The impact of the political conflict between Russia and Ukraine has reached London's capital markets and will affect all issuers submitting or filing documents with the UK Listing Authority (the UKLA). On 1 August 2014, a new EU Regulation No. 833/2014 (Regulation) came into force which imposes certain restrictive measures in view of Russia's purported actions de-stabilising the situation in Ukraine.
What are the sanctions?
The Regulation prohibits the direct or indirect, purchasing, selling, providing brokering or assistance in the issuance of, or otherwise dealing with transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 1 August 2014, by any entity within the scope of the Regulation (see Article 5 which catches specific Russian banks, and entities which are majority-owned or controlled by those banks).
The term 'brokering' includes:
- the underwriting of financial instruments and/or the placing of financial instruments on a firm commitment basis,
- the placing of financial instruments without a firm commitment basis, and
- any service in relation to the admission to trading on a regulated market (such as the Main Market) or trading on a multilateral trading facility (such as AIM).
What does this mean for capital markets issuances after 1 August 2014?
The Regulation is widely drafted and the UKLA is requesting that, in respect of all new issuances after 1 August 2014, all issuers confirm that they do not fall within Article 5(b) or (c) of the Regulation.
The Financial Conduct Authority (FCA) has stated that, for so long as the sanctions remain in force, it does not expect to admit securities to listing which are issued after 1 August by issuers within the scope of the Regulation. Furthermore, the FCA expects that depositaries for GDR issuers within the scope of the Regulation will not issue new depositary receipts during the sanctions period.
What form should the confirmation take?
If an issuer does not fall within the scope of the Regulation, it should provide the following confirmation (the Confirmation):
"The issuer confirms that it does not fall within paragraph (b) or (c) of Article 5 of COUNCIL REGULATION (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine."
Who should give the Confirmation?
The Confirmation should be given by the issuer, or by someone acting on the issuer’s behalf (for example, the sponsor) in the form of a signed letter or a scanned pdf copy of an email confirmation from the issuer.
Guarantors may also be required to provide this Confirmation.
When is the Confirmation required?
Issuers need to confirm their status under Article 5 of the Regulation each time that a document is submitted to the UKLA for approval and further, when final terms are filed with the UKLA. Issuers must also inform the UKLA if their status changes under Article 5 of the Regulation.
A Confirmation will also be required in respect of any prospectuses passported into the UK.
How should the Confirmation be submitted?
For filings of final terms and supplements which are submitted for approval using the Same Day Supplement Service, the Confirmation should be sent by email.
For prospectuses, base prospectuses, drawdown prospectuses and supplements submitted for approval, the Confirmation should be submitted by the ELS system (for the electronic submission of documents).
Are other competent authorities seeking a similar confirmation?
To date, only the UKLA is requiring this Confirmation, although going forward, other competent authorities may require a similar confirmation from issuers.