GENERAL CORPORATE

PSC register – 6 April 2016

Final form regulations for companies and LLPs

The Register of People with Significant Control Regulations (SI 2016/339) (the “PSC Regulations”) were published in final form this week and reflect the draft regulations published earlier this year and detailed here. The PSC Regulations provide additional detail on certain matters covered more broadly in the Small Business, Enterprise and Employment Act 2015 including: which companies will be outside the scope of the PSC regime; warning and restriction notices; and the PSC protection regime. They also confirm that the earliest date a person can be a PSC, for the purposes of entering information in the register, is 6 April 2016.

The Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016 (SI 2016/340) (the “LLP PSC Regulations”) have also now been published and effectively transpose the PSC regime for companies to LLPs incorporated under the Limited Liability Partnerships Act 2000. Helpfully all of the provisions are contained in one statutory instrument and also reflect the draft published earlier this year detailed here. The obligation on LLPs to keep a PSC register mirrors the commencement of the PSC provisions

for companies (i.e. the obligation to keep a register begins on 6 April 2016 and LLPs must provide the information to Companies House on or after 30 June 2016). The LLP PSC Regulations amend the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 by incorporating the PSC provisions applicable to companies detailed in the Companies Act 2006 and the PSC Regulations, modified where relevant for LLPs.

New BIS guidance for PSCs

BIS has published new guidance for individuals and legal entities to help them comply with the PSC regime which comes into force on 6 April. The non-statutory guidance for PSCs largely reflects the previously published guidance for companies with a focus on its application to PSCs/RLEs.

Interestingly, the guidance, addressing PSCs, notes that ‘If you have not volunteered your information, the company must send you a notice within one month of becoming aware that you are a PSC’ (para 3.3.1). The underlying legislation does not specify a timeframe within which any such notice must be sent. BIS’ non-statutory guidance for companies/LLPs suggests that if a company/LLP is unable to ‘immediately’ identify its PSCs it should ‘consider serving notices’. However where companies/LLPs have been informed of the person’s status as a PSC or RLE and been supplied with the relevant details (and, where the person is an individual, those details have been provided either by the individual or with their knowledge) the company is not required to send a notice.

Impact - companies and LLPs within scope of the PSC regime must have their PSC register available for inspection from 6 April 2016. Details of PSCs will also need to be included on the company/LLP’s annual confirmation statement submitted to Companies House on or after 30 June 2016. Confirmation statements will replace annual returns where the ‘return date’ would otherwise occur on or after 30 June 2016. Additional guidance, including on the protection regime for suppressing PSC information in exceptional circumstances is stated to be ‘coming soon’. Other minor changes detailed here will also come into force on 6 April 2016.

PRIVATE EQUITY

PERG – good practice reporting by portfolio companies

The Private Equity Reporting Group (“PERG”), established to monitor conformity with the Guidelines for Disclosure and Transparency in Private Equity also known as the  Walker Guidelines (the “Guidelines”) has published revised guidance on the application of the Guidelines and examples of good practice. The guidance has been updated to ‘reflect the increasing standards seen in corporate reporting by the FTSE 350, the benchmark against which compliance with the Guidelines is judged’. The guidance highlights examples of good practice and is aimed at helping portfolio companies with their narrative reporting.

Background - each year, compliance by the UK PE industry with the Guidelines is reviewed by PERG (previously called the Walker Guidelines Monitoring Group). The Guidelines require private equity firms to provide certain financial, employment and environmental information on their UK portfolio companies and comply with certain obligations (and limited disclosures) themselves. The Guidelines broadly apply to FCA authorised private equity firms which either have acquired a company in: a public to private transaction where the market capitalisation was in excess of £210m; or a non-market deal, where enterprise value at the time exceeded £350m, and (in both cases) more than 50% of revenues were generated in   the UK or the number of UK employees exceeded 1,000.

PUBLIC COMPANIES

Changes to approval and publication of a prospectus – 24 march 2016

As mentioned in an update earlier this month, an EU Regulation was recently published in the Official Journal amending, amongst other things, the approval and publication regime for prospectuses (the “Regulation”). The Regulation came into force on 24 March 2016. Following previous consultations the  FCA has  published  changes to the  Listing  Rules and Prospectus Rules to align them with the  Regulation.

OTHER ITEMS

  • PIRC has  published  its  ‘UK  Shareholder  Voting Guidelines 2016’. The guidelines set out PIRC’s views of best practice on issues such as board structure and  director remuneration and by extension indicate how shareholders may vote on particular issues.
  • An EU regulation has recently been published detailing technical standards regarding the timing, format and template of the submission of notifications by investment firms and operators of certain markets, to competent authorities under the Market Abuse Regulation (due to be implemented by 3 July  2016).
  • Additional changes to the Listing Rules (“LR”), Prospectus Rules (“PR”) and Disclosure and Transparency Rules are proposed in the FCA’s recent quarterly consultation including:
    • modifications to the LR to make the link between the definition of a reverse takeover in LR 5 and the aggregation provisions in LR 10 clearer to ensure that transactions cannot be artificially broken up to avoid being classified as a reverse takeover;  and
    • changes to the PR to reflect ESMA publications, including updating the list of documents in PR 1.1.6G that need to be considered together when determining the effect of the prospectus directive.
  • The investment association has launched a ‘Productivity Action Plan to boost British economy and end short- termism’. The plan includes publishing a ‘Public Position Paper’ recommending that listed companies cease quarterly reporting.
  • Businesses within scope of the Modern Slavery Act 2015 must publish a ‘slavery and human trafficking statement’ for financial years ending on or after 31 March   2016. The obligation applies to a “commercial organisation” (which includes a body corporate or partnership, wherever incorporated or formed), carrying on a business or part of a business in any part of the UK if it supplies goods or services and has a total turnover of not less than £36m. For more detail on the requirement click here.
  • The Equality and Human Rights Commission (“EHRC”) has published guidance for companies and executive search firms on improving the diversity of company boards within the frameworks set out by the Equality Act 2010 and the Financial Reporting Council’s UK Corporate Governance Code.   The guidance was published in the same  week that the EHRC published the results of its inquiry into how FTSE 350 companies, and the executive search firms they instruct, recruit and select people for board director roles.