Publication
When is a contractor one too many?
A recent decision by a Full Court of the Federal Court of Australia (Court) examined the concept of "genuine redundancy" in the context of redeploying workers to contractor roles.
Global | Publication | November 16, 2018
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On November 9, 2018 the Department for Business, Energy and Industrial Strategy (BEIS) published an updated version of the Companies (Miscellaneous Reporting) Regulations 2018 Q&A which was originally published in June 2018.
Changes in the updated Q&As include the following:
(Companies (Miscellaneous Reporting) Regulations 2018 updated Q&A, 09.11.18)
On November 13, 2018 the Hampton-Alexander Review published its third report assessing progress against the five key recommendations that it set in 2016, highlighting emerging best practice and current challenges.
The report notes the following:
Executive Committee and Direct Reports
The FTSE 100 has seen the number of women on the combined Executive Committee and Direct Reports increase to 27 per cent in 2018, up from 25.2 per cent in 2017. For the FTSE 250, the number of women on their combined Executive Committee and Direct Reports has increased marginally to 24.9 per cent in 2018, up from 24 per cent in 2017.
Women on boards
The number of women on FTSE 100 boards is now 30.2 per cent, up from 27.7 per cent in 2017. Women’s representation on FTSE 250 boards has increased from 22.8 per cent in 2017 to 24.9 per cent in 2018.
The number of all-male boards is now down to five, from 10 in 2017, but 75 companies in the FTSE 350 only have one woman on the board.
Outlook
The report notes that if progress continues at a similar rate, the FTSE 100 is on track to achieve the 33 per cent target for women on boards by 2020. However, a step change in pace is needed elsewhere with half of all available appointments in the next two years, both board appointments and combined Executive Committee and Director Reports, needing to go to women to achieve the 33 per cent target.
Throughout the report, there are examples of good practice as well as a summary of the barriers to women’s progression in the workplace. The report compares UK progress to that internationally and the role of executive search firms and the investor community is also considered.
(Hampton-Alexander Review, Improving gender balance in FTSE leadership, 13.11.18)
(Hampton-Alexander Review, Improving gender balance in FTSE leadership press release, 13.11.18)
On November 12, 2018 the European Securities and Markets Authority (ESMA) published version 13 of their Market Abuse Regulation (MAR) Q&As. The revised Q&As include a new question and answer relating to the scope of the trading restrictions for persons discharging managerial responsibilities during a closed period under Article 19(11) of MAR.
The Q&As confirm that the prohibition in Article 19(11) applies to persons discharging managerial responsibilities (PDMRs) within an issuer, not to the issuer itself. Article 19(11) does not encompass transactions of the issuer relating to its own financial instruments even if it is the PDMRs who are taking the decision or bringing a previous decision into practice. The actions of a PDMR in its capacity as a director or employee of the issuer are not PDMR transactions for the account of a third party, rather transactions of the issuer itself, and so the Article 19(11) prohibition does not apply.
ESMA do however highlight that any transaction carried out by the issuer during a closed period should be treated carefully, as the issuer remains subject to the prohibition on insider dealing contained in Article 14 of MAR and so, where an issuer is in possession of inside information relating to its own financial instruments, it will not be able to trade on them unless it has established, implemented and maintained the internal arrangements and procedures set out in Article 9(1) of MAR.
(ESMA: Updated Market Abuse Regulation Q&A, 09.11.18)
On November 15, 2018 the Financial Reporting Council (FRC) announced plans to supplement its 2018/19 Audit Quality Review (AQR) monitoring programme with two thematic reviews. These thematic reviews complement other AQR work, all with the over-riding objective of driving improvements in audit quality.
Thematic reviews
The thematic reviews focus on aspects of audit practice across a number of firms to identify both scope for improvement and good practice. The thematic review topics are:
The FRC will publish its 2018/19 thematic review of ‘The Auditors Work on Other Information in the Annual Report’ later in 2018, and a report on ‘Audit Firm Transparency Reporting’ will follow in the first quarter of 2019.
Priority sectors
Priority sectors are those considered by the FRC to be particularly high risk in terms of corporate reporting and audit as a result of economic or other pressures. The corporate reports and audits selected for review by the FRC in 2019/20 will have regard to the following priority sectors:
Areas of focus
Audit areas of focus are specific aspects of audit work or non-sector specific factors which the FRC expects to consider when reviewing an audit. As part of its audit monitoring programme for 2019/20,the FRC expects to pay particular attention to the auditor’s work on:
In addition to this, the FRC will also consider the potential impact of Brexit, in both the selection of audits to review, and the individual areas of audit work to focus on.
(FRC: 2019/20 Audit thematic reviews, priority sectors and audit areas of focus announced, 15.11.18)
On November 12, 2018 the Department for Business, Energy and Industrial Strategy Committee (BEIS Committee) launched an inquiry into the future of audit. The enquiry follows a similar study by the Competition and Markets Authority (CMA) on the statutory audit market and the Government’s independent review of the Financial Reporting Council (FRC) led by Sir John Kingman.
The inquiry will focus on the likely impact of the CMA market study and the review of the FRC in improving quality and competition in the audit market and reducing conflicts of interest. The BEIS Committee intends to feed into the CMA study and ensure audit reform is linked to coherent reform of the wider corporate governance agenda. As part of this inquiry, the BEIS Committee will consider the published submissions from the CMA’s market study of the audit sector.
Submissions are requested by January 11, 2019. The BEIS Committee intends to begin evidence hearings in January 2019, as soon as possible after the Kingman and initial CMA reports are published.
(BEIS Committee Inquiry: future of audit, 12.11.18)
(BEIS Committee Inquiry: future of audit press release, 12.11.18)
On November 9, 2018 the Department for Business, Energy and Industrial Strategy (BEIS) published the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 and an accompanying explanatory memorandum.
The published Regulations remain unchanged from the draft Regulations published on July 18, 2018. They make changes to reporting requirements for quoted companies and introduce new reporting requirements for large unquoted companies and large limited liability partnerships (LLPs) to annually report on emissions, energy consumption and energy efficiency action as follows:
The Regulations will come into force on April 1, 2019 and will have effect on financial years beginning on or after this date.
On November 13, 2018 HM Treasury published the Draft Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018 (draft Regulations) together with an explanatory note.
The draft Regulations address deficiencies in each of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the EU Funds Transfer Regulation and the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 that arise from the UK leaving the EU to ensure that this legislation continues to operate effectively.
Changes introduced by the draft Regulations include:
There are no substantive policy changes to the wider anti-money laundering (AML) regime, and the changes are only to ensure that the UK’s AML regime continues to operate effectively once the UK leaves the EU. The changes made would not take effect on exit day if the UK enters an implementation period.
Publication
A recent decision by a Full Court of the Federal Court of Australia (Court) examined the concept of "genuine redundancy" in the context of redeploying workers to contractor roles.
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