Publication
Building long-term integrity in the voluntary carbon market
In recent years, an important question has arisen in relation to the voluntary carbon market (VCM) as it continues to expand: How do we elevate and maintain its integrity?
Global | Publication | November 27, 2015
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On November 20, 2015 the Financial Conduct Authority (FCA) published a consultation paper seeking views on its proposals to amend the guidance in DTR 2.5.5G on when an issuer can legitimately delay disclosure of inside information. This follows a review by the FCA of its rules and guidance about delaying disclosure of inside information in the Disclosure and Transparency Rules (DTRs) following the Upper Tribunal decision in Ian Hannam v FCA in 2014.
The FCA notes in the consultation paper that it is in the interests of both issuers and investors to have a clear understanding of the basis for classifying information as inside information so that they can properly understand their obligations. The consultation paper looks at the test of what “inside information” is within section 118C Financial Services and Markets Act 2000. It considers the link with “significant effect on price” and the meaning of “precise” information. It then considers the ability for issuers to delay disclosing inside information to protect their legitimate interest, for example, while negotiating a transaction. DTR 2.5.5G currently contains further UK specific guidance which states that “other than in relation to impending developments or matters described in DTR 2.5.3R or DTR 2.5.5AR, there are unlikely to be other circumstances where delay would be justified”. The FCA has been told that a combination of factors is causing practical difficulties for issuers in deciding what should be disclosed and there is concern that these factors could begin to force issuers into disclosure of information at a stage where it is still significantly unformed and would be of little benefit to the market.
The FCA states that its aim is to ensure the maintenance of a regime which produces transparency which is useful to investors. As a result it has been considering whether to leave the rules unchanged or make changes to the rules now. The FCA has decided that it is not appropriate to issue further guidance in relation to legitimate interest or the DTR provisions to delay disclosure or generally but has decided to propose amending the guidance to remove the last sentence of DTR 2.5.5G which will clarify, for the avoidance of doubt, that issuers may have a legitimate reason to delay disclosure in circumstances other than the non-exhaustive examples listed in DTR 2.5.3R or the circumstances described in DTR 2.5.5AR. The FCA does not believe that this proposed change will have a negative impact on the type of transparency it expects the regime to produce, or on the quality or amount of disclosures, but that it will align the rules more closely with the Market Abuse Directive and the Market Abuse Regulation’s policy intent. It will also provide clarity that an issuer can have a legitimate interest in delaying disclosure in other situations than the non-exhaustive circumstances the rules currently set out.
In the consultation paper, the FCA notes that ESMA is to issue guidelines which will create a non-exhaustive indicative list of issuers’ legitimate interests as required by Article 17(11) of the Market Abuse Regulation. The FCA will look at this when it is available. It also makes the following points:
Comments on the consultation paper are requested by February 20, 2016.
On November 23, 2015 the Financial Conduct Authority (FCA) published the twelfth edition of its Primary Market Bulletin. The FCA confirms several amendments that have been made to the UKLA Knowledge Base, which were consulted on in the eleventh Primary Market Bulletin, and also proposes some further changes for consultation.
Confirmed amendments to the UKLA Knowledge Base
Proposed amendments to the UKLA Knowledge Base
The FCA also notes that it is considering making further changes to those previously proposed in its eighth Primary Market Bulletin to the Procedural Note on the UKLA decision-making and review process (see UKLA/PN/908.1 – UKLA decision making and individual guidance processes) and that it expects to finalise this note or reconsult, if appropriate, in the next edition of the Primary Market Bulletin.
On November 24, 2015 the Financial Reporting Lab published a lab project report on the policy and practice in relation to disclosures about dividends, which sets out the findings from its discussions with investors on what they want to know about dividends and how dividend disclosures can be improved.
The report points to the following key areas relating to dividends that should be disclosed:
(FRC, Lab project report: Disclosure of dividends – policy and practice, 24.11.15)
On November 20, 2015 Institutional Shareholder Services Inc (ISS) published an update to its UK & Ireland Proxy Voting Guidelines, following consultation on a number of aspects in October 2015.
The updated Guidelines include the changes mentioned in the October consultation, as well as several other minor amendments.
Changes adopted from October consultation
New changes
ISS will publish its updated Guidelines in December 2015 and they will become effective for shareholder meetings from February 1, 2016.
On November 17, 2015 Companies House published a further updated implementation schedule relating to the Small Business, Enterprise and Employment Act 2015, initially published on August 20, 2015. The update provides that the date of implementation has been moved to April 2016 for the provisions on director disputes and registered office address disputes, which were previously set to come into force in December 2015.
(Companies House, The Small Business, Enterprise and Employment Act is here, 17.11.15)
On November 23, 2015 the Department for Business Innovation & Skills (BIS) published a consultation paper on the financial reporting requirements for Limited Liability Partnerships (LLPs) and the creation of a new micro-entity regime for LLPs and for those general partnerships and limited partnerships that are Qualifying Partnerships as defined in the Partnerships (Accounts) Regulations 2008, that is a partnership where each of its members is a limited company, an unlimited company, or a Scottish partnership, each of whose members is a limited company.
The main proposed changes to the accounting and audit requirements for LLPs are:
The Government also proposes to introduce micro-entity regimes for LLPs and Qualifying Partnerships, which will enable them to access a much less burdensome administrative regime, whilst still meeting their business needs and the needs of their members and other stakeholders.
Responses to the consultation are requested by December 21, 2015, with the regulations to be made by summer 2016 and applying to financial years commencing on or after January 1, 2016.
On November 20, 2015 the Financial Conduct Authority (FCA) published a new standard form for issuers to use to disclose their home member state, as well as an accompanying statement. The member state rules have changed due to the implementation of the Transparency Directive Amending Directive (TDAD) in the UK, and consequently, from November 26, 2015, all issuers must disclose their home member state to:
The FCA notes that:
The information provided to the FCA in the home member state notifications will be sent to ESMA who will maintain a centralised list of all issuers regulated by EU National Competent Authorities.
(FCA, Standard form for the notification of Home Member State, 20.11.15)
On November 23, 2015 the Financial Reporting Council (FRC) published an article discussing the Audit Committee Chairs’ (ACCs) Survey 2015. The survey was sent to ACCs at all FTSE 350 and at some smaller listed companies to provide a suitable sized sample for the six largest audit firms. ACCs were asked eight questions about audit quality and were asked to rank their responses.
ACCs scored their auditors highly across all questions. There was evidence of improvement in all categories with the highest being that of independence and objectivity. The lowest overall scores, for a second year, were for questions on professional scepticism and the auditor’s response to regulatory oversight.
(FRC, Audit Committee Chairs believe audit is improving, 23.11.15)
Publication
In recent years, an important question has arisen in relation to the voluntary carbon market (VCM) as it continues to expand: How do we elevate and maintain its integrity?
Publication
On 16 April 2024, the Hon Tanya Plibersek MP, the Minister for the Environment and Water (the Minister) announced progress on the package of reforms to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).
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