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Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On June 27, 2018 the Department for Business Energy and Industrial Strategy (BEIS) and the Government Equalities Office published a press release in relation to progress made to date by FTSE 350 companies in meeting the Hampton-Alexander Review target of having at least 33 per cent of board positions held by women by the end of 2020.
At the half-way point of the Hampton-Alexander Review, 29 per cent of FTSE 100 board positions are held by women (up from 12.5 per cent in 2011) so FTSE 100 companies are on track to meet the 33 per cent target by 2020 but FTSE 350 companies may fall short.
In relation to FTSE 350 companies, while the number of women on boards has increased to 25.5 per cent, around 4 per cent of all appointments will need to go to women over the next two years for the FTSE 350 to meet the 33 per cent target. There are also still 10 FTSE 350 companies with all-male boards.
The press release also announces that the new online portal for FTSE 350 companies to submit their 2018 gender leadership data (the number of men and women on the executive committee and direct reports to the executive committee) is now open and progress made on women in executive and leadership positions will be reported in November 2018 when the 2018 Hampton-Alexander Report will be published.
On June 26, 2018 the Department for Work and Pensions (DWP) published a consultation paper setting out proposals to improve the Pensions Regulator’s powers in relation to defined benefit pension schemes. The aims of the proposals are to ensure that the Pensions Regulator can be more proactive and get involved earlier when employers make changes which could impact the company’s pension scheme, and to ensure that the Pensions Regulator can obtain the right information about a scheme and its sponsoring employer and is able to gain redress when things go wrong.
The proposals in the consultation paper include the following:
Notifiable events framework
The DWP believes that the current notifiable events framework can be improved by including a broader range of employer-related events within it. It is proposed that the following be added as notifiable events:
The DWP also proposes extending the current “breach of banking covenant” notifiable event to include covenant deferral, and amendment or waiver. In addition, where the following transactions are proposed, the Pensions Regulator should be made aware of the planned transaction when a heads of terms agreement is first put in place (so earlier than in the current process) since this is the point at which it believes scheme trustees should be made aware of what is planned:
Declaration of Intent
In connection with the sale of a controlling interest in a scheme employer, or the sale of the business or assets of a scheme employer or the granting of security in priority to scheme debt, the DWP proposes requiring the employer to issue a Declaration of Intent setting out the implications of the transaction for the pension scheme and how any risks will be mitigated. The Declaration of Intent would be required after the parties have completed due diligence and once transaction financing has been finalised but before signature of the sale and purchase agreement. It would be addressed to the trustees from the transaction’s corporate planners (usually the board of the company) and be shared with the Pensions Regulator. It would explain the nature of the planned transaction, confirm that the trustees of the pension scheme have been consulted and agreed (or otherwise) to the planned transaction, and explain any detriment to the scheme and how this is to be mitigated.
Improved powers for the Pensions Regulator
The DWP wants to complement the existing penalty regime with new penalties that can be imposed, as appropriate, for both low-level compliance breaches and more serious offences such as in the event of reckless behaviour in relation to pension scheme liabilities. The Pensions Regulator will be able to vary the level of penalty depending on the seriousness of the breach and the following suite of options is proposed:
It is suggested that the range of possible targets should include all of those who have responsibility to the pension scheme, which will include directors, sponsoring employers and any associated or connected persons and, in some circumstances, trustees.
The consultation paper also sets out proposals to strengthen the existing Contribution Notice regime and proposals to strengthen and improve the way Financial Support Directions work.
The consultation paper includes an online survey and responses are requested by August 21, 2018.
As business resumes in the workplace and circumstances change, American companies must be ready.