Publication
Horizon Scanning: Investigations and Enforcement
In this horizon scan, we focus on key developments affecting companies operating in the UK, including in light of the recent change in UK government.
Global | Publication | May 12, 2017
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On May 5, 2017 the Financial Markets Law Committee (FMLC) published a discussion paper concerning issues of legal uncertainty in the context of the Market Abuse Regulation (MAR) which came into effect in July 2016. Stakeholders have brought a number of practical and legal issues raised by MAR to the attention of the FMLC and the FLMC has identified and analysed those uncertainties in the discussion paper and included proposed solutions.
Legal uncertainties
The paper highlights the following legal uncertainties:
Impact analysis
The FMLC has found that such uncertainties are having a practical impact, especially with third country issuers. Moreover, if the interpretations of certain phrases are not clarified, a sizable burden will be imposed upon issuers and underwriters in respect of securities transactions with little or no connection to the EU.
Proposed solutions
The FMLC suggests additional guidance and clarification concerning the scope of MAR and its practical application to capital markets transactions outside the EU could usefully be developed. This could be by way of additions to the existing MAR Q&A document produced by the European Securities and Markets Authority (ESMA), or other guidance by national competent authorities.
(FMLC, Issues of legal uncertainty arising in the context of the Market Abuse Regulation, 05.05.17)
On May 9, 2017, the Investment Association (IA) published new guidance on various aspects of long term reporting including the reporting of the long term drivers of value creation and productive enterprise. This guidance applies to companies whose shares are admitted to the Premium Segment of the Official List of the UK Listing Authority. Companies whose shares are admitted to the Standard Segment of the Official List, to trading on AIM or to the High Growth Segment of the London Stock Exchange’s Main Market are encouraged to adopt the guidance as best practice. Companies are urged to read the guidance in conjunction with the Financial Reporting Council’s (FRC) 2014 Guidance on the Strategic Report.
Expectations of future long term reporting include the following:
Business models and long term reporting
Productivity
Capital management
Disclosure of material environmental and social risks
Human capital and culture
Implementation and monitoring
Going forward, the IA encourages companies to adopt this guidance at the earliest possible opportunity. The IA’s Institutional Voting Information Service (IVIS) will monitor the implementation of this guidance by analysing annual reports for financial year-ends on or after September 30, 2017. IVIS will outline to its members those companies that continue to report on a short term basis and where companies are not making the desired disclosures.
(The Investment Association, Long Term Reporting Guidance, 09.05.17)
On May 10, 2017, the European Commission published an online consultation questionnaire to gather views on facilitating the use of digital technologies throughout a company’s lifecycle and cross-border mergers and divisions. The questionnaire follows on from the European Commission’s 2017 Work Programme where the initiative was first announced. The aim of the public consultation is to collect input from stakeholders on problems in company law, gather what evidence they have of such problems and hear their possible solutions on how to address the problems at EU level.
This new company law initiative seeks to make the best use of digital solutions in companies' interactions with public authorities but also with companies' shareholders. It hopes to provide efficient rules for cross-border mobility of companies which could include mergers, divisions, conversions and uniform conflict-of-law rules for companies.
The questionnaire is divided into four parts, which each contain a number of specific questions:
The European Commission also encourages the public to make additional comments and explanations at the end of the questionnaire. All of the responses will be taken into account in preparation of the 2017 initiative on company law.
(European Commission, Digital solutions questionnaire, 10.05.17)
Publication
In this horizon scan, we focus on key developments affecting companies operating in the UK, including in light of the recent change in UK government.
Publication
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