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Further measures and guidance for companies in response to the COVID-19 pandemic

30 Mar 2020

The Government, regulators and representative bodies have been responding swiftly to the challenges the COVID-19 outbreak has been presenting for companies. A number of measures have been announced recently, in addition to those already highlighted in the “Coronavirus updates” section of our website. You should get in touch with your usual contact in the DMH Stallard LLP corporate team, if you would like more information about these measures and guidance. 

Annual General Meetings

On 27 March 2020 the Chartered Governance Institute published a supplement to its original guidance on the impact of COVID-19 on AGMs (issued on 17 March 2020 –please see the “Coronavirus updates” section of our website).  This is to assist companies holding valid general meetings in light of the COVID-19 self-isolation measures which prohibit, among other things, public gatherings of more than two people. The guidance is aimed at listed companies, but will also be relevant to private companies. It considers limiting participation by shareholders to the use of proxies, other than as necessary to form the minimum quorum, and changing the venue.

The Government has also announced on 28 March 2020 that it will introduce legislation to ensure companies required to hold AGMs will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus. Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings.

The original guidance and supplemental guidance can be found at:
https://www.icsa.org.uk/knowledge/resources/agms-and-impact-of-covid-19

Stamp Duty

On 25 March 2020, HMRC announced temporary changes to its guidance on stamping stock transfer forms and on paying stamp duty in light of the COVID-19 pandemic. These measures include emailing stock transfer forms and other transfer documents to HMRC, with documents already sent by post being required to be re-submitted electronically, and payment of the stamp duty being made electronically. Once HMRC has checked the form and confirmed it has received payment it will send a letter by email that will confirm receipt of stamp duty, detail the transaction it is confirming receipt for and the reference codes and give assurance that HMRC will not pursue a penalty against a registrar for registering the new ownership of the shares. The letter is to be sent to the registrar of the company along with the stock transfer form and share certificate.

The detailed HMRC guidance must be referred to in all cases and can be found at:
https://www.gov.uk/guidance/stamp-duty-on-shares

Also, on 25 March 2020, Companies House published updated guidance on filing Form SH03 (Return of purchase of own shares) to reflect the electronic service introduced by HMRC to temporarily replace their usual stamp duty process. Companies House will accept and register an unstamped SH03 form, if it’s accompanied by a letter from HMRC confirming that the correct duty has been paid.

Details can be found at:
https://www.gov.uk/government/publications/notify-a-purchase-of-own-shares

Insolvency measures

The Government announced on 28 March 2020 that legislation will be introduced at the earliest opportunity to introduce new insolvency measures to assist companies whose business has been adversely affected by the coronavirus pandemic. These include temporarily suspending the wrongful trading provisions in the Insolvency Act, under which directors could incur personal liability for carrying on trading when there is no reasonable prospect that the company would avoid going into insolvent liquidation, so as to allow them to continue to incur credit and pay staff and suppliers. The suspension will apply retrospectively from 1 March 2020 for three months.

Additional measures include a moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure, protection of their supplies to enable them to continue trading during the moratorium and a new restructuring plan to which creditors are bound. The proposals will include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought.

https://www.gov.uk/government/news/regulations-temporarily-suspended-to-fast-track-supplies-of-ppe-to-nhs-staff-and-protect-companies-hit-by-covid-19

Guidance on preparing financial statements

On 26 March 2020, the Financial Reporting Council published guidance for companies preparing financial statements in the current environment of uncertainty created by the COVID-19 pandemic. The guidance highlights some key areas of focus for boards in maintaining strong corporate governance and provides high-level guidance on some of the most pervasive issues when preparing their annual report and other corporate reporting.

https://www.frc.org.uk/about-the-frc/covid-19/company-guidance-update-march-2020-(covid-19)

Listed companies

On 26 March 2020, the Financial Conduct Authority published a statement of policy announcing temporary relief under which UK listed companies that are required to comply with DTR 4.1 and certain other listed companies will be given an additional two months to publish their audited annual financial reports.

https://www.fca.org.uk/news/statements/delaying-annual-company-accounts-coronavirus 

On 25 March 2020, the London Stock Exchange published market notice N07/20 which makes temporary changes to the Dividend Procedure Timetable 2020 in light of the challenges and uncertainties caused by COVID-19. With immediate effect and until further notice, the London Stock Exchange will permit a deferral period of up to 30 business days for payment of a dividend, but no more than 60 business days after the record date.

https://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2020/n0720.pdf

On 26 March 2020, the Financial Reporting Council, the Financial Conduct Authority and the Prudential Regulation Authority published a joint statement announcing a series of actions to ensure information continues to flow to investors and support the continued functioning of the UK’s capital markets against the backdrop of the challenges and economic uncertainty created by the COVID-19 pandemic.

https://www.frc.org.uk/about-the-frc/covid-19/covid19-joint-statement-26th-march-2020

On 23 March 2020, the Financial Reporting Council confirmed that it fully supports the Financial Conduct Authority's request that all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks. The Financial Conduct Authority’s request was made on 21 March 2020 and the purpose of the moratorium is to ensure that listed companies and their boards are not rushed into issuing preliminary financial statements during the fast-changing circumstances presented by COVID-19.

Financial Reporting Council Press Release

https://www.frc.org.uk/news/march-2020-(1)/frc-supports-moratorium-in-corporate-reporting

Financial Conduct Authority request

https://www.fca.org.uk/publication/correspondence/fca-requests-delay-forthcoming-announcement-preliminary-financial-accounts.pdf

 

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