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Supreme Court of Canada rules managers cannot unionize in Quebec
On April 19, 2024, the Supreme Court of Canada handed down the long-awaited decision on the unionization of managers.
Global | Publication | December 8, 2017
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On December 5, 2017 the FRC published proposals for a revised UK Corporate Governance Code (Code) and updated Guidance on Board Effectiveness (Guidance). The proposals reflect the changing business environment and the revised Code aims to promote the long-term success of companies by achieving the highest standards of corporate governance.
The UK Corporate Governance Code
The revised Code is much shorter and sharper than the current April 2016 Code, reduced from 32 pages to 13 and from around 11000 words to 5000. The FRC has taken findings from its 2016 Culture Report, engaged with stakeholders and incorporated suggestions from the Government’s response to its Green Paper on Corporate Governance Reforms to produce a Code that is fit for purpose.
The FRC has included a revised version of the Code in Appendix A to the consultation document, while Appendix C summarises the changes that have been made to the April 2016 Code.
The revised Code strives to raise standards further and sets out good practice that ought to be adopted by the boards of UK companies. It is now made up of five sections: 1 Leadership and purpose; 2 Division of responsibilities; 3 Composition, succession and evaluation; 4 Audit, risk and internal control; and 5 Remuneration.
Section 1 – Leadership and purpose
Key points for boards to note from this section are:
Section 2 – Division of responsibilities
Key points for boards to note from this section are:
Section 3 – Composition, succession and evaluation
Key points for boards to note from this section are:
Section 4 – Audit, risk and internal control
This section remains mostly unchanged, though all companies, including those below the FTSE 350, will require an audit committee of at least three independent non-executive directors.
Section 5 – Remuneration
Key points for boards to note from this section are:
Guidance on Board Effectiveness
The FRC has also published new proposed Guidance on Board Effectiveness (Guidance) which is set out in Appendix B to the consultation paper.
The Guidance has been amended to support the proposed changes to the revised Code and it follows the structure of the revised Code. Some of the more procedural aspects of the current April 2016 Code have been moved to the Guidance as these are still important but are now common place in many businesses.
The Guidance includes possible questions for boards, management and remuneration committees and the FRC proposes that boards should use the questions posed in the Guidance to consider how they report on their application of the Code’s Principles.
The proposed Guidance includes:
The FRC notes that the Guidance will need further updating once the outcome of the consultation on the revised Code is known.
Proposed amendments to the UK Stewardship Code
The consultation also includes questions to help shape the future direction of the UK Stewardship Code, which will be published for consultation in mid-2018. The FRC consults on two ways in which the UK Stewardship Code could be improved:
Format
Content
Next steps
Responses to all the proposals should be submitted by February 28, 2018. The FRC plans to publish the final version of the Code by early summer of 2018 and it will apply to accounting periods beginning on or after January 1, 2019. Its detailed consultation on specific changes to the UK Stewardship Code will be published in mid-2018, once the review of the Code has been finalised.
(FRC, Proposed revisions to the UK Corporate Governance Code, 05.12.12)
(FRC, Appendix A - Revised UK Corporate Governance Code, 05.12.12)
(FRC, Appendix B - Revised Guidance on Board Effectiveness, 05.12.12)
(FRC, Appendix C - Summary of changes of the UK Corporate Governance Code, 05.12.12)
The Financial Reporting Council (FRC) has announced it will delay publishing its updated Guidance on the Strategic Report which will incorporate the requirements of the Non-Financial Reporting Regulations.
In August 2017, the FRC published a consultation paper outlining amendments to its 2014 Guidance on the Strategic Report. The FRC intends to incorporate the requirements of the Non-Financial Reporting Regulations in an amended version of that Guidance and also strengthen the ties between the strategic report and the directors’ section 172 Companies Act 2006 duty to promote the success of the company.
Since then, the Government has announced plans to introduce legislative changes in respect of reporting on section 172, expected in March 2018. As a result, the FRC has decided to delay the publication of the updated Guidance until after the Government has published its legislative changes. However, the FRC encourages boards to continue developing their thinking about how to report better on their directors’ section 172 duty and it has published a set of Frequently Asked Questions on Non-Financial Reporting as a result of requests from preparers of reports and accounts for more clarification of the requirements that will apply to companies with December 31 year ends onwards.
On December 4, 2017 the FRC published a set of Frequently Asked Questions (FAQs) on the application of the Non-Financial Reporting Regulations. The FRC encourages companies to read these in conjunction with the 2014 Guidance on the Strategic Report. They are intended as a guide while the FRC finalises the updates to that 2014 Guidance and their content may change when that final updated guidance is published.
The FAQs cover the following questions:
(FRC, FAQs on the Non-Financial Reporting Regulations, 04.12.17)
On December 1, 2017 the Financial Conduct Authority (FCA) published its latest quarterly Consultation Paper – CP17/39. This proposes, among other things, some minor changes to the Listing Rules and the Disclosure Guidance and Transparency Rules (DTRs).
The FCA proposes to make the following changes:
Next steps
The FCA asks for comments on these changes by February 1, 2018 through an online response form.
On December 5, 2017 the London Stock Exchange (LSE) published AIM Notice 48. The LSE has applied to the Financial Conduct Authority (FCA) for AIM to be registered as an SME Growth Market under the Markets in Financial Instrument Directive (MiFID II) and expects to receive confirmation of final approval to take effect from January, 3 2018.
The eligibility requirements for SME Growth Markets require that certain regulatory information remains available for five years once published. As a result, AIM Rule 26 (Company information disclosure) needs to be amended to reflect the requirement that certain regulatory information must remain available for five years once published under Article 78(2)(i) of Commission Delegated Regulation 2017/565/EU.
There will be minor consequential changes to the AIM Rules, making it clear that AIM Rule 26 will apply in respect of the five year period to:
A definition of SME Growth Market has also been included in the AIM Rules and the Introduction has been amended to reflect the fact that AIM will be an SME Growth Market.
These minor amendments to the AIM Rules for Companies will come into force on January 3, 2018 to coincide with the MiFID II implementation date and the expected approval of AIM as an SME Growth Market.
(AIM Notice 48, Application for SME Growth Market Status, 05.12.12)
On December 8, 2017 the Financial Reporting Lab (the Lab) invited investors, analysts and companies of all sizes to participate in a project on effective reporting on performance.
The project follows on from the Lab’s reports on business models (October 2016) and risk and viability (November 2017). The Lab will explore how companies measure performance against their strategic objectives, consider both financial and non-financial metrics, and highlight how these measures can be presented in a way that is most useful to investor decision-making.
The project will examine the following areas:
Next steps
Investors, analysts and companies are invited to indicate their interest by January 31, 2018 by emailing the Lab at FinancialReportingLab@frc.org.uk.
On December 5, 2017 the Quoted Companies Alliance (QCA) and UHY Hacker Young published their annual review of corporate governance behaviour, which focuses on the disclosures made by 100 small and mid-size quoted companies taken from the Main List, AIM and ISDX and compares these disclosures against the minimum disclosures set out in the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code).
The results were discussed with a group of institutional investors at a roundtable discussion and the QCA has used the feedback received to create five recommendations for companies to follow in order to improve the way they address corporate governance disclosures.
The recommendations for companies are as follows:
(QCA and UHY Hacker Young, Corporate Governance Behaviour Review 2017, 05.12.17)
Publication
On April 19, 2024, the Supreme Court of Canada handed down the long-awaited decision on the unionization of managers.
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