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U.K. Regulator Relaxes Standards for Firms Raising Capital

April 8, 2020, 8:39 AM

The U.K. financial markets regulator is easing requirements on companies to help them raise capital as the coronavirus pandemic undermines the global economy.

U.K. issuers will be allowed to disclose their worst-case assumptions about the fallout on their business, without having to say they face challenges to working capital, according to the Financial Conduct Authority on Wednesday.

The FCA move, which breaks with standards set by other European Union regulators, is a key change to rules for issuers, and the regulator said that without acting a significant number of companies would probably need to say they do not have sufficient capital to last a year.

U.K. lawyers have been in discussions with regulators to shorten subscription periods for some rights offerings, as cash-strapped firms on the London bourse contend with mounting funding needs, according to people familiar with the matter last month.

“Our aim is to help companies to raise money quickly and effectively, while ensuring they respect the needs of investors, both current and future,” said Christopher Woolard, interim chief of the FCA in the statement. “We think this package strikes that balance.”

The FCA also is trying to help companies get shareholder approval for transactions without needing to hold general meetings. The steps are just the latest in a series of moves by the FCA and Bank of England to relax trading, capital and reporting requirements on firms during the pandemic.

--With assistance from Swetha Gopinath and David Hellier.

To contact the reporter on this story:
Silla Brush in London at sbrush@bloomberg.net

To contact the editors responsible for this story:
Ambereen Choudhury at achoudhury@bloomberg.net

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