The Business, Innovation and Skills (BIS) Committee has launched an inquiry on corporate governance. The inquiry focuses on executive pay, directors' duties and the composition of boardrooms, including worker representation and gender balance in executive positions.
This inquiry follows the recent corporate governance failings at both BHS and Sports Direct highlighted by recent Committee inquiries and in the wake of the Prime Minister's commitment to overhaul corporate governance. In a speech in July, shortly before becoming Prime Miniser, Theresa May proposed that workers, as well as consumers, should be represented on company boards. She has also suggested that shareholder votes on pay should be binding rather than advisory (as they currently are). There have also been calls in the press for the concepts of remuneration and nomination committees need reform. A conservative MP, Chris Philip has recently published a report, 'Restoring Responsible Ownership' which, among other points, suggests that nomination committees should be replaced by 'shareholder committees'.
A list of the questions being asked by the inquiry and the Press release announcing the inquiry can be found here.
Submissions to the inquiry are requested by 26 October. If you would like any assistance in putting together a submission for this inquiry, or if you have any queries about it, please contact any of the listed contacts for this article or your usual Hogan Lovell contact or one of the authors of this article.
Changes ahead for the PSC regime? Treasury consults on transposition of Fourth Money Laundering Directive into national law
We reported back in July on the European Commission's proposal for a directive to amend the Fourth Money Laundering Directive (4MLD) and the First Company Law Directive to introduce measures designed to ensure greater transparency of beneficial ownership of legal entities similar to those of the UK's PSC regime which has been fully in force since 30 June this year.
In September, the Treasury published a consultation paper on the transposition of the 4MLD into UK law. Chapter 10 looks at beneficial ownership and two areas which still need to be transposed into UK law, and which, when they are, will affect the UK's PSC regime (Persons with significant control).
What will change?
- the 4MLD requires information on the beneficial ownership register to be current. This differs from the position under the UK's PSC regime which allows companies to file details of their PSCs only once a year via the confirmation statement. The Treasury is seeking views on what can be done to address this requirement of the 4MLD though it is difficult to see what can be done except to make it necessary to notify PSC changes to Companies House in real time, rather than once a year.
- The 4MLD is designed to apply to a wide range of corporate and other legal entities. The UK's PSC regime currently applies to companies registered in the UK under the Companies Act 2006, Limited Liability Partnerships and European SEs registered in the UK. The 4MLD requires the government to identify which other legal entities are in the scope of the 4MLD and which will also have to register information on their beneficial ownership. The consultation paper lists those which might be considered as coming within scope. The list includes, among others, Scottish Limited Partnerships, building societies, friendly societies, unregistered companies, open ended investment companies (OEICs) and Investment companies with variable capital (ICVCs). These may all need to be brought within the UK's PSC regime.
The Commission also proposed in July bringing forward the transposition deadline for the Directive to 1 January 2017 (previously June 2017).
There is currently no set timetable for implementing these final two changes in the UK though the government has expressed the view that Member States may struggle to meet a revised deadline of 1 January 2017.
New regime for foreign companies
The Treasury consultation paper confirms the government's commitment to require foreign companies to disclose their beneficial ownership if they want to own or acquire land in England or Wales or to participate in public tenders. A register will be established across the UK – see our previous article for more information.
The Treasury consultation paper can be found here. Our client note on the PSC regime can be found here.
ICSA guidance on minute taking
The Institute of Company Secretaries and Administrators (ICSA) issued a consultation paper looking at the practice of minuting meetings in May. See our earlier article for details. Following this consultation, ICSA has now published formal guidance for ICSA members on the practice of minuting meetings. The guidance is principles based rather than prescriptive and emphasises many existing elements of good practice. These include making minutes, clear, concise, impartial and a balanced record of the key points of discussion, using minutes to demonstrate the directors have understood and discharged their statutory duties, giving responsibility for preparing minutes to the company secretary but making the chairman and the board responsible for their accuracy.