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Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On July 13, 2016, the European Securities and Markets Authority (ESMA) published its final report on the Market Abuse Regulation (MAR), setting out guidelines in relation to market soundings and the delay of disclosure of inside information and situations in which the delay of disclosure is likely to mislead the public under Articles 11(11) and 17(11) of MAR (the Guidelines). The Guidelines contain some amendments to those proposed in ESMA’s consultation paper published in January 2016.
With regard to market soundings, the sections on what to do in the case of a discrepancy of opinion have been removed. The reasons for this are related to the fact that further dialogue between the parties could involve the risk of additional information inadvertently being disclosed and the liaison requirement was not strictly included in the mandate.
Other changes relating to market soundings include:
Under the Guidelines on legitimate interests of issuers to delay disclosure of inside information, only two conditions have been retained that must be met where inside information relates to a management decision or contract that is subject to approval by another body of the issuer. These are:
Other issues covered in the Guidelines concerning legitimate interest in delaying the disclosure of inside information are ongoing negotiations and grave and imminent danger to the financial viability of the issuer, development of a product or an invention, a plan to buy or sell a major holding in another entity and deals or transactions previously announced and subject to a public authority’s approval.
Within two months of the Guidelines being issued, each national competent authority will have to confirm whether it complies or intends to comply with the Guidelines. In the event that a national competent authority does not comply or does not intend to comply, it will have to inform ESMA, stating its reasons.
On July 13, 2016, European Securities and Markets Authority (ESMA) published an updated version of its Q&A on the Market Abuse Regulation (MAR), which includes a new question on whether the announcement of interim or year-end financial results determines the timing of the closed period referred to in Article 19(11) of MAR.
ESMA notes that, according to MAR, there should be only one closed period relating to the announcement of every interim financial report and another relating to the year-end report. The term “announcement of an interim or a year–end financial report” used in Article 19(11) of MAR is the public statement whereby the issuer announces the information included in an interim or a year-end financial report that the issuer is obliged to make public according to the rules of the trading venue where the issuer’s shares are admitted to trading or national law. The date when the announcement is made is the end date for the thirty-day closed period.
With particular reference to the year-end financial report, the announcement is the public statement whereby the issuer announces, in advance of the publication of the final year-end report, the preliminary financial results agreed by the management body of the issuer and that will be included in that report. This can apply only if the disclosed preliminary financial results contain all the key information relating to the financial figures expected to be included in the year-end report. In the event the information announced in such way changes after its publication, this will not trigger another closed period but should be addressed in accordance with Article 17 of MAR.
On July 14, 2016 the Takeover Panel published RS 2016/1, its Response Statement on the communication and distribution of information and opinions during an offer, by, or on behalf of, an offeror or the offeree company following a Consultation Paper (PCP 2016/1) published in February 2016.
The Response Statement contains some minor amendments to the proposals in PCP 2016/1 as explained in the Response Statement, and includes a blackline of the final changes to the existing Takeover Code.
Areas covered in PCP 2016/1 and RS 2016/1 include:
The amendments to the Takeover Code introduced as a result of the Response Statement will take effect on September 12, 2016.
On July 12, 2016 the Financial Reporting Council (FRC) published a reminder for directors highlighting some matters for them to consider when preparing their forthcoming half-yearly and annual financial reports in light of the referendum vote for the UK to leave the EU.
The considerations discussed include:
On July 13, 2016 the Quoted Companies Alliance (QCA) published its revised Remuneration Committee Guide for Small and Mid-Size Quoted Companies.
The Guide, prepared to assist remuneration committee members of small and mid-size quoted companies in setting pay for executive directors and senior management in a fair and reasonable manner, was last published in 2012, and it has been revised and updated to address new remuneration regulations and developments in governance behaviour and best practice. Key changes include:
The Guide is available for purchase on the QCA website.
On July 8, 2016 the Financial Reporting Council (FRC) published amendments to FRS 101 on the Reduced Disclosure Framework, which is an optional accounting standard intended to enable cost-efficient financial reporting within groups, particularly for those applying EU-adopted IFRS in their consolidated financial statements. The amendments follow a review of FRS 101 by the FRC and contain some minor changes to the draft amendments published in December 2015, providing certain disclosure exemptions in relation to IFRS 15, “Revenue from Contracts with Customers”, and clarifying the order in which the notes to the financial statements are presented.
As a result of comments received during the consultation process, the FRC is now separately consulting, in FRED 65, on a further amendment to FRS 101 to remove the requirement for a qualifying entity to notify its shareholders in writing that it intends to take advantage of the disclosure exemptions in FRS 101. A similar, consequential amendment is also proposed to FRS 102.
The FRC has requested comments on this consultation by October 14, 2016 and aims to finalise the amendments in December 2016, with them applying to accounting periods beginning on or after January 1, 2016.
On July 7, 2016 Cranfield School of Management published its 2016 Female FTSE Board Report. The Report notes that the percentage of women on FTSE 100 boards had increased to 26 per cent in March 2016, significantly more than in March 2015 (23.5 per cent), but similar to the recorded 26.1 per cent in the final report by Lord Davies published in October 2015.
The Report comments that progress among executive ranks and in the executive pipeline remains very slow. Female executive directorships stand at 9.7 per cent in the FTSE 100 and 5.6 per cent in the FTSE 250,with only 19.4 per cent of women holding roles on executive committees of FTSE 100 companies. The Report notes that this shortage of women in top senior roles will make it difficult to reach and sustain Lord Davies’ target of 33 per cent women on FTSE 350 boards by 2020.
The Report identifies some key points to be considered for future action to maintain momentum moving forward, including:
On July 11, 2016 HM Treasury announced that 72 financial services firms have now signed up to its Women in Finance Charter, which commits financial services firms to link the remuneration packages of their executive teams to gender diversity targets and to set internal targets for gender diversity in their senior management, publish progress reports annually against these targets, and to appoint a senior executive responsible for gender diversity and inclusion.
IMO 2020 is almost upon us. Readers are well aware of the impending switch to 0.5 percent fuel mandated by Annex VI of MARPOL which will cause an anticipated drop in HSFO demand, the potential hazards of new untested LSFO blends, the concerns around scrubber operations, the debate over open loop versus closed loop, and the myriad of other risks associated with the impending regulatory change.