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Coronavirus – notification requirements for company reporting – UK

  • United Kingdom
  • Energy and infrastructure - Clean energy

18-03-2020

As the situation with the COVID-19 outbreak continues to develop in the UK and beyond, there are a few recent developments for UK companies to be aware of.

Year end reporting and filing accounts

Year end reporting

As a reminder, the Financial Reporting Council (FRC) published advice to all companies and auditors on COVID-19 related risk disclosures in year-end reports. The advice encourages companies to consider what related disclosures they might need in their year-end accounts, particularly where they are dependent on supply chains in, or have close trade associations with, China. However, the FRC letter noted that other companies could be affected, and companies will need to monitor developments to ensure that they provide up-to-date and meaningful disclosures. Clearly the situation continues to evolve rapidly given the current focus on the outbreak in Europe and beyond.

In the clean energy sector clearly supply chain contracts, feedstock arrangements, compliance with regulatory requirements particularly CfD obligations, compliance with other contractual obligations including under PPAs, potential breaches of financial covenants to name a few could impact reporting. In addition, access to any of the UK Government’s support announced on 17 March may also be relevant including business rate relief, loan guarantees and liquidity support and tax reliefs.

Companies should be discussing these issues with their auditors. The extent of the risk and the degree to which it might crystallise depends on companies' specific business circumstances.

For further details, see FRC advice to companies and auditors.

Filing accounts

Companies House has issued guidance for companies that are unable to file their accounts due to being affected by COVID-19. If, immediately before the filing deadline, it becomes apparent that companies will not be able to file their accounts due to being affected by the outbreak, companies may make an application to extend the period allowed for filing. The guidance contains links to the existing Companies House guidance on applying for more time. Companies should be aware that if they do not request such an extension then an automatic penalty will be imposed. Any appeals would then be dealt with under the existing Companies House guidance for appeals based on unforeseen ill health.

Listed and traded companies

As the uncertainty for business increases, listed and traded companies that are subject to the Market Abuse Regulation (MAR) will be considering their ongoing obligations with regards to the disclosure of inside information (under Article 17 of MAR). Listed and traded companies should consider whether material adverse effects or new developments that are directly or indirectly linked to the COVID-19 threat could satisfy the requirement for “inside information” as set out in MAR, and continue to assess their disclosure obligations as the impact of COVID-19 in the UK and elsewhere becomes more significant.

As a reminder, “Inside Information” is determined by reference to a variety of factors, including whether the information would be likely to have a significant effect on the price of the company’s traded shares or securities, and the likelihood that a reasonable investor would use such information to make investment decisions relating to the shares or securities.

The European Securities and Markets Association (ESMA) has recently issued advice which reinforces this. The advice also notes that in addition to market disclosure, companies with traded securities should also have regard to:

  • Business continuity planning – companies should be ready to enact their business continuity measures to ensure operational continuity in line with their regulatory obligations.
  • Financial reporting – as also identified by the FRC, companies should provide transparency on any impacts (actual and potential) on their business activities, financial situation and economic performance either in their 2019 year-end reports (if not yet finalised) or otherwise in their interim financial reporting disclosures.

For many traded companies (particularly those with a December year-end) we are approaching the AGM season. We are aware that ICSA, the Chartered Governance Institute, are working on some guidance on the impact of the virus and we will report on this as soon as it is published, but in the meantime we and companies will be considering the practical and legal implications for holding physical and/or hybrid AGMs and indeed general meetings.

What next?

This is clearly a fast moving situation, and further updates will follow in the coming weeks. The UK Government has issued general guidance for businesses which is available here.

For Eversheds Sutherland briefings and updates on specific topic areas, visit the client Coronavirus hub here.

Should you require immediate support on managing your response to the Coronavirus, please contact the team below who can quickly identify the right lawyers in our global offices to support you.