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Essential Corporate News – Week ending March 18, 2016

Publication March 18, 2016


Introduction

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

UK Budget 2016

The Chancellor delivered his UK Budget on March 16, 2016. This briefing, from the Norton Rose Fulbright Tax team, concentrates on those changes which will directly affect corporate and business clients:

  • The business tax road map – the Government has published its long term tax plans for businesses, which include adopting many of the BEPS changes, such as a cap on interest relief;
  • Taxation of entrepreneurs and managers – while combating so-called tax avoidance, reducing the rate of capital gains and extending the favourable regime for entrepreneurs;
  • Oil and gas – a welcome reaction to the collapse in oil prices; and
  • Real estate - an increase in the rate of stamp duty land tax for commercial property and bringing offshore property developers into the UK tax charge.

The detail will be in the Finance Bill, which is due to be published on March 24, 2016.

(Norton Rose Fulbright, UK Budget 2016, 17.03.16)

European Union: Commission Implementing Regulation on the precise format of insider lists and updating insider lists for the Market Abuse Regulation

On March 11, 2016 the European Union published Commission Implementing Regulation (EU) 2016/347 of 10 March 2016 laying down implementing technical standards with regard to the precise format of insider lists and for updating insider lists in accordance with the Market Abuse Regulation (MAR) in the Official Journal.

The implementing technical standards are in largely the same form as those proposed by ESMA in its final report on draft technical standards on MAR delivered to the European Commission in September 2015.

The Implementing Regulation entered into force on March 12, 2016 and will apply from July 3, 2016.

(European Union, Official Journal of the European Union - Commission Implementing Regulation (EU) 2016/347 of 10 March 2016 laying down implementing technical standards in accordance with Regulation (EU) No 596/2014, 11.03.16)

European Union: Commission Implementing Regulation laying down implementing technical standards with regard to the timing, format and template of the submission of notifications to competent authorities under the Market Abuse Regulation

On March 17, 2016 the European Union published Commission Implementing Regulation (EU) 2016/378 of 11 March 2016 laying down implementing technical standards with regard to the timing, format and template of the submission of notifications to competent authorities in accordance with the Market Abuse Regulation (MAR) in the Official Journal.

The implementing technical standards are based on those proposed by ESMA in its final report on draft technical standards on MAR delivered to the European Commission in September 2015. They apply to the notification requirement in Article 4(1) of MAR for market operators of regulated markets and investment firms, and market operators operating a multilateral trading facility or an organised trading facility, to make certain notifications to competent authorities including in relation to financial instruments admitted to trading. Competent authorities are required by Article 4(2) of MAR to transmit such notifications to ESMA, which will publish them on its website.

The Implementing Regulation entered into force on March 18, 2016 and will apply from July 3, 2016.

(European Union, Official Journal of the European Union - Commission implementing Regulation (EU) 2016/378 of 11 March 2016 laying down implementing technical standards with regard to the timing, format and template of the submission of notifications to competent authorities according to Regulation (EU) No 596/2014, 17.03.16)

FRC: Letter to investors on shareholder meeting season

On March 17, 2016 the Financial Reporting Council (FRC) published a letter from its Chief Executive to investors highlighting some recent changes in reporting which investors should be aware of.

The letter discusses the following:

  • The overall aim of the annual report – Investors are encouraged to engage with companies to provide a steer on what information they believe is relevant and to challenge where reporting falls short of these expectations.
  • Risk, internal control and viability – Companies should explain the period chosen for the viability statement and avoid boilerplate statements. They should also disclose how their principal risks specifically affect them and investors are encouraged to question companies if key risks do not seem to be included.
  • Brexit - Companies may well be currently considering the risks and uncertainties associated with the UK’s potential exit from the EU and if the board considers this to be a principal risk, they should disclose that to their shareholders.
  • Alternative performance measures – Where companies choose to use non-GAAP and alternative performance measures, they should be clearly defined, consistent and include reconciliations to, and explanations of, how they relate to GAAP measures.
  • Audit reporting - Extended audit committee and auditor reporting requirements were introduced in 2013 and as a result, reports should be consistent with the financial statements and sufficient information should be provided about the audit to allow for an informed discussion with the company. The FRC notes that it recently published a guide on the impact of extended auditor reports.
  • Dividend disclosures - The Financial Reporting Lab’s recent report “Disclosure of dividends – policy and practice” encourages companies to ensure clear disclosure of dividend policy and suggests areas for improvement. The FRC notes that investors may wish to challenge companies that provide insufficient information in this area.
  • Governance reporting - Where boards elect not to comply with key provisions of the UK Corporate Governance Code, they should provide specific, meaningful explanations to investors and the FRC encourages investors to challenge companies where they do not believe that explanations given are sufficiently persuasive.
  • Accounting policies and impact of new standards - Companies should explain critical judgements and accounting policy choices, particularly where there is diversity of treatment and investors should expect companies to identify the precise nature of the judgements they made rather than merely repeat what the standards require.
  • FRC transparency – The FRC notes that it is committed to improving its effectiveness in raising the quality of corporate reporting in the UK and in 2016 plans to increase the transparency of reporting conclusions on individual company reports and audits; let companies know when it has reviewed their report and accounts and has no substantive points to raise; and, from 2017, will name the companies whose reports have been subject to corporate reporting or audit quality reviews.

(FRC, Letter to investors on shareholder meeting season, 17.03.16)

LSE: Feedback on consultation on amendments to the Admission and Disclosure Standards and the High Growth Segment Rulebook

On March 14, 2016 the London Stock Exchange (LSE) published Notice N02/16 (the Notice) containing feedback on its December 2015 consultation which set out proposed amendments to the Admission and Disclosure Standards and the High Growth Segment Rulebook. These proposed amendments have been adopted as set out in the consultation with the exception of those relating to issuers of depositary receipts, which the LSE has proposed further changes to.

The LSE requests responses to these further proposals by April 11, 2016.

The Notice contains an attachment with the confirmed rules which will come into effect on April 4, 2016.

(LSE, Market Notice N02/16 - Feedback on N19/15 and publication of the Admission and Disclosure Standards, 14.03.16)

The European Public Limited-Liability Company (Register of People with Significant Control) Regulations 2016

On March 17, 2016 the European Public Limited-Liability Company (Register of People with Significant Control) Regulations 2016 were published, together with an explanatory memorandum and final impact assessment in parts 1, 2 and 3.

The Regulations modify the people with significant control regime (PSC regime) in Part 21A of and Schedule 1A and 1B to the Companies Act 2006 (CA 2006) and the Register of People with Significant Control Regulations 2016, so that it applies to Societates Europaeae. The Regulations also amend the European Public Limited-Liability Company Regulations 2004.

The Regulations come into force on April 6, 2016, apart from the sections covering amendments to the European Public Limited-Liability Company Regulations 2004 and the modification of the CA 2006 in its application to SEs, both of which come into force on June 30, 2016.

(The European Public Limited-Liability Company (Register of People with Significant Control) Regulations 2016, 17.03.16)

The Small Business, Enterprise and Employment Act 2015 Commencement Regulations

On March 11, 2016 the Small Business, Enterprise and Employment Act 2015 (Commencement No 4), Transitional and Savings Provisions Regulations 2016 (the Commencement Regulations) were published. The Commencement Regulations bring into force certain provisions of the Small Business, Enterprise and Employment Act 2015 (the 2015 Act), including the following:

  • Regulation 3 brings provisions into force on April 6, 2016, including: section 102 of the 2015 Act on the removal of material about directors from the public register and section 107 on reports of office holders on the conduct of directors of insolvent companies.
  • Regulation 5 brings into force on May 1, 2016 section 92 of the 2015 Act on the duty to deliver a confirmation statement instead of annual returns (for the purpose of enabling the Registrar of Companies to impose the requirements referred to in section 853F(6) of the Companies Act 2006 about the form in which shareholder information is delivered to the Registrar).
  • Regulation 6 brings provisions of the 2015 Act into force on June 30, 2016, including: section 92 to the extent not in force by virtue of regulation 5, section 93 covering related amendments to section 92 so far as not yet in force, section 94 and Schedule 5 on the option for companies to keep information on the central register, section 96 on the protection of information about a person's date of birth so far as not yet in force, section 97 and Schedule 6 on the contents of statements of capital and section 98 on the information about the aggregate amount paid upon shares for public companies.

(The Small Business, Enterprise and Employment Act 2015 (Commencement No 4, Transitional and Savings Provisions) Regulations 2016, 11.03.16)


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