Motor vehicle changes to Franchise Code effective now
Regulations introducing a new automotive section into the Franchising Code of Conduct (Franchising Code) take effect from 1 June 2020.
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On October 17, 2018 the Code Committee of the Takeover Panel (Panel) published PCP 2018/1 proposing amendments to Rule 29 of the Takeover Code (Code) which relates to asset valuations.
Having conducted a review of the purpose and operation of Rule 29, the Panel notes that it does not currently reflect certain aspects of the Panel Executive’s practice. Although it is not intended to materially alter the way in which Rule 29 is currently applied, it is proposed that a revised Rule is introduced in order to (amongst other things) provide better clarity in certain areas and codify current practice.
The following are the key proposals:
A new requirement to consult the Panel in advance if the publication of information contained in valuation report could constitute a profit forecast is also being introduced.
The existing rule that a party to an offer is not normally permitted to publish a valuation of the assets of another party unless supported by an unqualified valuation report is to be retained with minor amendments.
Response to consultation
Comments on the amendments to the Takeover Code proposed in the PCP are requested by December 7, 2018.
On October 12, 2018 the Department for Business, Energy and Industrial Strategy (BEIS) published a notice in relation to cross-border legal entities and EU-specific entities. The notice explains the implications for legal entities operating across the UK-EU border, or which are European specific entities, in the event that the UK leaves the EU in March 2019 with no agreement in place.
After March 29, 2019 if there is no deal, the Government will ensure that the UK continues to have a functioning regulatory framework for companies and that, as far as possible, the same laws and rules that are currently in place continue to apply.
The notice states, amongst other things:
On October 12, 2018 the Department for Business, Energy and Industrial Strategy (BEIS) published a notice explaining the implications for accounting, corporate reporting and audit if the UK leaves the EU in March 2019 with no Brexit agreement in place.
The notice states that if after March 2019 there is no deal, the Government will ensure that the UK continues to have a functioning regulatory framework for companies and that, as far as possible, the same laws and rules that are currently in place continue to apply, but certain changes will be necessary to reflect that the UK is no longer an EU Member State.
A number of points, including the following, are made:
Accounting and corporate reporting
A number of points, including the following, are made:
On October 18, 2018, the Financial Reporting Lab (Lab) of the Financial Reporting Council (FRC) published a report which considers how reporting practice in relation to both business model reporting and risk and viability reporting has changed since the Lab published its “Business model reporting” report in October 2016 and its report on “Risk and viability reporting” in November 2017. The report also examines how companies have responded to suggestions for good practice disclosure that were presented in those reports and it highlights examples where companies have thought about and demonstrated how to enhance the value of their disclosures.
In relation to viability reporting, the report notes that there are some promising developments with companies separating the viability statement into an assessment of prospects, then an assessment of viability, providing more disclosure on both. However, investors would like to see more disclosure on scenario and sensitivity analysis that supports the statement, and reasoning behind the period selected.
The report includes questions for boards on both principal risks and the viability statement.
On October 15, 2018 the Financial Conduct Authority (FCA) published a Discussion Paper (DP18/8) which explains how climate-related matters are relevant to the FCA’s statutory objectives and its proposed approach. The FCA is responsible for ensuring that issuers of listed securities admitted to a regulated market are meeting their disclosure obligations, which can include disclosures about climate change risks, and so aspects of the Discussion Paper consider whether greater encouragement is needed to ensure issuers give investors appropriate information, and whether issuers require clarity over what is expected of them.
Proposals and questions for respondents in the Discussion Paper include the following:
Views on these questions are requested by January 31, 2019.
(FCA, Climate change and green finance, DP18/8 - 15.10.18)
In October 2018, the Investment Association (IA) published guidance for companies on “Update Statements”, being an update, published within six months of an Annual General Meeting or General Meeting at which 20 per cent or more of the votes have been cast against a board recommended resolution, on the views received from shareholders and actions taken by a company since that meeting. This is required by Provision 4 of the 2018 UK Corporate Governance Code.
Update Statements will appear on the Public Register maintained by the Investment Association and which highlights companies who receive a high vote against, or withdraw a resolution. The Public Register provides companies with the opportunity to highlight to investors and other stakeholders the steps they have taken to engage with shareholders in such situations.
The guidance provides information on the features investors would like to see in Update Statements. These should:
On October 18, 2018 Institutional Shareholder Services Inc (ISS) launched a consultation on aspects of their benchmark voting policy for the UK, Ireland and Europe.
In light of increased scrutiny of the role and performance of auditors, and signs of investors’ willingness to hold auditors directly accountable for perceived failures in audit quality, ISS is proposing to track significant audit quality issues, with a focus on accounting controversies, at the lead engagement partner level, wherever such information is available for UK, Irish and European companies.
ISS research reports will note any lead audit partners (and/or partnership firms) who have been linked with significant auditing controversies and, where they are engaged in the audit for other public companies, this will be raised for investor attention even if no audit concerns have been identified at the subject company. A negative recommendation on auditor ratification may be applied in the most severe cases, for example, where the lead audit partner has previously been linked with a corporate failure scenario or other material destruction of shareholder value arising from fraud or other accounting issues.
ISS specifically seeks feedback from investors on the following:
Comments are requested by November 1, 2018. These will be taken into consideration when ISS finalises its benchmark voting policies to be applied for shareholder meetings taking place on or after February 1, 2019.
Following the introduction of the National Cabinet’s Mandatory Code of Conduct for SME Commercial Leasing Principles during the COVID-19 crisis (the Code) in early April, there has been much anticipation and speculation as to how each of the States and Territories would legislate to give effect to the principles of the Code.