Essential Corporate News – Week ending September 18, 2015

Publication September 18, 2015


Introduction

Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.

NAPF: 2015 AGM Season Report

On September 14, 2015 the National Association of Pension Funds (NAPF) released its third annual review of the preceding AGM season. The NAPF highlights the following points:

  • In 2015 there has generally been a more purposeful and effective engagement between companies and investors, with few new regulations for either party to contend with.
  • At first glance 2015 appears to have been a very placid year, however there were significant shareholder rebellions at approximately 20 per cent of FTSE 100 and FTSE 250 companies and the report names 12 companies within the FTSE 350 for whom a significant proportion of their shareholders have for a successive year expressed their discontent with particular aspects of their governance arrangements.
  • There was general pay restraint, but the introduction of the constraints imposed by binding pay policies has not resulted in this issue becoming wholly uncontentious although, while remuneration does continue to dominate conversations between companies and investors, there are encouraging signs that time is being found to focus on other, arguably more important, issues.
  • Attention is being increasingly directed towards the effectiveness of both boards as a whole as well as the individual directors. In addition, the NAPF draws attention to the opaque area of the wider workforce. It notes that an increasing number of investors are keen to better understand how companies’ human resources practices are aligned with their objective of generating long-term sustainable success.
  • The NAPF hopes that in 2016 governance discussions will continue to become more integrated and holistic in nature. Enhanced disclosures about the other 99 per cent beyond executive management which constitute a company’s workforce, alongside the new viability statements, should provide new richer insights and equip both investors and companies with the context to move conversations towards the shared aim of aligning governance practices with fostering long-term business success.

(NAPF, 2015 AGM Season Report, 14.09.15)

London Stock Exchange: AIM disciplinary notice AD 14

On September 17, 2015 the London Stock Exchange (the Exchange) announced that a nominated adviser has been privately censured and fined £75,000 by the AIM Executive Panel.

The private censure relates to a failure by the nominated adviser to effect changes it had previously agreed to make. These were changes in order to address issues identified by the Exchange as part of a review of that nominated adviser’s work against the standards required of it by the AIM Rules for Nominated Advisers (Nomad Rules). The relevant Nomad Rules which were found to have been breached were (i) Nomad Rule 19 relating to the quality of the nominated adviser’s liaison with the Exchange and (ii) Nomad Rule 23 relating to the failure to ensure that the nominated adviser maintains procedures which are sufficient for it to discharge its ongoing obligations under the Nomad Rules.

As a result of its review of the nominated adviser, AIM Regulation provided guidance and made a number of recommendations in respect of its procedures. The nominated adviser agreed that it would implement changes to address the issues identified. Notwithstanding these assurances, it became clear that little progress had been made in respect of implementation of those changes. The Exchange points out that failure to implement agreed changes is unacceptable to the Exchange given the importance of the role of the nominated adviser in respect of maintaining the integrity and reputation of AIM.

(London Stock Exchange, AIM disciplinary notice AD 14 – Section C2.2 Notice, 17.09.15)

BIS: The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2015

On September 14, 2015, the Department for Business Innovation and Skills (BIS) published the Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2015 (the Regulations), together with a final impact assessment. The Regulations remake earlier regulations (The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2012) which provide that companies listed in the USA or Japan and that domicile in the UK are required to file their accounts using either UK GAAP or IAS, and to prepare their first set of accounts within 18 months of incorporation in the UK, which can lead to substantial costs. The Regulations remake and enhance these measures to give parent companies listed on stock exchanges in the USA or Japan, a longer timeframe (a maximum of four years) to convert to using UK GAAP/IAS.

BIS notes that the changes avoid additional costs associated with converting accounts within 18 months. This should help to attract companies to domicile in the UK, potentially increasing productivity, competition and innovation.

(BIS, The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2015, 09.09)


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