Singapore court’s cryptocurrency decision
Implications for cryptocurrency trading, smart contracts and AI
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On June 11, 2018 the Financial Conduct Authority (FCA) published its latest Primary Market Bulletin concerning a consultation on a proposed update to the UKLA Knowledge Base. The consultation relates to updates to the existing technical note on periodic financial information and inside information The proposed amendments are extensive and centre on the issue of identifying and handling inside information during the preparation of periodic financial reports.
The revised technical note, FCA/TN/506.2, suggests that issuers, when preparing periodic financial reports, should conduct an ongoing assessment on a case-by-case basis as to whether or not the information they hold constitutes ‘inside information’ as set out in Article 7 of the Market Abuse Regulation (MAR). In undertaking this assessment, issuers should assume that information relating to financial results could constitute inside information. Issuers should exercise judgement and conduct the assessment in good faith and should be able to provide evidence of the assessment process to the FCA upon request. The FCA warns issuers that it is not appropriate for them to take a blanket approach to the assessment. They should not consider that information to be included in periodic financial reports will always or never constitute inside information.
In suggesting when a legitimate interest of an issuer maybe prejudiced, so permitting the issuer to delay disclosure in accordance with Article 17 (4)(a) of MAR, the FCA gives the example of a situation where work on preparing a periodic financial report is in process and immediate public disclosure of certain information to be included in it would impact on the orderly production and release of the report and could result in the incorrect assessment of that information by the public. The FCA stresses, however, that issuers should not assume that this interest will always be present. This example is limited to the situation in which the inside information emerges as part of the process of preparing a periodic financial report and is to be included in the report.
The technical note also reminds issuers that they should assess on an ongoing and case-by-case basis the extent to which the delay of disclosure of inside information is likely to mislead the public and it refers to ESMA’s non-exhaustive list of situations where delay of disclosure of inside information is likely to mislead the public. It also reminds issuers about the record keeping and other requirements under MAR where the disclosure of inside information is delayed.
Comments on the revised technical note are requested by July 23, 2018.
On June 11, 2018 the draft Companies (Miscellaneous Reporting) Regulations 2018 (Draft Regulations) were published. Subject to Parliamentary approval, the Draft Regulations will amend the reporting requirements contained in Part 15 Companies Act 2006 (CA 2006), in the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 and in the Community Interest Companies Regulations 2005.
The Draft Regulations include the following new requirements:
Subject to Parliamentary approval, the new requirements will apply to company reporting on financial years starting on or after January 1, 2019 in line with the Financial Reporting Council’s plans for bringing a revised UK Corporate Governance Code into effect. On June 12, 2018, the draft Companies (Miscellaneous Reporting) Regulations 2018 Q&A were published to help companies and other interested stakeholders understand how they will be affected by the new reporting requirements.
Following the publication of the draft Companies (Miscellaneous Reporting) Regulations 2018, on June 12, 2018, the Department for Business, Energy and Industrial Strategy (BEIS) published draft “Companies (Miscellaneous Reporting) Regulations 2018 Q&A”. The purpose of the Q&A is to help companies and interested stakeholders understand how they will be affected by the Regulations. While the Regulations will not become law until approved by Parliament, BEIS recognises the importance of providing companies and stakeholders with as much time as possible to understand the proposed changes to the law.Among other things, the Q&A:
On June 13 2018, the Financial Reporting Council (FRC) issued a draft of the Wates Corporate Governance Principles for Large Private Companies (the Principles), and supplementary guidance, for public consultation. In its August 2017 response to its Green Paper on corporate governance reform, the Government stated that it believed that the corporate governance framework for the UK’s largest private companies should be strengthened and, in January 2018, Sir James Wates was appointed to chair a coalition group tasked with developing appropriate corporate governance principles for large private companies.
The Principles have now been published for consultation and are designed to assist companies which, for financial years beginning on or after January 1, 2019, will be required by the Companies (Miscellaneous Reporting) Regulations 2018 to provide a corporate governance statement for the first time. Such companies may adopt the Principles as a framework for the purposes of making the statement of corporate governance arrangements that will be prescribed by the Regulations, assuming they are adopted in their current form. It is further hoped that the Principles will act as guidance to companies of all sizes, not just those subjected to the new legislative requirements, in understanding good practice in corporate governance and apply that good practice widely.
It is intended that the Principles be applied on an “apply and explain” basis. A company adopting them will be expected to apply them fully but can provide a supporting statement for each of the six Principles that gives an understanding of how the company’s corporate governance processes operate and achieve the desired outcomes. The Principles are supported by non-exhaustive guidance that helps companies apply them in practice but this is not to be seen as a checklist. Rather, companies adopting the Principles will be encouraged to demonstrate, through a written explanation in their directors’ report and on their website, how the application of the Principles has resulted in improved corporate governance outcomes.
The six Principles and accompanying guidance are as follows:
On June 12, 2018 the Financial Reporting Council (FRC) issued a Briefing from its Corporate Reporting Review team setting out current ‘hot topics’ of its Corporate Reporting Review function which will be particularly relevant to companies about to prepare their interim accounts and auditors engaged to review them.
The Briefing notes that most listed companies will adopt IFRS 9 ‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with Customers’, meaning 2018 interim reports will be the first prepared under these new standards. The FRC will be monitoring companies’ disclosure of their effects. It points out that companies should assess and explain the effects of the new standards and should provide responses which are clear, concise and company-specific, and focus on the areas of change. Directors are expected to disclose significant judgements made in applying the new standards and to quantify and explain sources of estimation uncertainty.
Other topical issues identified by the Briefing include:
On June 12 2018, the Department for Digital, Culture, Media and Sport and HM Treasury published the Government's response to the industry-led report, ‘Growing a Culture of Social Impact Investing in the UK’ published in November 2017 and which made a number of recommendations to better enable people to invest in line with their values. "Social impact investing" is defined in the response as investing in the share or loan capital of companies and enterprises that not only measure and report their wider impact on society but also hold themselves accountable for delivering and increasing positive impact.
As part of the response, the Government has committed to work with the financial services industry to facilitate the launch of further social impact investment funds. It has also outlined plans to encourage more investments to flow into disadvantaged areas and to create investment opportunities that both address social challenges and create financial return. In addition, it highlights the need to champion and promote the social and environmental responsibility of businesses across the country.
In the response, the Government:
Implications for cryptocurrency trading, smart contracts and AI
Decree No. 228 of 2019 (Decree 228/2019) came into effect on 27 August 2019, which simplifies and revokes previous decrees of the Ministry of Employment (MoE) to widen the type of job titles allowed for foreign professionals to work in Indonesia.
The Indonesian Investment Coordinating Board (BKPM) enacted BKPM Regulation 5/2019 to amend last year’s implementing regulation on guidelines and procedures for licensing and facilities under Indonesia’s foreign direct investment (FDI). The new regulation particularly includes requirements on divestment obligations for foreign direct investment companies.