Brexit

Brexit hub

We have created an area of our website with insights on the implications of  Brexit relative to various sectors and practice areas. This is being updated on a daily basis. It builds on our publication Brexit: A changing legal landscape which we issued following the referendum.

Corporate Governance

New EU Audit Directive and Audit Regulation

As reported in previous editions of Corporate News, the EU regulatory framework on statutory audit, encompassing the Audit Regulation and new Audit Directive came into force on 17 June 2016.

As a result of this new framework, the FRC has issued revised versions of the 2016 UK Corporate Governance Code, the Guidance on Audit Committees, the Ethical Standard 2016, and the Auditing Standards 2016The Statutory Auditors and Third Country Auditors Regulations 2016 also form part of the package of implementing measures.

For an overview of the changes - click here and scroll to the last item of our CQC update issued at the time that the revised UK Corporate Governance Code was published. Note that the revised Code applies to reporting periods beginning on or after 17 June 2016.

ecoDa and PWC guidance for audit committees

The European Confederation of Directors Associations, together with PwC, has published new guidance for audit committees in light of the EU Audit Regulation and Directive and the revised versions of various codes and guidance issued by the FRC. The guidance describes the main changes required by the Regulation and the Directive and aims to assist audit committee members to gain a better understanding of the practical implications.

Company Filings

Companies House changes – 30 June 2016 – The Big 5!

A number of changes to Companies House filings, precipitated by the Small Business, Enterprise and Employment Act 2015, came into force on 30 June 2016. For our overview of the changes – click here.  

Market Abuse Regulation

The Market Abuse Regulation (MAR) came into effect on 3 July 2016. Since the last edition of Corporate News, there has been a flurry of activity and the following is a summary of some of the main developments and publications.

FCA publishes on-line submission forms and guidance

The Financial Conduct Authority (FCA) has published the live versions of the forms which relevant issuers need to complete when notifying it of:

  • the disclosure of inside information, the announcement of which has been delayed; and
  • transactions by persons discharging managerial responsibilities (PDMR) and those closely associated with them (PCA).

In each case, accompanying guidance has also been issued.

Implementing regulation on disclosure of inside information published

One final key implementing regulation which supplements MAR has been published by the European Commission. It deals with the procedures for publishing inside information (including the need to state on the face of an announcement that it contains "inside information") and contains the obligations as regards record-keeping and other procedures if an announcement of inside information is delayed. No substantive changes have been made to the regulation since it was published in draft. It applied from 3 July 2016.

Regulation limiting notification obligations of PDMR / PCA published

The European Commission's Benchmarks Regulation which limits (in Article 56) the notification obligations of PDMR and their PCAs under Article 19 of MAR has been published in final form. No changes of note were made to Article 56 from the original draft.

Revised AIM Rules for Companies, Nomads etc.published

The London Stock Exchange (LSE) has published AIM Notice 45 to confirm the MAR-driven changes to the AIM Rules for Companies and consequential changes to the AIM Rules for Nominated Advisers and AIM Note for Investing Companies. The changes applied from 3 July 2016. For our overview issued at the time – click here.

ICSA, the GC100 and the QCA specimen dealing policy, code and manual

ICSA, the GC100 and the QCA have come together to publish their own MAR-compliant group-wide dealing policy, code of share dealing and dealing procedures manual. These are designed to work for companies with securities listed on the main market and admitted to AIM. All documents have been submitted to the FCA and the LSE their review and comment. For our overview issued at the time – click here.

CLLS and Law Society Q&A

The City of London Law Society and Law Society Company Law Committees' Joint Working Parties on Market Abuse, Share Plans and the Takeover Code have published a Q&A setting out a suggested approach to implementing certain aspects of MAR. The Q&A covers practical aspects of MAR as it applies to various topics including:

  • PDMR dealings;  
  • share buybacks;  
  • the disclosure of inside information; and  
  • insider lists.

Investment Association amends Principles of Remuneration

The Investment Association (IA) has amended its Principles of Remuneration in relation to the timing of share awards (at Section C.2.vii) to reflect the revised concept of a closed period under MAR.

Narrative Financial Reporting

Diversity disclosures in Annual Reports

The FCA has proposed amendments to Chapter 7 of the Disclosure and Transparency Rules which would require issuers to disclose their diversity policy in their corporate governance statement as part of the implementation of the Non-Financial Reporting Directive.

Any rule change would apply for financial years beginning on or after 1 January 2017. Comments should be received by 1 September 2016.

Share Capital Management / AGMs

Investment Association revises share capital management guidelines

The IA has published a revised version of its share capital management guidelines. The principal changes reflect theIA's support for the Pre-Emption Group's revised Statement of Principles and, in particular, the expectation that any company seeking a disapplication of pre-emption rights which in aggregate is equal to 10% of issued capital will follow the Pre-Emption Group's new model resolutions. The IA's guidelines also state that members have asked IVIS to amber top any company seeking such a disapplication of pre-emption rights from 1 August 2016 which does not provide two separate resolutions as proposed by the Pre-Emption Group and to red top any such company which does not do so after 1 January 2017.

The guidelines also note that IA members are concerned about the dilutive effects of scrip dividend issues and statestheir preference that shares offered in lieu of dividends should be sourced from shares purchased in the market, rather than through primary issuance.

Financial Reporting

FRC update on improving reporting by smaller listed and AIM quoted companies

The FRC has published an update and press release relating to its 2015 discussion paper on improving reporting by smaller listed and AIM quoted companies. The document provides a summary of the feedback received and an update on decisions and progress against the proposals in relation to:

  • reporting requirements and practices;
  • audit practices; and
  • company governance and resources.

FRS 101 (Reduced Disclosure Framework): FRC amendments and further consultation

The FRC has published amendments to FRS 101 (Reduced Disclosure Framework) following its annual review. Minor and technical amendments have been made since December's consultation draft.

The FRC is separately consulting 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 amendment is also proposed to FRS 102. Responses to the consultation should be received by 14 October 2016, with the aim being to finalise amendments in December 2016 so as to apply to accounting periods beginning on or after 1 January 2016.

Competition

CMA publishes guidance on its mergers intelligence function

The CMA has published guidance intended for lawyers advising parties on a merger who are deciding whether to notify the CMA of that merger, and for third parties who may wish to alert the CMA to an unnotified merger. This guidance supplements Chapter 6 of the CMA’s Mergers: – Guidance on the CMA’s jurisdiction and procedure.