Primary Market Bulletin 65

For most of the new admissions we reviewed, sponsors took a different approach to expert reporting compared to the traditional suite of third-party long form, working capital and FPPP reports we observed prior to our Listings reforms and more recent guidance. The big shift related to long form reporting, where in most cases sponsors did not commission a traditional report. 

However, we also saw emerging flexibility in approaches to FPPP and working capital, where in some cases these reports were not produced either. 

In general, sponsors were not using these reports where alternative sources of information were available. These approaches were not isolated to a single sponsor or sector. They spanned different transaction types, including IPOs and transfers from AIM to the Main Market, and where admissions involved overseas issuers.  

We were encouraged to see that sponsors noted our updated guidance published in our Technical Notes. We were also reassured that the sponsors had carefully considered the basis for their judgements and that they were subject to appropriate internal governance.

Sponsors told us that factors influencing their decisions around the necessity or scope of reporting, across all three types of financial-focused expert reports, included: 

• How well the sponsor understood the issuer, often arising from longstanding corporate broking or NOMAD relationships.  
• The level of transaction risk. For example, one sponsor told us that its judgement not to commission an external working capital report took into account the company’s financial profile as a profitable, high margin business with strong cash conversion. The sponsor also considered our revised guidance in Primary Market Technical Note 704.4, and that the sponsor considered itself able to perform due diligence on the company’s working capital projections for this transaction. 
• Where issuers were already listed or transferring market. Sponsors said in these cases some or all financial-focused expert reports might not be needed, as existing information or knowledge could be relied upon instead. This included one AIM to ESCC move where existing working capital-related reporting was leveraged by the sponsor.  

In some cases, issuers themselves encouraged a more pragmatic approach to expert reporting, including referencing our guidance. For these examples, we were comfortable that the sponsors formed their own opinion on the appropriate approach. 

Long form reporting was where we saw the greatest shift in approach. In one case, a sponsor determined it would not be appropriate to commission a long form report because the issuer had a limited financial history. The sponsor decided to treat the issuer as a startup and asked for the working capital report to be extended instead. 

The rationale for this was that there would be little historical financial information to analyse, and, as an early-stage business, sponsor comfort would mainly be derived through other factors such as liquidity and asset valuation. These were dealt with in the working capital and valuation reports.  

In some cases, sponsors determined that long form reports would not provide additional material comfort where the issuer was well known and its audited accounts were incorporated by reference into prospectus documentation. 

In another case the sponsor did not commission a long form report because financial information relating to the company’s recent involvement in an acquisition was already available. They believed this provided sufficient coverage of the company’s financial position and performance. More generally, the availability of relevant, reliable and recent financial information was a factor in sponsors deciding whether to commission long form reports.  

We also observed examples where sponsors decided not to commission long form reports because alternative, transaction-specific analysis was undertaken instead. For one transaction, where a long form report was not produced, several ‘databooks’ were produced instead. These were comprehensive files with key financial information and associated commentary.  

Most of the transactions we reviewed included a working capital report. Most sponsors reflected that working capital was an area where their own procedures suggested expert reporting should be obtained by default, or where the typical circumstances of a new admission or transfer would demand this extra comfort.   

However, we also observed sponsors choosing not to commission working capital reports. One company drafted a working capital board memorandum, with the support of external counsel. The sponsor reviewed and challenged both its scope and contents, and supporting analysis. They also held several sessions to discuss and agree the approach to the company’s working capital assumptions and sensitivities. The sponsor took into account its longstanding knowledge of the issuer and board, and its own competence to perform the work, when deciding upon this approach. The sponsor also considered that the company was already trading on AIM and had established working capital processes for reporting purposes. 

In another case, the sponsor was able to derive comfort from a working capital board memorandum produced by the company, but with support from a third-party reporting accountant. The sponsor was involved in setting the scope for the memorandum. In this case the sponsor noted that the memorandum was produced to a high standard, and was similar in content to, a typical working capital report produced by a reporting accountant. In addition, the sponsor derived comfort from other factors, for example that the company was already trading on AIM, and the prior relationship the sponsor had with the company, having previously acted for the business as NOMAD.

FPPP was another area where most transactions involved the traditional approach of getting a reporting accountant’s opinion. However, we also saw alternative approaches. 

In one case, where a third-party FPPP report was not procured, the company produced a detailed FPPP memorandum, with the scope of the report drafted with the support of the sponsor’s counsel. In this case, the sponsors told us they were able to interrogate and review the memorandum, with the company devoting appropriate resources to supporting the sponsor. This included engaging an external accounting expert to lead compilation of it.  

In another case, the company procured a third-party reporting accountant to help them produce a FPPP board memorandum. The reporting accountant first identified gaps or actions that needed addressing. They then worked with the sponsor and the company to set the scope of the memorandum and then helped the company produce it. Other factors, such as the sponsor’s prior knowledge of the business and that the company was already trading on AIM, helped the sponsor gain comfort.  

In addition to producing modified forms of traditional reports and alternative outputs, sponsors sometimes commissioned long form, FPPP and/or working capital reports with a more targeted scope. 

For example, for one transaction under review, the sponsor produced a long form report with a tailored focus on incremental disclosure needs. This was because the issuer was already listed in another jurisdiction and was already publicly disclosing a large quantity of information. The FPPP report was similarly focused on UK-specific Listing requirements. These more targeted reports helped fulfil sponsors’ specific information needs. 

Even where all or some financial-focused expert reports were commissioned, some sponsors commissioned additional specialist work. For example, we saw instances where sponsors commissioned short-term working capital exercises on top of an existing working capital report. 

In one such case, although the initial working capital report identified no issues, the sponsor clearly articulated why additional analysis was warranted. This was linked to fluctuations in cash balances across the issuer’s sales cycle and the timing of admission.  

Looking across these examples, we were encouraged that the sponsors were not simply taking an overly conservative approach and clearly recorded their rationale. 

Our review also showed that established practices around commissioning expert reports prevailed for many transactions. We note that in some instances long form reports were still produced. Additionally, the commissioning of FPPP and working capital reports appeared to remain an important feature for most firms.  

We asked sponsors about the rationale behind this. In some cases, sponsors were able to clearly articulate why they had taken this approach. For example, sponsors told us that: 

• For some complex issuers and/or transactions, FPPP reports were particularly valuable. For example, for one transaction the sponsor noted that the issuer’s ownership structure, business model, assets and shareholder relationships heightened the importance of assurance on financial procedures. 
• For some transactions, long form reports were seen as important due to transaction complexity, heightened financial risk, limited publicly available financial information, or the need to better understand the business and sector. In one case, a report was obtained when the business operated in a sector that was new to the sponsor.  
• For some transactions sponsors did have preliminary discussions around not commissioning one or more expert reports, but ultimately concluded that the risk-reward balance did not justify undertaking work in-house.

However, one firm told us that while long form reports are now considered on a case-by-case basis, their approach to expert reports for FPPP and working capital remained unchanged. Similarly, another sponsor told us that they commission working capital and FPPP in all circumstances, as reflected in their sponsor manual. We would like to remind sponsors of our guidance in Primary Market Technical Note 722 that we expect to see sponsors taking an active role in determining the nature and extent of expert reporting specific to the transaction. 

In all cases, we observed that the sponsors’ judgements on expert reporting were clearly documented. For example, through sponsor committee meeting minutes showing that relevant matters had been discussed and incorporating the rationale for decisions. This made it easier for us to understand the basis for decisions and therefore to trust that due care and skill had been applied when providing the sponsor declarations to the FCA.

We followed up with a few larger Main Market issuers that had not submitted delayed disclosure notifications over an extended period.  Although we anticipated reasons for this, we were concerned that some issuers may have simply neglected their notification obligations. Our enquiries revealed that this was not the case.  

Issuers’ responses highlighted: 

• scale and relative price sensitivity, with fewer situations assessed as meeting the inside information threshold when considered in the context of the issuer’s size
• mature disclosure governance, with clear ownership of inside information judgements through standing decision groups or disclosure committees. 

Our enquiries revealed that unusually lengthy delays and anomalies were sometimes caused by inconsistent practices in classifying and handling  inside information.  

In particular, we observed the following: 

• Blanket classification of inside information.

In a small number of cases we reviewed, issuers adopted blanket approaches when assessing whether information held during periodic reporting processes constituted inside information. Issuers automatically treated advanced financial reporting information as inside information  until its scheduled publication date regardless of whether it varied from guidance or market consensus.

Primary Market/TN/506.3, published in July 2025, sets out that when preparing periodic financial reports, issuers should assess, on an ongoing and case by case basis, whether the information they hold meets the criteria in Article 7 of UK MAR, and that it is not appropriate to take a blanket approach to the status of such information. 

Failure to re-assess classification during the delay period 

Some issuers adopted a prudent approach when assessing whether information might amount to inside information at an early stage, particularly where facts were still developing. However, during the prolonged delay period, issuers did not always re-evaluate whether the information remained inside information - including in instances where market expectations became clearer or when price sensitivity diminished. 

Misunderstanding of what constitutes inside information

In one case, issues arose from a misinterpretation of what constitutes inside information. The issuer assumed that the creation of a closed period for periodic reporting processes indicated that inside information existed, without assessing whether the information was in fact precise and price sensitive. This resulted in the creation of insider lists and preparation for notifications being initiated where inside information did not exist.

We also noted that smaller issuers reflected greater reliance on third party advisers, and/or outsourced company secretariat functions when applying the inside information framework and operationalising MAR controls (for example, insider lists and filing of DDIIs). In these circumstances, while third party assistance may be appropriate, it remains important that issuers maintain sufficient internal understanding of their MAR obligations to enable them to apply external advice appropriately and exercise informed judgement in relation to inside information decisions. 

Errors caused by automated processes 

In some instances, misclassification of information was compounded by automated or semi-automated processes. Even where information had been incorrectly identified as inside information, RegTech tools used by the company or outsourced company secretariat systems triggered consequential steps – including insider list creation and the submission of DDII notifications – without meaningful opportunity for reassessment. 

While RegTech solutions are likely to play an increasingly important role in supporting issuers' processes, issuers should ensure that their use is accompanied by appropriate controls, governance and oversight, including opportunities to reassess underlying assumptions before regulatory actions are triggered. 

In one case, an issuer experienced an unexpected development and required a short period to clarify the position before making a complete announcement, relying on DTR 2.2.9G(2) during that period.

While we did not have concerns about that, we also did not consider the subsequent filing of a DDII notification by the issuer to be necessary. 

This is consistent with the ESMA consultation paper regarding draft guidelines on the Market Abuse Regulation, which refers to a case where an issuer faces an unexpected and significant event, and some time may be needed to clarify the situation and ascertain whether it holds inside information. In this case, ESMA considers that this may fall under the general provision laid down in Article 17(1) to disclose ‘as soon as possible’ rather than within the Article 17(4) framework. 

Our findings are relevant to all issuers subject to UK MAR and our casework in this area has exposed some inconsistent practices in the identification and processing of inside information. We will continue to monitor DDII notifications and may provide further updates, where beneficial.