KNF proposes adjustments to the regulatory and oversight regime in light of the coronavirus epidemic

As the unfolding corona crisis makes itself felt around the world, also the Polish regulator is proposing a shift towards lighter-touch oversight of the capital markets. The intent of these initiatives is two-fold: to afford the securities issuers more manoeuvring room as they try to adapt to the difficult situation, and to ease financing streams within the economy in the interests of a softer landing and, hopefully, a speedier recovery.

The various ideas of the Polish Financial Supervision Authority (KNF) have been collated within the Supervisory Initiatives Package for Safety and Development. For the moment, this is an open-ended catalogue of ideas which may be implemented, in letter or at least in spirit, as the situation develops.

For these purposes, the regulatory authority has identified four basis objectives: (i) ensuring continued liquidity in the market, (ii) moving back reporting deadlines so as to ensure that the entities concerned are in a position to comply, (iii) easier access to capital, and (iv) enabling a concentration of resources on client service and critical processes.

The specific measures posited by KNF include:

Adoption of a case-by-case approach to instances where investment funds exceed the prescribed investment limits, the idea being that supervisory measures should take due account of the current market situation;
Legislative amendments:

Longer deadlines for drawing up, approving, and publishing annual financial reports and annual consolidated reports;
Longer deadlines for filing of quarterly reports and consolidated quarterly reports for Q1 2020;
Longer deadline for holding the annual general meeting;
Longer deadline for approval of the remunerations policy by the annual general meeting;
Streamlined processing of information memorandums (offer documents) prepared by companies seeking capital;

A pragmatic approach to selected aspects of day-to-day oversight measures, including:

Review of the information sought in current statements so as to minimise the reporting duties, a more lenient approach to potential delays in submission of statements;
Deferral of planned activities in the area of market studies, surveys etc.;
In cases of transgression of mandatory capital parameters (including exposure limits), readiness to consider factors associated with the epidemiological situation in the context of enforcement measures;
Openness to moving back deadlines (e.g. for compliance with post-audit recommendations);
Updating of audit plans;
Adoption of a simplified formula for BION studies and assessments planned for 2020.

As already mentioned at the outset, the above are little more than general, non-binding suggestions formulated by KNF. It is too early to venture any guesses as to the actual implementation of any of these measures, let alone of their impact. That said, the very fact that the KNF saw fit to publicise such talking points is laudable, in that it testifies to a basic openness of the regulatory authority for dialogue with market players at a time when all parties concerned are working to face the unprecedented challenge presented in the coronavirus epidemic.

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