On 19 April 2018, the FCA published a Dear CEO letter on irredeemable preference shares and other similar capital instruments. The FCA's intention is to ensure that investors have access to the information necessary to assess the risk and rewards attaching to these types of share. Aviva plc recently announced it had an ability to cancel certain shares issued through a reduction of capital, affecting the market price of those shares and similar shares listed by other companies.
The letter suggests that companies should consider whether any intention to cancel or retire a class of shares constitutes inside information under MAR. The letter also suggests that certain information should be available to shareholders and potential shareholders. This information includes: the terms and conditions of the instrument, details of changes to terms and conditions after issue, the articles of association of the issuer and a Q&A to present information to investors in a clear manner.
The letter can be accessed here:
- https://www.fca.org.uk/publication/correspondence/dear-ceo-letter-irredeemable-preference-shares.pdf
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