Covid-19 may not have had quite the impact on shareholding disclosures that the 2008 financial crisis did, however it did have an impact, and this was all while the world was dealing with something quite extraordinary. The financial services industry had to move quickly to get entire workforces working from home safely and securely, and this had its own challenges. During a time of much in-work and out-of-work stress, compliance and operations teams were having to respond quickly to changes in shareholding disclosure rules globally as a result of the financial impact Covid-19 was having on the financial markets.
40 changes to rules within one month of lockdown
Many regulators swiftly implemented changes to the shareholding rules in order to safeguard certain industries/issuers from the impact of the volatile stock markets around the world. These changes were announced with no consultation and took immediate effect. Within the first month of the lockdown there were over 40 changes to shareholding disclosure rules. We saw the focus of the change being on lowering the percentage thresholds for substantial shareholding* and short selling disclosure reporting, additional disclosure of details of intention, and there were also outright bans on short selling. The lowering of thresholds provided greater transparency to the market and respective regulators whilst the short selling bans prevented the kind of activity that was witnessed in 2008 during the financial crisis where companies were shorted until their share price nose-dived.
How did we help our clients during this difficult time?
We continually monitor and update our rules library. We reacted very quickly to inform our clients and make any necessary changes to our monitoring and reporting service. We saw changes globally including but not limited to the European Union, Italy, South Korea, Belgium, Malta, France, Greece, Spain, U.K, Malaysia, UAE, Bulgaria, Jordan, Jersey, Bahamas, Croatia, Japan, Monaco, India, Nigeria, Ghana, Germany, Taiwan, Australia, Oman and the Philippines. Regulators have little sympathy for non-compliance even in these globally challenging times.
Rule changes on your behalf
As our clients were already using our service, their life was already made simpler as the system is accessed through a web browser there were no issues with them accessing this from home (even with the normal security procedures for accessing the service). With our monitoring of any shareholding disclosure rule changes our clients had peace of mind that we were continually monitoring any rule changes on their behalf and due to our ability to make these changes on their behalf, there was little they needed to do to respond to these rule modifications. If they had been using an internal system it would have been more challenging for them. During times of additional stress our service really can provide you with additional comfort that your business is still compliant despite the speed of change.
Even though we are now many months into the pandemic, we are seeing some of the emergency legislation being extended as the markets are still very fragile and it is still impacting on the global financial markets. We are likely to see its impact more permanently in the shareholding disclosure world, in particular as governments look to protect its key industries.
*also known as major shareholding or long disclosure reporting