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Essential Corporate News – Week ending September 14, 2018

Publication September 14, 2018


Introduction

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

FRC: Financial Reporting Lab call for participants in new climate and workforce reporting project

On September 12, 2018 the Financial Reporting Lab (Lab) invited investors and companies to participate in a new project regarding how the disclosure of climate change and workforce information can be reported effectively.

The scope of the project is likely to explore, amongst other things, how companies understand, measure and report on climate change and workforce issues, especially in the context of new reporting requirements, and examine how investors use this information. The project will consider how the recommendations identified in the Lab’s previous reports on business model reporting, risk and viability and performance metrics apply to companies’ reporting on climate change and their workforce.

A final report is likely to be published in Autumn 2019.

(FRC: Financial Reporting Lab Call for Participants in new project - Climate and workforce reporting – 12.09.18)

European Commission: Communication and other proposals to strengthen the Capital Markets Union

On September 12, 2017 the European Commission published a communication on the EU framework for prudential and anti-money laundering supervision for financial institutions, together with a revised legislative proposal for its Omnibus Regulation effecting changes to, among other things, the new Prospectus Regulation.

The communication is substantially the same, so far as the amendments to the Prospectus Regulation are concerned, to the version published in September 2017. In the 2017 communication, in relation to the Prospectus Regulation, amendments included passing responsibility from national competent authorities to the European Securities and Markets Authority (ESMA) to approve:

  • prospectuses for certain wholesale non-equity securities;
  • prospectuses relating to asset-backed securities;
  • prospectuses drawn up by property companies, mineral companies, scientific research-based companies or shipping companies; and
  • prospectuses drawn up by non-EU country issuers.

The communication will now be discussed by the European Parliament and Council.

(European Commission, Communication from the Commission, 12.09.18)

(Prospectus Regulation 2017/1129 – 30.06.17)

Brexit: Technical notice on merger control and competition enforcement in no deal scenario

On September 13, 2018 the UK Government published a technical notice on how merger review and investigations into anti-competitive activity would be affected if there is no Brexit deal by 11pm on March 29, 2019. The technical notice notes that in the unlikely event of a no deal scenario, the UK will cease to be a part of the EU competition regime, but the Government does not propose to make any changes to the UK competition regime, beyond those necessary to manage the UK’s exit from the EU.

The technical note states that:

  • The UK will make amendments to UK law to remove references to EU law and institutions and duties on UK bodies which relate to current EU obligations, so, for example, the European Commission wil no longer be able to investigate business premises in the UK.
  • All UK merger control and domestic competition law will remain the same and in a no deal scenario the UK would transpose EU block exemption regulation in UK law.
  • European Commission decisions made before exit will continue to have the same legal status in UK law as they do now, however the Competition and Markets Authority (CMA) and UK courts will no longer be bound to follow future ECJ case law.
  • The European Commission will no longer be able to investigate UK aspects of mergers or cases involving anti-competitive conduct in the UK. The CMA will be the only authority with jurisdiction to review mergers for their effect in the UK.

In relation to transition, the technical notice notes that the EU merger regime continues to apply as normal until the point of exit, however:

  • In the case of a no deal situation there may be no agreement on jurisdiction over live EU merger and antitrust cases to the extent that they address effects on UK markets.
  • The technical notice suggests that businesses who are considering a merger or have yet to receive clearance prior to March 2019 should inform the European Commission and the CMA.
  • The technical notice recommends that parties to live antitrust investigations seek legal advice on how to comply with any ongoing investigation of the European Commission and the CMA or concurrent UK regulator.

(Brexit: Technical notice on merger control and competition enforcement in no deal scenario – 13.09.18)

Brexit: Handling civil legal cases that involve EU countries in a no deal situation - civil, commercial and cross-border insolvency aspects

On September 13, 2018 the UK Government published a technical notice on how to handle civil legal cases that involve EU countries in the case of a no Brexit deal. The technical notice sets out the current position until exit day on March 29, 2018 and sets out the implications of a no-deal Brexit for civil and commercial disputes, cross-border insolvency cooperation and family law cooperation.

The technical notice provides that in the event of ‘no deal’, most of the reciprocity based rules relating to civil judicial cooperation, would be repealed. The UK, in place of these regulations, would revert to existing common law and statutory rules to govern its relationship with the EU member states (and Iceland, Norway and Switzerland). The technical notice adds that those regulations which do not operate on reciprocity, specifically Rome I and Rome II, would be retained in a no deal situation. The technical notice also confirms that in a no deal scenario, the UK would take the necessary steps for the UK to formally re-join the Hague Convention on Choice of Court Agreements 2005.

The technical notice also briefly addresses the impact of a no deal scenario on cross border insolvency cooperation. The majority of the insolvency regulation would be repealed in all parts of the UK, however in a no deal situation the Government would preserve EU rules which give UK courts insolvency jurisdiction where a company or individual is based in the UK. The technical notice confirms that UK insolvency practitioners seeking to obtain recognition of UK insolvency proceedings elsewhere in the EU will need to apply to each relevant EU country separately. In the meantime, practitioners seeking UK court recognition of insolvency proceedings commenced in an EU member state can do so under the Cross-Border Insolvency Regulations 2006 (SI 2006/1030).

The cross-border insolvency provisions of this technical note are limited, however it makes clear that cross-border insolvencies managed in the UK will be potentially far more complex, expensive and perhaps rare in a no-deal scenario.

(Brexit: Handling civil legal cases that involve EU countries in a no deal situation - civil, commercial and cross-border insolvency aspects – 13.09.18)


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