Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
The Enterprise Act 2002 (Turnover Test) (Amendment) Order 2018
The Enterprise Act 2002 (Turnover Test) (Amendment) Order 2018 (SI 2018/593) was published on May 14, 2018. This amends section 23 Enterprise Act 2002 which sets out the criteria for a merger to be a “relevant merger situation”, so qualifying for investigation by the Competition and Markets Authority (CMA).
Under the Enterprise Act, for the CMA to assess the merger, the acquired company must have an annual turnover of more than £70 million and/or the merger should result in the creation of, or increase in, 25 per cent or more combined share of sales or purchases in the UK (or in a substantial part of it), of goods or services of a particular description. The Government announced, in its March 2018 response to a consultation on changes to UK merger thresholds to protect national security that the turnover threshold would be reduced from £70 million to £1 million for changes in control over “relevant enterprises” active in three sectors (military or dual-use goods which are subject to export control, computer processing units and quantum technology).
This Order will come into force immediately after the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 comes into force on June 11, 2018, with the amendments it introduces only applying in cases where enterprises cease to be distinct after the Order comes into force.
The Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018
On May 16, 2018 the Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 (SI 2018/578) was published. This amends section 23 Enterprise Act 2002, which sets out the criteria for a merger to be a “relevant merger situation”, and so qualifying it for investigation by the Competition and Markets Authority.
Currently under the Enterprise Act, intervention in a merger can only take place if the transaction meets certain thresholds, including that the merger takes the merging parties’ combined share of supply to 25 per cent or more (or increases an existing share of supply of 25 per cent or more). Article 3 of this Order amends the share of supply test so that, in cases where the enterprise being taken over is a “relevant enterprise”, that test is additionally met if the relevant enterprise has a 25 per cent share of supply of goods or services in the UK before the merger. The relevant goods or services for this purpose are those by virtue of which it qualifies as a relevant enterprise.
Article 4 inserts a new section 23A into the Enterprise Act to define a “relevant enterprise”. This definition covers enterprises that are involved in specified activities in connection with military or dual-use goods that are subject to export control, computer processing units and quantum technology.
The Order will enter into force on June 11, 2018, with the amendments it introduces only applying in cases where enterprises cease to be distinct after the Order comes into force.
BEIS: Timing of pay ratio reporting legislation
On May 11, 2018, the Government provided a written response to a question asked by Frank Field MP on May 8, 2018 as to when it plans to consult on draft secondary legislative proposals requiring quoted companies to report annually on the pay ratio between their chief executive officer and the average worker.
In the Government’s response to its Green Paper consultation on corporate governance reform published in August 2017, the Government announced that it would legislate to introduce pay ratio reporting as part of a wider set of corporate governance reform.
The Government has confirmed in the written response that the secondary legislation needed to implement pay ratio reporting, and the other new corporate governance reporting requirements announced in 2017, will be laid in Parliament in summer 2018.
European Council: Fifth Money Laundering Directive adopted
On May 14, 2018 it was announced that the European Council has adopted the Fifth Money Laundering Directive. This was adopted by the European Parliament on April 19, 2018.
It will enter into force 20 days after its publication in the Official Journal and Member States will have 18 months from its entry into force to meet its requirements.
FRC: Feedback Statement - FRED 69 FRS 101 Reduced Disclosure Framework 2017/18
On May 10, 2018 the Financial Reporting Council (FRC) published a feedback statement summarising comments received on FRED 69 FRS 101 Reduced Disclosure Framework – 2017/18 cycle (FRED 69). The FRC issued FRED 69 in October 2017 as part of its annual review of FRS 101 and asked for comments to be submitted by February 2018.
FRED 69 comprised two questions:
- Do you agree that no amendments are required to FRS 101 in this cycle?
- In relation to the consultation stage impact assessment, do you have any comments on the costs and benefits identified?
In the feedback statement, the FRC confirms that no amendments are being made to FRS 101.
2019 guide to Foreign Private Issuer status
A company organized outside the US subject to provisions of the US federal securities laws receives benefits if it qualifies as an FPI.