The Financial Conduct Authority has published a handbook notice which sets out its response to feedback on its earlier quarterly consultation and amends the Listing Rule disclosure provisions regarding “going concern”. The FCA has now introduced a revised version of Listing Rule 9.8.6(3) whereby directors must make statements:

  • about the appropriateness of the decision to adopt the going concern basis of accounting; and
  • about the prospects of the company and containing the information set out in C.2.2 of the UK Corporate Governance Code.

C.2.2 of the Code states: “Taking account of the company’s current position and principal risks, the directors should explain in the annual report how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate. The directors should state whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, drawing attention to any qualifications or assumptions as necessary.”

Some respondents felt that this second viability requirement, which goes beyond the appropriateness requirement, goes too far and lies outside the “comply or explain” regime. However, the FCA’s response is that the provisions regarding going concern are longstanding and already constitute a mandatory disclosure requirement. The FCA therefore disagrees that it is imposing substantively new requirements or introducing a new liability regime. In addition, the Listing Rule also requires that the going concern statements be prepared in accordance the Financial Reporting Council’s “Guidance on Risk Management, Internal Control and Related Financial and Business Reporting“.