Key regulatory topics for UK-based IROs this summer
This article was produced by ELITE Connect and originally published on the ELITE Connect platform
To help those working within IR focus on the plethora of regulations and trends we can expect over the next few months, we hear from Laura Hayter, head of policy and communications at the Investor Relations Society (IR Society), who shares her views on the issues IROs should focus their time and resources on.
Elite Connect: What are the main regulatory issues IROs need to focus on at the moment?
Laura Hayter: The past 12 months have certainly seen a change in pace in regulation for IROs with the implementation of the Market Abuse Regulation (Mar) and the EU Shareholder Rights Directive, as well as the upcoming Mifid II directive in early 2018. While Mar may have placed a procedural burden on companies, all these regulatory concepts center around the heart of best practice IR: disclosure and transparency. Factor in the maelstrom of political, economic and social changes arising, and the role of IR becomes ever-more important. It is therefore vital for us to remind our members of the IR Society’s five Cs of IR: clarity, consistency, credibility, continuity and acting as that all-important conduit between companies their investors.
EC: Are there any issues causing particular concern for IROs?
LH: Mifid II is clearly front of mind for IROs this year as the market prepares for implementation in January 2018. With this seismic change in regulation affecting the relationship between brokers and investors, IROs are naturally questioning how they will best go about their targeting and roadshow activities. Identifying who they need to meet with to ensure they are meeting as wide a group as possible of potential investors, as well as gathering useful and effective post-roadshow feedback are all issues for the IR community. This is particularly the case for our small to mid-cap members, which may have fewer resources and less coverage, and which we feel will be impacted further by regulatory change.
The wider implications around the changing dynamic of the sell side is around analyst consensus, a hot topic for our members. A restriction in analyst coverage and research distribution may distort analyst consensus, and publicly available consensus may become outdated, particularly for those smaller companies with little or no analyst coverage.
EC: What are the other big issues you’re hearing about at the moment?
LH: We’re seeing a genuine sea-change in corporate reporting, with several reporting developments in recent months. Corporate governance reform, alongside other societal and economic changes, is demanding a far higher-quality disclosure of ESG topics in reporting. Despite the ever-changing and demanding legislative and regulatory environment, the annual report should be seen as an opportunity to ‘tell the company story’ and communicate long-term strategy, the value creation story and the drivers of business performance in a meaningful way. Governance and sustainability reporting is an area of growing interest within our IRO community.