Corporate Insolvency and Governance Act 2020: Royal Assent
The Corporate Insolvency and Governance Bill received Royal Assent on June 25, 2020 and the Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force (other than paragraph 51 Schedule 3) on June 26, 2020.
We will provide a link to a briefing on the areas covered by CIGA 2020 in due course.
Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020
On June 26, 2020, the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 were made. These Regulations came into force on June 27, 2020 and, pursuant to Section 39 Corporate Insolvency and Governance Act 2020 (CIGA 2020), they extend a range of filing deadlines for companies and other entities registered at Companies House falling after that date and ending on April 5, 2021. Examples for companies include extension of:
- The accounts filing deadline by 3 months, to 12 months for private companies and 9 months for public companies.
- The 14-day deadline for the annual confirmation statement after the end of the company's year-long confirmation period to 42 days.
- The 14-day deadline for submitting notices of relevant events (such as change of director or change of person of significant control) after they occur to 42 days.
- The 21-day deadline for registering a charge against a company's assets by 10 days to 31 days.
The Regulations also extend filing periods under the Limited Partnerships Act 1907, the Companies Act 1985, the Limited Liability Partnerships Act 2000, the European Public Limited-Liability Company Regulations 2004, the Overseas Companies Regulations 2009 and the Scottish Partnerships (Register of People with Significant Control) Regulations 2017.
The Regulations expire on April 5, 2021, but may be extended under Section 39(9) CIGA 2020. An Explanatory Memorandum has been published with the Regulations.
(Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020)
Companies House: Temporary changes to Companies House filing requirements
In light of the coming into force of the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020, on July 1, 2020, Companies House published guidance outlining how the temporary measures introduced by these Regulations will affect public companies, private companies, limited liability partnerships, Societas Europaea, overseas companies and European Economic Interest Groupings when those entities have to file documents or notices with Companies House.
Affected filings include annual accounts, confirmation statements, event-driven filings (such as changes to director or secretary details, information on persons with significant control, registered office or notification of where certain registers are kept) and mortgage charges. The guidance provides information about filing deadline extensions and other matters, with public companies and SEs referred to specific guidance in relation to their accounts filing.
(Companies House: Temporary changes to Companies House filing requirements, 01.07.2020)
Companies House: Guidance for public companies and Societas Europaea
On June 26, 2020, with the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020, Companies House published guidance for public companies and Societas Europaea (SEs) with an accounts filing deadline between March 26, 2020 and September 29, 2020.
The guidance states that such companies can extend their filing deadline to the earlier of September 30, 2020 and 12 months from the end of their accounting period and it sets out different scenarios for a filing deadline extended by the Corporate Insolvency and Governance Act 2020.
Companies House has also updated their Guidance for companies on applying for more time to file the company's accounts.
(Companies House: Guidance for public companies and Societas Europaea, 26.06.2020)
Limited Liability Partnerships (Amendment etc.) Regulations 2020
On June 25, 2020, the Limited Liability Partnerships (Amendment etc.) Regulations 2020 were made. These Regulations make the necessary amendments and provisions to apply the new insolvency and restructuring measures introduced in the Corporate Insolvency and Governance Act 2020 to limited liability partnerships. The Regulations were published together with an Explanatory Memorandum, and came into force on June 26, 2020.
(Limited Liability Partnerships (Amendment etc.) Regulations 2020)
FCA: Redcentric PLC publicly censured for market abuse – Final Notice
On June 26, 2020, the Financial Conduct Authority (FCA) issued a Final Notice publicly censuring Redcentric PLC, an IT service provider admitted to trading on AIM, for committing market abuse between November 2015 and November 2016.
Redcentric issued unaudited interim results on November 9, 2015, and audited final year results on June 16, 2016, both of which materially misstated its net debt position and overstated its true asset position in circumstances where it knew, or ought to have known that the information was false and misleading. As a result, investors were misled and paid more when purchasing shares than they would have done had they known the true position. The misstated accounting balances were announced by Redcentric on November 7, 2016 when it announced that they had been discovered following an internal review by its audit committee of its interim results for the six months ending September 2016.
Redcentric has agreed to offer compensation to affected investors who purchased Redcentric shares between November 9, 2015 and November 7, 2016 and in light of this, the FCA has decided to publicly censure Redcentric rather than impose a substantial fine. The FCA notes that this is the first time an AIM-listed company has offered to implement its own scheme to pay some compensation to those affected by the harm it caused as a result of market abuse and Redcentric estimates that the value of the scheme to potential claimants is £111.4 million, with each claimant having a basic entitlement to receive approximately 17 pence for each net share purchased.
(FCA, FCA publicly censures Redcentric PLC for market abuse, 26.06.2020)
(FCA, Final Notice – Redcentric PLC, 26.06.2020)
Competition legislation: The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 and Draft Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2020
In relation to the above legislation, our UK Antitrust and Competition team has updated the UK section of our global guide on foreign direct investment. The text of the UK section can be accessed here.
FCA: Climate Financial Risk Forum Guide to climate-related financial risk management
On June 29, 2020, the Climate Financial Risk Forum (CFRF), co-chaired by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), published a guide which aims to help financial firms understand the risks and opportunities arising from climate change and assist them in integrating them into their risk, strategy and decision-making processes.
The guide includes chapters on Disclosures, Innovation, Scenario Analysis and Risk Management, as well as a “Guide summary” co-produced by the FCA and PRA. Each chapter provides practical tools, experience, knowledge and case studies which firms can use to develop their strategies, processes and approaches.
(FCA, Climate Financial Risk Forum Guide to climate-related financial risk management, 29.06.2020)
ICAEW: Non-financial reporting – Ensuring a sustainable global recovery
On June 22, 2020, the ICAEW published a paper to contribute to the debate on non-financial reporting taking place in Europe and elsewhere. The ICAEW believe that improved reporting on environmental and social issues is central to efforts to encourage system change which is needed to expedite the sustainable rebuilding of economies around the world.
The paper’s key recommendations are as follows:
(ICAEW: Non-financial reporting – Ensuring a sustainable global recovery, 22.06.2020)
- The ICAEW strongly encourage all efforts to move towards the establishment of a single principles-based and internationally recognised global framework providing comparability and consistency for non-financial reporting.
- The ICAEW believe in the longer-term goal of a global corporate reporting structure, encompassing both financial and non-financial reporting.
- Current moves to consolidate existing standards, guidelines and frameworks need to be accelerated and made more open and transparent.
- High quality standards need to be based on a shared understanding of the goals and purposes of reporting. Next steps must also address the urgent need to define and agree a solid conceptual framework for non-financial reporting.
- The ICAEW recognise the particular momentum in Europe in this area and believe that the EU can act as a global leader to catalyse international alignment and the establishment of a new corporate reporting framework.
- Concurrently, steps can be taken at European level to work towards the rapid identification of standards that can address specific EU policy objectives and regulatory needs.
- This could lead to a more direct role for the European Financial Reporting Advisory Group (EFRAG) in helping to elaborate a new conceptual framework and in assuming some standard-setting functions where there is a pressing need for action at European level.
- An enhanced way of working could be envisaged between the EU/EFRAG and an eventual International Non-Financial Standards Board (INSB) which is open to the collaborative development of standards.