OFAC revokes so-called U-turn authorization for Cuba-related financial transactions
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.
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The Information about People with Significant Control (Amendment) Regulations 2017 (Regulations) were published on June 23, 2017 and came into effect on June 26, 2017. The Regulations implement aspects of Article 30 (requiring a central register of beneficial ownership information for corporate and other legal entities) of the Fourth Money Laundering Directive (Directive 2015/849/EU). They make minor changes to and extend the scope of Part 21A Companies Act 2006 (CA 2006) which relates to the persons with significant control (PSC) regime, as well as changes to other secondary legislation (including the Register of People with Significant Control Regulations 2016), to bring the UK’s PSC regime into compliance with the Directive’s requirements.
Key Amendments to Part 21A CA 2006 made by the Regulations include the following:
In light of the coming into force of The Information about People with Significant Control (Amendment) Regulations 2017 from June 26, 2017, the Department for Business, Energy and Industrial Strategy (BEIS) has updated the following guidance:
In addition, BEIS has published new PSC Guidance for eligible Scottish partnerships on the meaning of “significant influence or control”.
On June 26, 2017 a Written Ministerial Statement from Margot James, Parliamentary Under Secretary of State for Business, Energy and Industrial Strategy (BEIS), was published. In it she refers to the two sets of regulations implementing Article 30 of the Fourth Money Laundering Directive, namely the Information about People with Significant Control (Amendment) Regulations 2017 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. These modify and extend the UK regime for a public register of information about people with significant influence or control over UK companies and limited liability partnerships (the PSC regime).
The Ministerial Statement outlines key provisions in the new regulations and also refers to the updated guidance on the PSC regime published by BEIS.
On June 26, 2017 the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 came into effect. The Regulations implement aspects of Article 30 (requiring a central register of beneficial ownership information for corporate and other legal entities) of the Fourth Money Laundering Directive (Directive 2015/849/EU) for Scottish limited partnerships and certain Scottish general partnerships.
The Regulations cover the following:
There are also consequential amendments to section 790C(7) of the Companies Act 2006, and its application in the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009.
On June 22, 2017 the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (Money Laundering Regulations 2017) were laid before Parliament and came into force on June 26, 2017. They introduce a number of new and updated requirements on relevant businesses and changes to some of the obligations found under the Third Money Laundering Directive. They follow on from draft regulations and a consultation paper published by HM Treasury in March 2017.
Part 5 of the Money Laundering Regulations is concerned with beneficial ownership information and meets some of the requirements in Article 30 of the Fourth Money Laundering Directive (Directive 2015/849/EU). The following changes have been made to the draft regulations in so far as they apply to UK bodies corporate:
On June 26, 2017 the European Commission published non-binding guidelines on the methodology for reporting non-financial information. The guidelines have been prepared in accordance with Article 2 of the EU Non-Financial Reporting Directive (Directive 2014/95/EU) which requires the disclosure of non-financial and diversity information by certain large undertakings and groups.
The guidelines are designed to help companies disclose non-financial information in a relevant, useful, consistent and more comparable manner. The guidelines are not mandatory and do not create new legal obligations, so companies may also rely on international, EU-based or national narrative reporting frameworks, according to their own characteristics or business environment.. The overall aim of the guidelines is to promote sustainable growth and provide greater transparency to shareholders. They include examples and key performance indicators (KPIs) throughout.
The key principles of the guidance are:
In relation to the content of non-financial reports, the European Commission recommends the following:
The guidelines also address board diversity disclosure in a bid to help large listed companies prepare an appropriate description of their board diversity policy for inclusion in their corporate governance statement. The board diversity description does not, however, form a part of the non-financial statement, so this section of the guidelines is without prejudice to the need to disclose material diversity information. Companies should:
The Financial Conduct Authority (FCA) published Policy Statement PS17/13 on June 27, 2017 which sets out its rules banning the use of contractual clauses that restrict a client’s choice of future providers of primary market services (debt capital market, equity capital market and merger and acquisitions services). As of January 3, 2018 firms will be banned from entering into agreements with a provision that gives them a right to provide future primary market services to their clients. The ban excludes future service restrictions in bridging loans.
The ban follows the market study of investment and corporate banking conducted by the FCA, resulting in their final report published in October 2016. The FCA found that smaller clients in particular sometimes felt pressure to reward their relationship/lending bank or corporate broker with n future primary market services even where an alternative supplier might be better. The FCA aims to provide clients with a greater choice of providers for future services; in turn competition will increase and firms will be encouraged to compete on the merits of their services. The Policy Statement comes after the FCA asked whether respondents agreed with its proposal to introduce rules banning restrictive clauses in consultation paper CP16/31 in October 2016.
Scope, design and drafting of the rule and guidance
In CP16/31 the FCA asked for comments on the scope, design and drafting of the rule and guidance. PS17/13 therefore, considers each of the following points:
On June 28, 2017 the Financial Conduct Authority (FCA) published its final report MS15/2.3 into the asset management sector. This follows on from its interim report, MS15/2.2, published in November 2016.
The interim report found evidence to suggest that there was weak price competition in a number of areas of the asset management industry and in that interim report the FCA set out its provisional views on the way in which competition works for asset management services, the resulting outcomes for investors and its proposed remedies to address concerns which it identified. The interim report prompted feedback and the FCA undertook further work to reach a final set of findings (Part A MS15/2.3).
The final report maintains that price competition is weak in a number of areas of the industry. Despite a large number of firms operating in the market, the FCA found evidence of sustained, high profits over a number of years. It is apparent that investors are not always clear what the objectives of funds are, and fund performance is not always reported against an appropriate benchmark. The FCA also identified concerns about the way the investment consultant market operates.
Package of remedies
In Part B of the final report, the FCA has published a series of remedies to increase competition in the asset management market and to protect those least able to actively engage with their asset manager. The package of remedies is designed to bring together a consistent and coherent framework of interventions, enable investors to exert greater competitive pressure on asset managers and increase the transparency of costs. Finally, the package seeks to improve the effectiveness of intermediaries for both retail and institutional investors.
The FCA has published a separate consultation paper, CP17/18, ‘Consultation implementing asset management market study remedies and changes to Handbook’. This sets out the FCA’s proposals in relation to fund governance, risk-free box profits and share class switching.
Tomorrow’s Company announced publication of a new report “NEDS – Monitors to Partners” on June 26, 2017. Tomorrow’s Company, an independent non-profit think tank, has consulted with chairmen, non-executive directors (NEDs) and executives from a number of UK companies. The report concludes that there are shortcomings in the current approach to the role of non-executive directors (NEDs) and to corporate governance generally and it analyses the changes that need to be made in corporate governance to allow companies to focus upon long-term, sustainable business growth. This includes innovation in governance structures and greater alignment between NEDs and executives.
Many boards have found themselves focused on risk mitigation in recent years following a series of scandals and consequent reforms. While NEDs have occupied themselves with minimising risk and monitoring processes, executives have fallen short with record high dividends and low investment. The report considers that the following reasons have negatively impacted on board effectiveness:
The report addresses the need for change, critiques the current ‘focus on form over substance’ and lists a number of actions and questions that should be considered. The report also includes a series of perspectives from business leaders, intellectuals and its own members.
On June 28, 2017 the Institute of Chartered Secretaries and Administrators’ (ICSA) Governance Institute and The Core Partnership, a recruitment specialist, announced the results of a joint poll that found that only 36 per cent of companies surveyed considered the current system of annual general meetings (AGMs) to be still valuable for companies. Almost one-third (30 per cent) feel it is no longer valuable and a further 34 per cent of respondents were undecided.
When companies were asked to vote on whether the current AGM system was still valuable for shareholders however, 45 per cent of respondents said ‘yes’. A much lower percentage said ‘no’ (19 per cent) and 36 per cent remained undecided.
Companies then suggested ways in which to change the current AGM system:
On June 14, 2017 the Financial Reporting Faculty of the Institute of Chartered Accountants of England and Wales (ICAEW) published a report which looks at where corporate reporting stands at present and identifies key decisions that need to be taken before a step change in the quality and usefulness of financial reports can be achieved, with particular reference to non-financial reporting.
A number of roundtable discussions have been held with stakeholders and the report sets out the main themes arising from those discussions. It sets out points of view that enjoyed substantial support and highlights major issues that were singled out as barriers to change in corporate reporting. The Financial Reporting Faculty believes stakeholders need to agree collectively a way forward in relation to these areas, which include the following:
The Financial Reporting Faculty will consider comments on the report and expects to publish a follow up paper in 2018.
On June 15, 2017 the Takeover Panel issued Panel Statement 2017/10 in relation to the submission by Renova Asset Holding Limited (Renova), M&G Debt Opportunities Fund II Limited (M&G) and Sothic European Master Fund Limited (Sothic) of resolutions proposing changes to the board of directors of Petropavlovsk to be considered at Petropavlovsk’s AGM on June 22, 2017.
The Panel Executive was asked to determine whether these shareholders, and the proposed directors, should be considered to be acting in concert under Note 2 on Rule 9.1 of the Takeover Code (the Code), and if so, whether any such persons had acquired any interests in shares of Petropavlovsk following the date on which they were presumed to have come into concert with the result that they had thereby triggered an obligation for a mandatory offer to be made under Rule 9.1 of the Code.
The Panel Executive concluded that three of the four proposed new directors were independent of the shareholders proposing their appointment. As a result, the resolutions were not “board control-seeking” for the purposes of Note 2 on Rule 9.1, so the shareholders and proposed new directors were not acting in concert and no mandatory offer needed to be made under the Code.
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.
On 5 September 2019, Professor John McMillan AO’s Final Report (Report) on the operation of the Narcotic Drugs Act 1967 (ND Act) was tabled in Parliament. Section 26A of the ND Act required the Minster to cause a review of the operation of the ND Act to be undertaken.