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Essential Corporate News – Week ending March 10, 2017

Publication March 10, 2017


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

FCA: Quarterly Consultation No. 16 – Changes to Prospectus Rules

On March 3, 2017 the Financial Conduct Authority (FCA) published its sixteenth quarterly consultation paper. Among other things, the consultation paper proposes some minor changes to the Prospectus Rules in order to comply with the EU Prospectus Regulation, which will enter into force later this year, possibly in May or June, and which will replace the EU Prospectus Directive.

Proposed changes include the following:

  • Currently annual increases of shares admitted to trading of less than 10 per cent are exempt from the requirement to publish a prospectus and the Prospectus Regulation will change this to a higher threshold of 20 per cent. The FCA suggests deleting the text of PR 1.2.3R(1), which sets out the current exemption, and replacing it with a cross reference to "transferable securities referred to in article 1(4)(a) of the Prospectus Regulation". 
  • The Prospectus Regulation amends the exemption from the requirement to publish a prospectus for shares resulting from the conversion or exchange of securities, limiting the exemption to 20 per cent of the number of shares of the same class already admitted to trading on the same regulated market over a period of 12 months. The FCA proposes deleting the existing text of PR 1.2.3R(7) and replacing it with a cross reference to "shares referred to in article 1(4)(b) of the Prospectus Regulation".

The FCA has requested comments on other aspects of the consultation paper by May 3, 2017, but since the FCA anticipates that the Prospectus Regulation could come into force in May or June 2017, it is requesting comments on the proposed changes to the Prospectus Rules by April 3, 2017.

(FCA, Quarterly Consultation No. 16 – CP17/6, 03.03.17)

BEIS: Review of issues affecting black and minority ethnic groups in the workplace

On February 28, 2017 the Department for Business, Energy and Industrial Strategy (BEIS) published an independent review by Baroness McGregor-Smith considering the issues affecting black and minority ethnic (BME) groups in the workplace. This follows terms of reference published in April 2016 which stated that the review would look at the business and economic case for employers to harness potential from the widest pool of talent in the workforce. It was tasked with identifying the obstacles faced by BME groups in progressing through the labour market, assessing the impact of those obstacles, highlighting best practice and making cost-effective recommendations. The Government response to the review was published alongside the review.

The review sets out a number of changes that can be made by employers in the public, private sector and voluntary and community organisations to improve diversity within their organisations, including:

  • Measuring success - Given the impact ethnic diversity can have on organisational success, it should be given the same prominence as other key performance indicators. To do this, organisations need to establish a baseline picture of where they stand today, set aspirational targets for what they expect their organisations to look like in five years’ time, and measure progress against those targets annually. They must also be open with their staff about what they are trying to achieve and how they are performing. 
  • Changing the culture - Improving diversity across an organisation takes time. Aspirational targets provide an essential catalyst for change, but to achieve lasting results, the culture of an organisation has to change. Those from BME backgrounds need to have confidence that they have access to the same opportunities, and feel able to speak up if they find themselves subject to direct or indirect discrimination or bias. 
  • Improving processes - From initial recruitment, to the support an individual gets and their progression opportunities, processes need to be transparent and fair. In many organisations, the well-established processes in place can act as a barrier to ethnic minorities and hinder their progress through an organisation. 
  • Supporting progression - Getting a job is only the first step of the career ladder. For those who have friends or family with experience of particular professions, there can be an advantage that supports them in their development. However, this does not result in a business placing the very best candidates in every role.
  • Inclusive workplaces - The greatest benefits for an employer will be experienced when diversity is completely embedded and is ‘business as usual’. This means more than simply reaching set targets and changing the processes. It means that everyone in an organisation sees diverse teams as the norm and celebrates the benefits that a truly inclusive workforce can deliver.

The review includes a list of 26 recommendations, many of them directed at listed companies and all businesses and public bodies with more than 50 employees. The review also includes a number of best practice case studies.

The Government’s response includes the following:

  • BEIS will work with businesses to ensure they have the resources they need to improve diversity and inclusion and fully embed change within their organisation.
  • It sees a business-led, voluntary approach and not legislation as a way of bringing about lasting change. 
  • The attention of investment funds will be drawn to the importance of effective diversity and inclusion. 
  • It hopes employers will do what they can to improve their contracts to encourage greater diversity in their supply chains. 
  • It encourages all employers to accept the review’s recommendations. 
  • The Government will monitor how things develop over the next 12 months and take the necessary action where required. 

(BEIS, Race in the workplace: The McGregor-Smith review, 28.02.17)

UK Government Investments: Launch of Future Board Scheme

On March 8, 2017 UK Government Investments announced that in November 2016 the Government launched the Future Board Scheme, in partnership with 30% Club and Board Apprentice. The scheme gives women from a wide range of backgrounds the opportunity to spend 12 months with boards in a developmental capacity.

The scheme is aimed at FTSE 350 companies, small and medium-sized enterprises, and other major organisations. Each organisation involved hosts a participant on their own board and in return puts forward an employee of their own to be placed on another participating board. Companies such as Aviva and Hammerson have signed up to participate in the scheme.

The Government believes the scheme has the potential to significantly grow the talent pipeline of women executives by giving women 12 months’ experience on a major board.

(UK Government Investments, Women in senior leadership: launch of the Future Board Scheme, 08.03.17)

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