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Mar 23, 2020

FCA asks UK issuers to delay results amid Covid-19 disruption fears

Moratorium designed to prevent investors from relying on outdated market information

UK regulator the Financial Conduct Authority (FCA) is asking British firms to delay publication of preliminary results for at least two weeks in response to business disruptions triggered by the Covid-19 crisis in the last couple of weeks, reveals the authority in a statement published last week. 

On March 21, the FCA sent a letter to listed companies based in the UK, requesting that firms due to present preliminary financial statements in the upcoming days should withhold their results in the following two weeks. 

Imposing a two-week moratorium is designed to ensure sufficient time for companies to assess the impact of the Covid-19 crisis on their financial results and relieve the pressure on audit professionals. The move also aims to prevent investors from acting on inaccurate financial data. 

The practice of issuing preliminary financial statements earlier than the actual regulatory deadline is a common market practice among UK listed companies, according to the statement.

Currently, the FCA is in talks with the Financial Reporting Council and the Prudential Regulation Authority, a UK financial services regulatory body, about a package of measures intended to ease the pressure on British issuers. Details about upcoming measures will be announced once the authority has more clarity on them, according to the FCA press office.

The regulator reminds companies that the Market Abuse Regulation, an EU-mandated regime dealing with market abuse, market manipulation and insider dealing, remains in force and issuers are still required to announce information to the market as soon as possible, unless providing a valid reason for the disclosure delay.

In the US, similar measures have been taken to ease the burden of companies’ disclosure requirements and prevent them from reporting out-of-date information. The SEC issued regulatory relief for issuers affected by Covid-19 in early March, allowing them a 45-day delay for disclosures – including quarterly reports – that were scheduled for release between March 1 and April 30. 

In February, several regulators and stock exchanges in Asia also rushed to help listed companies. The Shenzhen and Shanghai stock exchanges rescheduled the annual reports’ submission deadline for one month, postponing disclosure to April 30, 2020. South Korea’s Financial Services Commission has granted similar regulatory relief for listed companies.