admission prospectus, who should be responsible for such a document, the circumstances in which a supplementary prospectus should be required, how and when withdrawal rights should be exercised, and the requirements for advertisements related to securities being admitted to trading on a primary MTF (EventID 22212).
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##### Responses
The FCA received a large number of feedback during its engagement process on the proposed changes to the public offers and admissions to trading regime. The feedback was gathered through written submissions, roundtable discussions, and events, providing a comprehensive view from a wide range of stakeholders, including industry experts, trade associations, law firms, accountancy groups, market operators, and consumer representatives.
One of the key areas of feedback related to the prospectus requirements for further issuances. While some respondents supported a more ambitious approach, including the removal of the prospectus requirement altogether for subsequent issuances, others favored retaining the prospectus but with more flexibility for issuers. There was also a call for warnings about specific factors affecting the accuracy of forward-looking statements and for including relevant assumptions and inputs in the PFLS. Additionally, respondents expressed mixed views on the format of related disclosures, with most in favor of issuer discretion.
Regarding non-equity securities, the feedback indicated broad support for the current UK prospectus regime in the context of wholesale debt capital markets. There was also a consensus on the removal of the dual disclosure standards in prospectuses for retail and wholesale non-equity securities, with strong support for using the wholesale disclosure standard as a starting point. Furthermore, there was interest in a scheme to encourage the issuance of standardized corporate bonds aimed at a wide range of investors.
In the context of public offer platforms, there was general consent about the FCA’s approach to disclosure and due diligence, although some respondents preferred a more principles-based approach. There were also discussions on the need for consumer testing to determine the most effective approaches in supporting consumers in making investment decisions and addressing the risk of scams and fraud.
The contents of a prospectus have also been a focus of the feedback. Some respondents recommended that the FCA consider requiring the inclusion of environmental, social, and governance (ESG) considerations in the prospectus. They suggested that the FCA should provide guidance on how to disclose ESG information in a clear and transparent manner. In same context, stakeholders emphasized the need for clear and concise language in the prospectus, as well as the inclusion of relevant and material information. They also suggested the FCA to provide guidance on what constitutes „material“ information.
Feedback has also been provided on the topic of takeovers. Commenters have expressed concerns about the potential for conflicts of interest and have recommended that the FCA establish clear rules and procedures for takeovers. They suggested that the FCA should require issuers to disclose any potential conflicts of interest and should provide guidance on how to manage conflicts of interest in a takeover situation.
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##### Way forward
The FCA is currently developing detailed policy proposals and aims to consult on these proposals in summer 2024. Besides the feedback received from these engagement papers, equality and diversity considerations will also be taken into account in the development of these proposals. The FCA is committed to creating a new admissions to trading regime that is fair, transparent, and accessible to all issuers and investors.
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Details on the feedback may be found in the enclosed document.