UK financial regulators encourage use of filing extensions

Out-Law News | 01 Feb 2021 | 4:18 pm | 1 min. read

The UK’s Financial Conduct Authority (FCA) and Financial Reporting Council (FRC) have told companies to make use of extensions to accounts filing deadlines amid the “unique set of circumstances arising from Covid-19”.

In a joint statement and updated guidance, the regulators said listed companies should refamiliarise themselves with measures brought in last year, which give an additional two months to publish annual financial reports and an additional month to publish half-yearly annual reports. The deadline for filing accounts with Companies House was also extended last year by three months, with the automatic extension period expiring on 5 April 2021.

The regulators said all stakeholders should use the permitted extensions to ensure the quality of reporting was not compromised in a busy period for financial reporting which coincided with the UK’s third national lockdown.

Corporate governance expert Tom Proverbs-Garbett of Pinsent Masons, the law firm behind Out-Law, said: “The FCA and the FRC are taking this step in view of the perfect storm of an approaching end of year and the combination of remote working, travel restrictions, home schooling and the uncertain economic outlook.

“The guidance not only brings together advice previously published, but explicitly encourages companies to take advantage of available filing extensions,” Proverbs-Garbett said.

The regulators reminded companies that the Market Abuse Regulation remains in force, having been transposed into UK law in the wake of Brexit. They said the market must be kept up to date with information and companies were still obliged to fulfil obligations concerning inside information as soon as possible.

The guidance recommends audit committees should consider setting out in their annual report the work they have undertaken, and the measures they have agreed to ensure high-quality reporting and audit for the period affected, including how they allowed flexibility in the year-end timetable “to complete all the necessary work to an appropriate standard that will meet investor and stakeholder expectations”.

Proverbs-Garbett said following the guidance would benefit both companies and investors.

“On the investor side, the FRC and FCA ask that expectations and action is informed by the context of the pandemic. Regular dialogue, alerting investors and others to changes to reporting timetables, should enable all parties to avoid, as far as possible, surprises,” Proverbs-Garbett said.

“The regulators emphasise that communication to the market is more important than ever. Inside information may arise unexpectedly, as a company’s business prospects are impacted by the course of the pandemic and policy responses to it. Companies should continue to be vigilant and keep internal controls under review,” Proverbs-Garbett said.