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CFPB takes steps to regulate “Buy Now, Pay Later” providers
On May 22, 2024, the CFPB issued an interpretive rule that imposes some of the same rules on BNPL providers that apply to conventional credit card providers.
Global | Publication | October 23, 2015
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On October 23, 2015 the Code Committee of the Takeover Panel (the Code Committee) published Response Statement 2015/1 following consultation on PCP 2015/1 published in May 2015 which contained proposed amendments to the Takeover Code (the Code) in relation to the treatment of dividends paid by an offeree company to its shareholders. The proposed amendments were intended primarily to clarify the application of existing provisions of the Code and to ensure greater alignment of the Code with the existing practice of the Panel Executive.
The Code Committee notes that respondents were generally supportive of the proposals. However, concern was expressed that a potential offeror that made a possible offer announcement which included the terms on which an offer might be made for the offeree company, but which (possibly as the result of an inadvertent mistake) did not reserve the right to reduce the offer consideration by the amount of all or part of a dividend subsequently paid by the offeree company, would not be permitted to introduce such a reservation in a subsequent firm offer announcement or offer document, and that this could result in potentially significant consequences for the offeror.
Having considered the responses to the consultation, the Code Committee has adopted the substance of the amendments to the Code which were proposed in PCP 2015/1. However, the Code Committee has decided that the new Note 4 on Rule 2.5, the new Note 4 on Rule 2.7 and the new Note 5 on Rule 24.3 should not be adopted in the forms proposed in the PCP. The Code Committee has instead concluded that, in summary, the Code should require an offeror, in a statement made under Rule 2.5(a)(i), a firm offer announcement and an offer document, to state that the offeror will have the right to reduce the offer consideration by the amount of any dividend (or other distribution) which is paid or becomes payable by the offeree company to offeree company shareholders, unless, and to the extent that, the offeror expressly states that offeree company shareholders will be entitled to receive all or part of a specified dividend in addition to the offer consideration.
A draft of an Executive Practice Statement in relation to the application of certain provisions of the Code to the payment of dividends by an offeree company was set out in Appendix C to PCP 2015/1. The Code Committee understands from the Panel Executive that, in view of the final form of the amendments to the Code adopted in this Response Statement, it considers that it is not currently necessary to publish a Practice Statement in this area.
The amendments to the Code will take effect from November 23, 2015.
(Takeover Panel, Response Statement 2015/1: Dividends, 23.10.15)
On October 23, 2015 the Code Committee of the Takeover Panel (the Code Committee) published Response Statement 2015/2. This follows the publication in July 2015 of PCP 2015/2 which contained proposed amendments to the definition of ‘voting rights’ in the Takeover Code (the Code). The changes relate to the treatment of restrictions and suspensions of voting rights for these purposes.
The proposed amendments in the consultation paper were intended to address two main points:
In light of responses, the Code Committee has adopted the amendments to the Code proposed in PCP 2015/2 with some minor modifications. The changes will take effect on November 23, 2015.
Any company which has in the past issued suspended voting shares which remain in issue is advised to contact the Panel Executive to obtain a ruling regarding the application of the Code to the company, taking account of the facts of the particular case.
(Takeover Panel, Response Statement 2015/2: Restrictions and Suspensions of Voting Rights, 23.10.15)
On October 23, 2015 the Code Committee of the Takeover Panel (the Code Committee) published Response Statement 2015/3 following consultation on PCP 2015/3 published in July 2015 which contained proposed amendments to the definition of ‘acting in concert’ in the Takeover Code (the Code) through the introduction of three new categories of persons presumed to be acting in concert.
The definition of acting in concert under the Code currently includes six categories of person who the Panel Executive will presume to be acting in concert with other persons in the same category (although these presumptions are capable of being rebutted). It has been the Panel Executive’s practice for a number of years to also presume certain other categories of persons to be acting in concert with each other even though they are not specifically covered by the existing presumptions in the definition. Although the Code Committee considers practitioners are generally aware of the Panel Executive’s approach in respect of these groups, it believes that this approach should be codified and so proposed to introduce three new presumptions to the definition such that the following categories of persons will be presumed to be acting in concert:
It is also proposed to include a definition of the term ‘close relatives’ clarifying that this will normally include: (a) the person’s spouse, civil partner or co-habitant; (b) the person’s children, parents, brothers, sisters, grandchildren and grandparents, and those of any person described in (a); and (c) the spouse, civil partner or cohabitant of any person described in (b).
Having considered the responses to the consultation, the Code Committee has adopted the amendments to the Code proposed in PCP 2015/3 and the amendments will take effect on November 23, 2015.
On October 22, 2015 the Financial Reporting Council (FRC) published its corporate reporting review. This report provides an overview of the corporate reporting review activities of the FRC for the year ended 31 March 2015. The report:
The FRC makes the following comments on several key areas:
The FRC’s 2015/16 reviews
The FRC comments that it spends an increasing proportion of its time evaluating the significant accounting judgements that boards make and the quality of their conclusions, as these areas are important to investors. These significant judgements involve the consideration of materiality. Boards should consider both the quantitative and qualitative aspects of materiality when making judgements. The FRC may challenge these conclusions, particularly if it believes the board may be using a quantitative materiality argument to achieve a particular accounting treatment, to justify giving insufficient prominence to relevant information or to avoid the transparency surrounding an error correction. The FRC reminds boards that an error can be less than a previously calculated quantitative threshold for materiality but still be material in nature when the issue is relevant to investors.
The FRC’s 2015/16 reviews will also be influenced by macro-economic factors that may affect corporate reporting in the UK, specifically:
Areas of corporate reporting most frequently raised
The FRC identified the following areas of corporate reporting that were most frequently raised with companies during the year and it includes case studies in some areas to explain its approach and views:
The FRC also published the technical findings of the Conduct Committee’s Financial Reporting Review Panel (the Panel). The Panel summarises the resolution of certain issues arising from the reviews undertaken in the past year and reminded quoted companies that paragraph 8(c) of Section 414 C of the Companies Act 2006 requires absolute numbers of employees of each sex at various levels within the company to be disclosed and of the requirements in Schedule 7 of SI 2008/410 to disclose greenhouse gas emissions. The Panel also identified companies that did not disclose an intensity ratio, the methodology used or total emissions in CO2 equivalent.
(FRC, Corporate Reporting Review - Annual Report 2015, 10.15)
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On May 22, 2024, the CFPB issued an interpretive rule that imposes some of the same rules on BNPL providers that apply to conventional credit card providers.
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