Included in this issue: Changes to the PSC regime made in a hurry; FCA publishes policy statement on prohibition of restrictive contractual clauses; Pensions Regulator's BHS Report signals more interventionist approach and more...

Company Law

Changes to the PSC regime made in a hurry

To comply with the requirements of Article 30 (Beneficial ownership) of the Fourth Money Laundering Directive, changes were required to be made to the persons with significant control (PSC) regime. These changes came into force on 26 June 2017 and included amendments to the timing requirements for updating PSC registers, and extending the scope of the regime to pull in previously exempt companies, such as those on AIM, and also including other entities such as certain Scottish partnerships. Due to the General Election, the changes were made in a hurry and without the usual 21 day period of notice before the implementing regulations came in to force. For an overview of the changes and the immediate actions to take click here. To access an updated version of our detailed PSC guide (originally published in February 2016) click here.

Equity Capital Markets

CLLS and Law Society updates MAR Q&A

The City of London Law Society and Law Society Company Law Committees' Joint Working Parties (JWP) on Market Abuse, Share Plans and Takeovers Code has revised its Q&A which deals with aspects of the EU Market Abuse Regulation (MAR).

The updated version includes a new Part C which deals with contractual arrangements in relation to a subscription for shares (for example, an issue of consideration shares in connection with an acquisition, an undertaking to subscribe for shares under a firm placing or signing an irrevocable undertaking in connection with a takeover) and the disclosure of inside information.

Specifically, Part C deals with:

  • the ability of an issuer to selectively disclose inside information to a counterparty, which the JWP believes would typically be permitted;
  • the ability of an issuer to delay its disclosure to the market, which the JWP believes would also be permitted provided that each of the conditions in MAR (Article 17(4)) have been satisfied; and
  • the fact that the JWP would not typically expect the issuer to be required to disclose such inside information to the market before entering into the relevant contractual arrangements with the counterparty.

Naturally, the JWP highlight the need to consider facts on a case by case basis.

FCA publishes policy statement on prohibition of restrictive contractual clauses

The Financial Conduct Authority (FCA) has published a policy statement (PS17/13) as well as final rules which will prohibit the use of certain clauses by investment banks / corporate finance advisers which seek to restrict a client's choice of future providers of primary market services (such as debt capital market, equity capital market and/or M&A services). This follows the FCA's October 2016 report which found that some routinely used contractual provisions could hinder competition (for more detail, see our update published at the time).

The ban applies to written agreements for unspecified and uncertain future services only, and excludes future service restrictions in bridging loans. It also applies irrespective of the size of the client company.

Specifically, the FCA is seeking to prohibit "Rights of first refusal" – the contractual right for an adviser to be given the opportunity to enter into a business transaction with a company before anyone else can, whereby the client company is prevented from accepting offers from third parties. "Rights to match" clauses are acceptable to the extent that they only create a right for the advisory firm to be approached following a third-party offer in order to be able to match that offer, with the client company ultimately deciding which firm to select to provide the services.

The new rules, which accompany the policy statement, come in to force on 3 January 2018 and will apply to all agreements entered into after that date.

Narrative Financial Reporting

Commission sets guidelines on disclosure of non-financial information

The European Commission has adopted non-binding guidelines on the disclosure of non-financial information by relevant companies (for the most part, companies on regulated markets, banking and insurance companies with more than 500 employees), and published a set of FAQs. The Commission's aim is to help companies fulfil the requirement to disclose relevant and useful information on environmental and social matters in a consistent and more comparable way. For more detail on the new disclosure regime - click here.

Pensions

Pensions Regulator's BHS Report signals more interventionist approach

The Pensions Regulator's recent report on its involvement in the BHS affair signals an intention to be more proactive in the use of its regulatory powers in future.

Takeovers

Takeover Panel issues statement dealing with collective shareholder action

The Takeover Panel has published a statement on the Panel Executive's ruling regarding the proposed appointment of new directors to the board of Petropavlovsk plc as proposed by certain shareholders of the company. The Executive was asked by Petropavlovsk to determine whether these shareholders and the proposed new directors would be acting in concert under Note 2 on Rule 9.1 of the Takeover Code (Code) and, if this was the case, whether any such persons had acquired any interests in the shares of Petropavlovsk triggering an obligation for a mandatory offer to be made under Rule 9.1 of the Code.