timeline - a guide to the legal milestones ahead CALENDA R OF KEY ISSUES (UK PERSPECTIVE) MAY 2014 LEGAL GUIDE ABOUT HERBERT SMITH FREEHILLS We are one of the world’s leading law firms. We advise many of the biggest and most ambitious organisations across all major regions of the globe. Our clients trust us with their most important transactions, disputes and projects because of our ability to cut through complexity and mitigate risk. We can help you thrive in the global economy. With 2,800 lawyers in offices spanning Asia, Australia, Europe, the Middle East and the US, we can deliver whatever expertise you need, wherever you need it. Because technical ability alone is not enough, we seek to build exceptional working relationships with our clients. By doing so, we are able to develop a deeper understanding of your organisation, give you commercially astute, innovative advice and deliver better business outcomes for you. Welcome This is a guide to key legal developments in the coming months and years ahead (UK perspective). The developments include changes in employment law, information on the review of communications legislation and press regulation, banking reform plans, prospective pensions law changes and details of forthcoming developments in competition law. For more information, or for a hard copy of the Timeline, please contact the relevant Herbert Smith Freehills partner referred to in the contact list or Simone Pearlman, head of legal knowledge on +44 (0) 20 7466 2021 or email at [email protected]. Contents 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 page 02 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS 2014 1 May 2014 Employment TUPE reforms: From 1 May 2014, transferors have to provide the transferee with employee liability information 28 days prior to the transfer, rather than the current 14 days. Changes to TUPE 2006 came into force on 31 January 2014, including: (1) the location of the workforce following a transfer is expressly included within the scope of an economic, technical or organisational reason entailing changes in the workforce (ETO reason), thereby preventing genuine place of work redundancies from being automatically unfair; (2) collective redundancy consultation which begins before the transfer may count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee agree; (3) transferees are able to negotiate (transfer-related) changes to terms derived from collective agreements one year after the transfer, provided that the overall change is not less favourable to the employee; and (4) where employment terms are derived from collective agreements, transferees will not be bound by post-transfer collective bargaining between transferor and union. From 31 July 2014, micro-businesses (with fewer than 10 employees) will be allowed to inform and consult affected employees directly when there is no recognised independent union, nor any existing appropriate representatives. 1 May 2014 Compet ition, regulat ion and trade EU competition rules on technology transfer agreements: The new EU “block exemption” Regulation exempting certain categories of technology licensing agreements from the competition rules on anti-competitive agreements came into force on 1 May 2014, together with a revised set of guidelines. The new block exemption contains a number of changes representing a tightening of the regime, including removing the “safe harbour” of the block exemption from: all exclusive “grant-back” obligations (obliging a licensee to exclusively license back to the licensor all improvements it has made to the licensed technology, including non-severable improvements); and “termination clauses” (which allow the licensor to terminate the license agreement if the licensee challenges the validity of the licensed technology) in non-exclusive licensing agreements. The new guidelines include guidance on settlement agreements and patent pools. There is a short transitional exemption under which agreements in force on 30 April 2014 which met the conditions for exemption under the old regime, but which do not meet the conditions for exemption under the new rules, will nevertheless remain exempt until 30 April 2015. 6 May 2014 Employment Employment tribunal claims: The new Acas early conciliation procedure becomes mandatory for claims lodged from 6 May 2014 (it may be used voluntarily from 6 April to 5 May 2014). The new regime requires a prospective claimant to submit a form to, or telephone, Acas giving their name and address and that of at least one prospective respondent. The parties will then be offered pre-claim conciliation for one month, with a potential two week extension. This “stops the clock” on the time limits for submitting the ET1 for the period of conciliation, and the claimant is also given a minimum of one month post conciliation to lodge the claim. The prospective claimant does not have to provide any details about the nature of the dispute. There is no obligation on either party to engage in the conciliation process; in that event, Acas will issue the certificate and the process ends. If claimants voluntarily choose to contact Acas for early conciliation from 6 April, they must obtain an Acas early conciliation certificate that the process has finished before lodging their claim (in the same way as for claims on or after 6 May). Note two other recent changes: (1) employment tribunals have discretion to order a losing employer to pay a fine to the Exchequer for an “aggravated” breach of employment law from 6 April 2014. The potential fine for losing employers is 50% of the value of the award to the employee, subject to being within the band of £100 to £5,000, and reduced by half if paid within 21 days; and (2) statutory discrimination questionnaires were abolished with effect from 6 April 2014. Acas has published good practice guidance on how employers should now deal with questions regarding discrimination in the workplace. May 2014 Compet ition, regulat ion and trade Private enforcement of competition law in the EU: In June 2013 the EU Commission published a long-awaited draft Directive designed to facilitate competition law private actions in the EU. The draft Directive proposed various claimant-friendly measures on disclosure and limitation periods, as well as a presumption of loss in cartel cases. The draft Directive also contained measures to protect cartel whistle-blowers, including a prohibition on the disclosure of leniency corporate statements in damages actions and an exception from the joint and several liability rule for immunity recipients. The proposed Directive was subsequently debated between the EU Member States (through the European Council) and the European Parliament, and was amended in a number of respects. In April 2014 the revised Directive was approved by the European Parliament, and is expected to be formally adopted by the EU Council in the course of May 2014. Member States will then be required to implement its provisions into national law within two years. HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 03 May 2014 Corpo rate Changes to the listing regime: In November 2013, the Financial Conduct Authority (FCA) published its response on the consultation on enhancing the effectiveness of the listing regime and started a further consultation on certain aspects. The changes particularly impact on companies with a controlling shareholder and include: (i) the requirement to put in place a relationship agreement with the controlling shareholder; and (ii) a separate vote by independent shareholders on the election of independent directors. The FCA has announced its intention is to implement the final rules in May 2014. May 2014 Finance , insolvency and derivat ives EU regulation of over-the-counter (OTC) derivatives: The EU Regulation on OTC Derivatives, Central Counterparties and Trade Repositories (commonly known as EMIR ) entered into force on 16 August 2012. The obligations started to take effect in 2013 and early 2014 and continue to be rolled out in a phased implementation. EMIR is introducing significant changes to the OTC derivatives market by mandating central clearing for standardised contracts and imposing risk mitigation standards for non-centrally cleared contracts. EMIR applies to both financial counterparties and non-financial counterparties who exceed certain thresholds, and will apply broadly to OTC derivatives contracts, including interest rate, credit, equity, foreign exchange and commodity derivatives. May 2014 Rea l Estate and Planning Easements, covenants and profits à prendre: These three interests in land are, in the Law Commission’s opinion, “essential for the effective and efficient use of land”. However, the law relating to these interests is complicated and would benefit from reform to make it more accessible and easier to operate. Having concluded its project to examine these interests, the Law Commission made recommendations to modernise and simplify the law so that it fits the needs of the twenty-first century and a modern system of land registration. The Law Commission’s report and a draft Law of Property Bill was submitted to the Government in 2011. The Government’s response was expected in 2013 but is still awaited. May 2014 ENERGY AND ENVIR ONMENT Water Act 2014: The Water Bill 2013-14 is being progressed through Parliament. In addition to industry regulation and competition reforms, the Act is expected to enable (at a later date) the inclusion of abstraction licences, impoundment licences and flood defence consents into the general environmental permitting regime, and to introduce a new legal framework to ensure the future availability and affordability of home insurance in areas of flood risk. Not befo re end May 2014 Dispute reso lut ion New London Court of International Arbitration (LCIA) Rules: New LCIA Rules are expected to be released. Seco nd qua rte r of 2014 Re gulato ry Markets in Financial Instruments Directive (MiFID): A new MiFID Directive (MiFID II Directive) and Regulation (MiFIR ) (which, together, recast the existing MiFID ) will be formally adopted in Europe. MiFID II Directive and MiFIR will apply 30 months after entry into force (currently expected to be in June 2014). Spring 2014 Rea l Estate and Planning Proposed Minimum Energy Performance Standards: The Energy Act 2011 requires the Government to bring regulations into force, no later than 1 April 2018, which will mean that landlords “may not let” property which falls below a certain level of energy efficiency (as demonstrated by a property’s Energy Performance Certificate (EPC)) until the landlord has made to the property such relevant energy efficiency improvements as are provided for by the regulations. The regulations are not yet made but, essentially, they will prohibit the letting of the least energy efficient commercial and residential properties until measures to improve their energy efficiency have been performed. The regulations are likely to apply to properties rated F and G on their EPCs. It is not known whether the regulations will apply to existing lettings. The Department of Energy and Climate Change (DECC) expects to publish a consultation in spring 2014 and aims to publish the draft regulations at the same time. DECC hopes that the finalised regulations will be laid before Parliament before the general election. May/JUNE 2014 ENERGY AND ENVIR ONMENT Changes to shale drilling regulation: Changes to the petroleum licensing legislation are expected to be announced to enable shale operators holding a relevant petroleum licence to drill under neighbouring land without the need for landowner approval. Planning permission and environmental permits will still be required. 4 JUNE 2014 ENERGY AND ENVIR ONMENT Energy Efficiency Directive: The new Energy Efficiency Directive, passed on 4 December 2012, will be implemented in all Member States by 4 June 2014. It sets out the common framework for achieving the EU's 2020 energy efficiency targets. The Department of Energy and Climate Change consulted on the implementation of metering and the billing of heating and cooling. This consultation closed in February 2014 and the Government's response is expected mid 2014. Additionally, the EU has generated further targets in the 2030 draft framework for climate and energy policy. On the 21 March 2014, EU leaders decided in the European Council to take a final decision on the framework in October 2014 at the latest Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 04 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS 6 June 2014 Const ruct ion CDM regulations – consultation on revision: The Health and Safety Executive consulted in April 2014 on replacement of the Construction (Design and Management) (CDM) Regulations 2007. The consultation is open for responses until 6 June 2014. The consultation documentation consists of an exploratory paper together with a draft of the new Regulations and an assessment of the impact of the proposed revisions. The impetus for the proposed changes has been concern that the 2007 Regulations may not provide an effective regulatory framework in the light of developments in the industry since that date. In particular, a trend is identified whereby site safety is better managed on large sites than small sites. Two thirds or more fatalities now occur on small sites, defined as sites where fewer than 15 people work. This is a reverse of the historical picture. The main proposed changes to the Regulations are as follows: The replacement of the Approved Code of Practice with targeted guidance. Replacing the CDM co-ordinator role with a principal designer embedded into the pre-construction project team. This represents a move away from the current CDM co-ordinator role which is external to the project team. The revised Regulations are expected to be in force during 2015. 30 June 2014 Employment Flexible work requests: Part 8 of the Children and Families Bill 2013 will extend flexible working rights to all employees with 26 weeks’ service, rather than just those employees who qualify as parents or carers. 30 June 2014 TAX The US Foreign Account Tax Compliance Act (FATCA) grandfathering provisions end: Loans and other obligations advanced or committed prior to 1 July 2014 and which remain outstanding after that date will not be subject to FATCA withholding provided that they are not "materially modified" after that date. June 2014 Dispute reso lut ion European Account Preservation Order (EAPO) Regulation: In July 2011 the European Commission published a draft Regulation allowing for a new self–standing European procedure enabling a creditor to freeze a debtor’s bank accounts across the EU pre- and/or post-judgment. The initiative seeks to address difficulties with the recovery of cross-border debts; however the European Banking Federation has voiced concerns on behalf of banks that would need to action the European freezing or attachment orders. In October 2011 the UK Government announced its decision to opt out of the EAPO Regulation, but stated that it intends to participate fully in negotiations with the hope that sufficient changes will be made to enable an opt-in after the proposal is adopted. In April 2014 the European Parliament endorsed the Commission’s proposal. To become law, it must now be adopted by Member States in the Council (voting by qualified majority). This is expected to happen in June. June 2014 Corpo rate Implementation of the Consumer Rights Directive (CRD): The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 No. 3134 come into force on 13 June 2014 to implement the CRD . The Regulations cover three main areas of consumer rights: (i) information which traders should provide to consumers; (ii) cancellation rights and responsibilities for distance and off-premises sales; and (iii) measures to prevent hidden costs. June 2014 Corpo rate Fiduciary duties of investment intermediaries: In April 2013 the Law Commission started a project to review the fiduciary duties of investment intermediaries (which was one of the recommendations of the Kay Review into UK equity markets). It published its consultation paper on the subject in October 2013. The Law Commission consulted on whether fiduciary duties, as established in law or as applied in practice, are conducive to investment strategies that are in the best interests of the ultimate beneficiary. The Law Commission will publish a final report, with any recommendations, by June 2014. June 2014 Pensions Government review of pension benefits for same sex couples: Under provisions of The Marriage (Same-Sex Couples) Act 2013, the Government must review the differences in survivor benefits for opposite-sex couples and same-sex couples in legal relationships in occupational pension schemes. The Act, in particular, requires the Government to review the Civil Partners Exemption, which requires schemes to pay surviving civil partners benefits on the same terms as surviving spouses of the opposite-sex, but only in respect of the deceased partners’ pensionable service accrued from 5 December 2005 (although they can provide benefits in respect of all of the deceased’s civil partner’s pensionable service if they wish). Under the Act, same sex couples must be entitled, as a minimum, to the same level of statutory benefits as civil partners. The Government is required to publish its findings in a report before 1 July 2014. Following publication of the report, the Secretary of State may adopt provisions to reduce or eliminate relevant differences in survivors’ benefits in occupational pension schemes. The review could result in further changes in the law and schemes that do not provide full benefits for civil partners and same-sex spouses may need to consider their provisions again. 2014 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 05 JUNE 2014 ENERGY AND ENVIR ONMENT Electricity market reform: On the 18 December 2013 the Energy Act 2013 was granted Royal Assent. The Act provides the statutory basis for the reform of the electricity market both to attract investment to the energy sector and to meet the decarbonisation targets set by the European Union. To achieve these goals the Act introduces, amongst other provisions, a new support scheme for generators in the form of Contracts for Difference and a Capacity Market. The Contracts for Difference are to replace the existing Renewables Obligation for new projects and operate by fixing a guaranteed, technology-specific price for energy. The latest draft of the generic Contract for Difference was released in April 2014. The Government has stated that it expects to pass supporting secondary legislation in June 2014. The Capacity Market is aimed at ensuring there is sufficient generating capacity in the UK energy market during the transition towards increasingly low carbon generation and to allow intermittent generation (such as wind and solar) to play a significant and on-going role in the UK's energy mix. The Government has confirmed its intention that, subject to state aid approval, the first capacity auction will be run in December 2014 for delivery of capacity for the year from 1 October 2018. The Government also intends to run two transitional auctions for demand side capacity in 2015 and 2016. Other topics within the Act will be consulted on throughout 2014/15. June to July 2014 Pensions Finance Bill 2014: The Bill contains clauses in relation to the pensions-related proposals announced in the Budget that were due to take effect from 27 March 2014. These are principally: An increase in the maximum income that a person may draw down under Capped Draw-down from 120% to 150% of an equivalent annuity. Reducing the minimum income threshold for Flexible Draw-down from £20,000 to £12,000. (These changes apply for draw-down pension years starting on or after 27 March 2014). I ncrease in the trivial commutation limits in relation to total pension savings of an individual from £18,000 to £30,000 – the new limits apply to all commutation periods starting on or after 27 March 2014. I ncrease in the limits in relation to a “small pension pot” which can be taken as a lump sum from a single pension arrangement from £2,000 to £10,000 and the number of pension pots that can be taken under a personal pension arrangement from two to three – this change applies to all payments made on or after 27 March 2014. These measures were given temporary statutory effect in the Budget resolutions passed on 25 March 2014 until the Finance Bill is enacted, which is expected to be in summer 2014. The Bill also contains provisions giving extensive powers to HMRC from 20 March 2014 to combat pension liberation with greater powers in relation to the registration and de-registration of pension schemes (these powers were also given temporary legal effect under the Budget resolutions) and clauses in relation to the Individual Protection regime. TAX June TO JULY 2014 ENERGY AND ENVIR ONMENT Finance Bill 2014: As expected, the Finance Bill 2014 contains new measures designed to promote onshore oil and gas projects. These measures comprise: (i) a new onshore tax allowance, which will have the effect of removing a proportion of the profits from onshore oil and gas projects from the scope of the additional 32% rate of supplementary charge; and (ii) the extension of the ring-fence expenditure supplement from six to 10 years for onshore oil and gas activities, which will have the effect of increasing the value of carried forward expenditure or losses for such projects. These new measures are proposed to apply to onshore oil and gas projects generally, including shale gas projects. The Finance Bill 2014 is expected to receive Royal Assent in July 2014, although the two measures described above will take effect from 5 December 2013. 1 July 2014 TAX The US Foreign Account Tax Compliance Act (FATCA) withholding on US source income commences: FATCA withholding on certain payments of US source income (i.e. withholdable payments: interest, dividends, gross proceeds and certain other payments) made to account holders which are generally considered to be "non compliant" for FATCA purposes commences for those payments that are not otherwise exempt or grandfathered. 7 July 2014 Corpo rate Interconnection of business registers: On 16 June 2012 the Directive on the Interconnection of Central, Commercial and Companies Registers was published in the Official Journal. All 27 Member States have business registers which store key company information such as the company’s legal form, seat, capital and legal representatives. In the UK this function is performed by Companies House. The aim of the Directive is to facilitate cross-border electronic access to business information, to assist companies when setting up branches, providing cross-border services in the EU or carrying out cross-border mergers. Member States must implement the Directive by 7 July 2014 but will have two years to make the necessary technical adaptations once those provisions are implemented by the Commission. Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 06 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS July 2014 Pensions Changes to the definition of “money purchase benefits”: In November 2013, the Department for Work and Pensions (DWP) issued a consultation proposing to bring into force provisions in the Pensions Act 2011 that will change the statutory definition of “money purchase benefits” with retrospective effect from 1 January 1997 to the effect that a money purchase benefit will be a benefit in respect of which a deficit cannot arise – this despite considerable representation from various pensions groups during the informal consultation stage recommending that the change should be prospective. To temper the impact on schemes of the retrospective nature of the amendment, the DWP also issued for consultation draft Regulations introducing transitional measures to ensure that affected schemes will not have to revisit past decisions – originally this applied to past decisions made from 1 January 1997 to the DWP’s Statement of 27 July 2011. However, following an April 2014 ministerial statement, it is now intended for the transitional protection to apply in most cases to past actions taken between 1 January 1997 and the date the Regulations come into force (which the ministerial statement confirmed will be sometime in July 2014). Mid-2014 Corpo rate Competition and Markets Authority measures in relation to the UK audit market: The Competition Commission published its report following its investigation into the UK audit market in October 2013. The report set out the measures it believes are required to remedy the restrictions on competition it found to be present. The remedy package includes: (i) a requirement on FTSE 350 companies to put their statutory audit out to tender at least every 10 years; (ii) a requirement that companies put an advisory vote to their AGM on the sufficiency of the disclosures contained in the Audit Committee’s report in the annual report; and (iii) prohibiting provisions in loan agreements restricting a company’s choice of auditor. The European Commission published its final rules in the same area in April 2014 (see entry below entitled “Audit regulation”). The Competition Commission (now the Competition and Markets Authority) delayed its implementation timetable so as to ensure that its final order does not unnecessarily duplicate or contradict the EU measures. We are now expecting the Competition and Markets Authority to publish further details of its implementation proposals in mid-2014, to come into force in the fourth quarter of 2014. Mid-2014 Corpo rate Reform of company and business names: The Department for Business, Innovation & Skills (BIS) is expected to publish draft legislation to reform the company and business names regime. In its February 2013 consultation paper BIS sought views on whether the Regulations relating to company and business names should be significantly reduced or even repealed completely. Following a review of the responses to the consultation, BIS has confirmed that it proposes to reduce the list of “sensitive” words requiring the prior approval of the Secretary of State before they can be used in a company name and that the list of words on the “same as” list be reduced. Mid-2014 Corpo rate Consumer rights legislation: In January 2014 the Consumer Rights Bill was introduced to the House of Commons. The Bill intends to clarify and simplify consumer law by providing simple, standardised remedies in relation to the supply of goods, services and digital content by businesses to consumers. The Bill also includes provisions permitting private actions in competition law. If Parliamentary proceedings on the Bill have not been completed by the end of the 2014-2015 session, the Bill will be carried over into the next Parliamentary session. Corpo rate Mid-2014 Re gulato ry EU Market Abuse Regulation: The EU has finalised a new Market Abuse Regulation (MAR) which will replace the Market Abuse Directive and will be directly applicable in Member States. MAR will come into force two years after publication in the Official Journal, which is expected in mid-2014. Summe r 2014 Insu rance Insurance contract law review: The English and Scottish Law Commissions are nearing the conclusion of their joint review of insurance contract law. A final report and draft Bill will be produced covering the topics dealt with in its two earlier joint consultation papers: (i) Post Contract Duties and other Issues; and (ii) Business Insurance Law: pre-contract disclosure, misrepresentation and warranties (some draft clauses from the draft Bill have already been the subject of consultations in early 2014). The proposed reforms involve amendments to the Marine Insurance Act 1906 and the underlying common law. It is hoped that the Bill will be suitable for the special Parliamentary procedure for uncontroversial Law Commission Bills which provide for certain stages to be carried out in committee. Summe r 2014 TMT Independent Press Standards Organisation (IPSO) due to launch: The IPSO is the media industry’s response to the Royal Charter which was sealed on 30 October 2013 and is intended to oversee the implementation of the new press regulation body (this has not yet been created). ISPO represents over 90% of British publishers who have signed up for an initial period of six years and have agreed to subject themselves to oversight by the IPSO. As the IPSO is not, and we understand will not be, seeking recognition as a Royal Charter regulatory body its members remain at risk of the costs consequences for publishers in defamation actions as introduced by the Crime and Courts Act 2013. 2014 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 07 Summe r 2014 Rea l Estate and Planning Conservation covenants: These covenants do not currently exist in the law of England and Wales but are used in many other jurisdictions. A conservation covenant is a voluntary agreement between a land owner and a responsible body (such as a charity, public body or local/central government) to do or not to do something on their land for a conservation purpose e.g. to maintain a woodland. These agreements are long lasting and continue after the landowner has parted with the land. In March 2013 the Law Commission published a consultation examining the possible introduction of these covenants. The responses have now been analysed and the Law Commission expects to publish its final report and a draft Bill in summer 2014. 18 Septembe r 2014 Const itut ional law Scottish independence referendum: The referendum will take place on 18 September 2014. Scottish independence raises many complex legal and political issues, including Scotland’s future currency, EU membership, border issues between England and Scotland and Scotland’s relationship with other international organisations. As regards currency, there are four options for an independent Scotland: a formal currency union with sterling, unilateral adoption of sterling, joining the euro or introducing a new Scottish currency. It is thought unlikely that, on independence, Scotland would automatically become a Member State of the EU by way of “partial succession” to the UK’s existing membership, and the better view is that Scotland would be a new applicant for EU membership if it becomes independent and as such, it would have to commit to adopt the euro as a price of membership. It would also have to apply to join a large number of international organisations and to accede to and ratify a large number of existing international treaties as an independent nation. Scotland would also have to settle its share of UK national debt and set up its own tax legislation. 1 Octobe r 2014 Employment Antenatal appointments: Fathers and partners will be entitled to unpaid time off to attend two antenatal appointments from 1 October 2014. 1 Octobe r 2014 Corpo rate Consumer protection: The Consumer Protection (Amendment) Regulations 2014 (SI 2014/870) come into force on 1 October 2014 and apply to contracts entered into on or after that date. They amend existing Regulations dealing with unfair business to consumer commercial practices and introduce private rights of redress for consumers who have been victims of misleading or aggressive practices, including standard remedies and an entitlement to seek damages. 6 Octobe r 2014 Corpo rate Introduction of T+2 standard settlement on the London Stock Exchange: The standard securities trading settlement period of T+3 (trade date plus three business days) will be reduced to T+2 (trade date plus two business days) effective from 6 October 2014. The standard settlement period is being reduced in accordance with the European Commission’s Central Securities Depositaries Regulation (see below) which aims to harmonise EU securities settlement cycles to T+2 from January 2015. Rather than waiting for the Regulation to be finalised, the London Stock Exchange has decided to go ahead independently with the change in the UK. As a result of the move to T+2 settlement, ex dividend dates will move to Thursdays, with dividend record dates remaining as Fridays. Octobe r 2014 Corpo rate UK Corporate Governance Code: The Financial Reporting Council (FRC) is consulting on a revised edition of the Governance Code which would apply for accounting periods beginning on or after 1 October 2014. The proposed changes to the Governance Code focus on directors' remuneration and risk management, internal controls and the going concern basis of accounting, which the FRC consulted on in July 2013 and November 2013 respectively. The FRC is also seeking views as to whether companies should be permitted to publish some or all of the information currently contained in the corporate governance report on their website rather than in their annual report. Following the delay to the implementation of the Competition and Markets Authority's audit remedies package (see above), the FRC has deferred consideration of changes dealing with the audit committee and appointment of the external auditor until the Governance Code is next reviewed (expected to be in 2016). Octobe r 2014 Employment Equal pay: Tribunals are to be given the power to order an employer that has breached equal pay law to carry out an equal pay audit. This is expected to come into force in October 2014. Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 08 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS Autum n 2014 Rea l Estate and Planning Further reforms to permitted development rights expected: In the March 2014 Budget, the Government outlined proposals to further reform the system of permitted development rights, allowing deemed planning permission for certain changes of use of property. A consultation is expected later in 2014. Works to buildings which benefit from permitted development rights do not require express planning permission, easing the administrative burden on property developers and local authorities. The consultation is expected to propose new rights allowing changes from warehouses and light industrial buildings to homes, and to introduce wider retail use classes. This consultation will follow a 2013 consultation and recent legislative changes made to expand permitted development rights to help streamline the planning system and increase flexibility between use classes. The Government also announced in the Budget that it will review the General Permitted Development Order and implement a new approach based on a three-tier system to decide the appropriate level of planning permission: using permitted development rights for small-scale changes, prior approval rights for development requiring consideration of specific issues, and planning permission for the largest scale development. These changes are expected later in 2014. TAX Autum n 2014 ENERGY AND ENVIR ONMENT The Wood Review: In February 2014, Sir Ian Wood published his report on how best to maximise the return from the UK continental shelf (UKCS). The report focuses on the development of a strong new independent regulator that will ensure that both the UK Government and industry get the maximum financial benefit from the estimated remaining 12 to 24 billion barrels of oil in the UKCS. After the report was published the Prime Minister issued a statement in support of all the findings and made a commitment to fast tracking the recommendations. The Budget 2014 backed up this commitment with the following announcements: The Department for Energy and Climate Change is to launch a competition for the CEO designate for the new regulatory body proposed in the review, with the aim of having someone in place by July 2014. The CEO will then coordinate the constitution of an interim body, with the Government intending to have it running by October 2014. The principal task of the new body will be to review how best to encourage exploration and reduce decommissioning cost, with a view to presenting its findings and recommendations at Budget 2015. The MER UK (Maximising Economic Recovery UK) principles will be in legislation in the fourth session and, subject to progress in Parliament, in force from spring 2015. In addition, at the Budget 2014, it was announced that the Treasury will review the UK’s oil and gas fiscal regime to ensure it continues to incentivise economic recovery as the UKCS basin matures, working with the new regulatory body described above. Initial conclusions will be set out at the Autumn Statement 2014, and a consultation with industry will follow. Novembe r 2014 Compet ition, regulat ion and trade Extension of EU merger control rules to non-controlling minority stakes: In June 2013 the EU Commission consulted on extending the EU merger control regime to cover certain non-controlling minority stakes. The Commission considers that there is an enforcement “gap” caused by its inability to review such stakes, and proposed various options for reform of the EU Merger Regulation (EUMR) to plug this gap, ranging from mandatory notification (as is currently the case for transactions involving a change of control which meet the EUMR jurisdictional thresholds) to a selective system in which Commission identifies and investigates only specific cases raising substantive concerns. The Commission is considering further in light of the responses to its consultation, and is expected to publish a White Paper setting out its proposals for extending the EUMR to cover non-controlling minority stakes in November 2014. Decembe r 2014 TAX The Chancellor of the Exchequer is due to hand down the Autumn Statement: The Autumn Statement is frequently used as a mechanism to make tax related announcements. Decembe r 2014 TAX Finance Bill 2015: The first draft of the 2015 Finance Bill is expected to be published. 2014 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 09 Late 2014 Compet ition, regulat ion and trade Private enforcement of competition law in the UK: In January 2013 the UK Government published its planned reforms to the competition law private enforcement regime. The legislative provisions to implement the proposals were introduced to Parliament in January 2014 as part of the Consumer Rights Bill, which is currently working its way through the legislative process. The reform plans are far-reaching, and include most controversially the creation of an “opt-out” collective action for competition law claims in the Competition Appeal Tribunal (CAT), together with the introduction of an opt-out collective settlement regime in the CAT. Subject to Parliamentary schedules and approval, adoption of the legislation is expected in late 2014 (although it is not yet clear when the reforms, if adopted, will come into force). Late 2014 Compet ition, regulat ion and trade EU rules on public procurement: Three new EU Directives on public procurement were adopted by the EU in February 2014 and published in the EU Official Journal in March 2014. The reforms are intended to modernise and simplify the rules regulating the award of contracts and concessions by public bodies and utilities. The new Directives formally entered into force on 17 April 2014, but EU Member States have two years to implement them into national law. The UK Government welcomes the changes and so will implement the new Directives more rapidly, possibly before the end of 2014. Late 2014 Corpo rate Changes to AIM Rules: The London Stock Exchange (LSE) is consulting on amendments to its AIM Rules for Companies and its AIM Rules for Nominated Advisers. The proposed changes to the AIM Rules for Companies include: (i) amending the rules in relation to disclosure of price-sensitive information to better reflect the provisions of the Financial Services and Markets Act 2000; and (ii) requiring additional information to be included on the company’s website regarding corporate governance and the application of the UK Takeover Code. The proposed changes to the AIM Rules for Nominated Advisers focus on the definition of “Qualified Executive”. Late 2014 Corpo rate Guidelines on Alternative Performance Measures: In February 2014, the European Securities and Markets Authority (ESMA) published a consultation paper proposing guidelines for the use of “Alternative Performance Measures” (APMs) by listed companies. APMs are information that is not part of the applicable financial reporting framework, but which are presented voluntarily by issuers as an aid to understanding the performance of their business (for example, earnings per share and EBITDA). The range of information proposed to be covered by the guidelines includes all documents containing regulatory information that is made publicly available by an issuer, such as annual and interim financial statements. The proposed guidelines require issuers to publish information about APMs including reconciling APMs to amounts presented in the financial statements and providing explanations of APMs and the information they seek to present. Late 2014 Corpo rate Central Securities Depositaries Regulation: The European Union is finalising a Regulation to improve securities settlement and to regulate central securities depositaries. The Regulation seeks to ensure that transactions between buyers and sellers of securities are settled in a timely manner by introducing common settlement standards across the EU. One of the key proposals is dematerialisation, that is, to abolish paper share certificates in listed companies. The Regulation has been approved by the European Parliament. It is expected to be endorsed by the EU Council and published in the Official Journal in late 2014. The form of Regulation approved by the Parliament allows for a transitional period through to 2025 for the implementation of the requirement for all shares in listed companies to be in dematerialised form. Late 2014 Rea l Estate and Planning Rights to light: A “right to light” is an easement that gives land owners the right to receive light through defined apertures in buildings on their land. Rights to light are valuable and, if interfered with, may enable a landowner to claim damages or even prevent construction of a building on other land. In 2013 the Law Commission published a consultation paper on reform of the law relating to rights to light. The consultation investigated whether the law by which rights to light are acquired and enforced provides a fair balance between the important interests of land owners and the need to facilitate development of land. It proposed that in future it should no longer be possible to acquire rights to light by long use (known as “prescription”). It also looked at the inter-relationship of rights to light with the planning system and examined whether the remedies available to the courts are reasonable, sufficient and proportionate. The Law Commission is currently finalising its policy in the light of responses to this consultation and the February 2014 Supreme Court decision in Coventry v Lawrence. It expects to publish its final report (with a draft Bill if necessary) later this year. Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 10 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS Winte r 2014 Rea l Estate and Planning Criminal Justice and Courts Bill expected to receive Royal Assent: Following the Ministry of Justice consultation in 2013 on further reforms of the judicial review process, a new Planning Court has been established as part of the High Court and the new Criminal Justice and Courts Bill is on its way through Parliament, and is expected to receive Royal Assent by the end of 2014. Amongst other general court provisions, the Bill provides for a new permissions filter for statutory challenges in planning cases, to mirror the provisions for planning judicial reviews. The Bill also aims to streamline different types of planning challenge so that standing, time limits and procedure are consistent for each. This should reduce costs and delays and enable the new Planning Court to function efficiently. The new Planning Court was established within the High Court on 6 April 2014, to hear planning-related judicial reviews and statutory challenges, and is overseen by the new Planning Liaison Judge. The types of claim the Court expects to hear include disputes related to planning permissions, other development consents, applications under the Transport and Works Act 1992, wayleaves, highways and other rights of way, compulsory purchase orders, village greens, European Union environmental legislation and domestic transpositions, and national, regional or other planning policy documents. The Planning Liaison Judge can also allocate any other matter to the Planning Court which he considers appropriate. The Criminal Justice and Courts Bill and the new Planning Court are part of a number of reforms aiming to make the planning system more efficient and encourage growth in the UK, building on the shortened six week judicial review period for challenges to decisions made under the “planning acts” and the fast track planning process in the administrative court (introduced in summer 2013). End of 2014 ENERGY AND ENVIR ONMENT Market coupling: On 4 February 2014 the EU commenced a pilot scheme for day-ahead market coupling. It consists of 14 EU Member States (Belgium, Poland, Sweden, Denmark, Estonia, Finland, France, Germany, Austria, Latvia, Lithuania, Luxembourg, the Netherlands and UK). This marks the first steps in the creation of an internal market for gas and electricity. There are plans to expand the pilot across Europe by the end of 2014 and it is likely the Commission is preparing a Regulation to be issued in the third or fourth quarter of 2014 that will make coupling binding across the EU with further steps being taken in the coming year. End of 2014 TMT “Connected Continent” reform: In September 2013 the European Commission published its “Connected Continent” legislative package to reform the EU telecommunications regulatory framework. It seeks to promote a single “unified, secure digital market” by removing barriers within the market and developing harmonised rules across the EU. The package comprises a Commission Communication, a proposed Regulation and a Commission Recommendation. It includes proposals for: a single EU notification and authorisation regime for telecommunications operators; the coordination of spectrum allocation; the harmonisation of consumer rights regarding contract length and tacit contract extension by operators; net neutrality rights; and ending roaming charges across the EU. The package received a mixed response from interested parties. On 3 April 2014 the European Parliament voted to approve the draft Regulation (as amended in a report by the European Parliament Industry, Research and Energy Committee) in order to consolidate the work done so far and hand it over to the next Parliament. Member States are continuing to review the draft Regulation and the text has yet to be agreed with the Council of the EU. The European Commission expects final agreement on the draft Regulation by the end of 2014. 2014/2015 TMT Data protection reform: In January 2012, the European Commission published proposals for a comprehensive reform of the 1995 EU Data Protection Directive. The main aim of the reform is to remove inconsistencies created by the 27 Member States having implemented the Directive in different ways, and to reflect rapid advances in technology since the Directive first came into effect. The proposals are now going through the European legislative process. In October 2013, the European Parliament's Committee on Civil Liberties, Justice and Home Affairs (LI BE) adopted a revised compromise text for the proposed General Data Protection Regulation. The draft Regulation needs to be approved by the European Parliament and the Council of the EU in order to become law. The European Parliament voted in favour of the compromise text in March 2014 and this will now form the basis of formal negotiations between the European Parliament and the Council of the EU, once the Council's position is clear. Whilst LI BE originally called for the final Regulation text to be agreed before the European Parliament elections in May 2014, the Council’s meeting at the end of October 2013 indicated that 2015 may be more realistic. Once adopted, current proposals also provide for a two year grace period before the Regulation comes into force. Once in force the Regulation will be directly applicable throughout the EU and businesses may need to comply with the new regime as early as 2016 or 2017. 2014 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 11 Late 2014/Early 2015 TAX The proposed European Financial Transactions Tax (FTT) may come into force: Under the enhanced co-operation procedure, 11 Member States (including France and Germany and others, comprising – the so called FTT zone) agreed to introduce an FTT. The proposal was that the tax will be applied to "financial transactions" which involve "financial instruments" (including shares, derivatives, swaps etc, but not plain "vanilla" loans) that are entered into where at least one party was "established" within the FTT zone and where at least one party to the transaction is a "financial institution" (whether acting as principal or agent) which is "established" in the FTT zone. The exact form of the tax is still to be agreed but is likely to apply widely and have significant extra territorial impact. "Financial institution" is likely to be widely defined and may catch parent companies and treasury companies of non-financial services sector groups. There will be joint and several liability and as drafted, there is no intra group exemption and no proposal for grandfathering rules. FTT will be payable at a minimum rate of 0.1% for shares/securities and 0.01% for derivatives. The original deadline for implementation was 1 January 2014, but the discussion continues. In a plenary session in February 2014, the European Parliament debated the need for a broad based FTT that can be quickly adopted. End 2014/Early 2015 Re gulato ry Money Laundering Directive (MLD): A new money laundering directive (MLD IV ) is expected to be formally adopted in Europe. MLD IV will take effect 24 months after entry into force (not currently clear, but likely to be late 2014/early 2015). 2014 Corpo rate European contract law: The European Commission published a draft Regulation containing an optional Common European Sales Law in October 2011 and had initially hoped that the proposal would be adopted in 2012 which was the 20th anniversary year of the Single Market. It was accepted that the EU Member States needed further time to consider the proposals and discussions have continued in 2013 and are expected to continue in 2014. The proposed Regulation contains a comprehensive set of uniform contract law rules for cross-border contracts which would exist alongside current national regimes as a 28th contract law regime. The Common European Sales Law would apply to cross-border contracts for the sale of goods, including digital content contracts where both parties voluntarily and expressly agree to it and one of the parties is established in one of the EU Member States. The regime will be available for both business-to-consumer and business-to-business transactions where one of the businesses is a small or medium-sized enterprise (SME). However, Member States have the option of making it available for all business-to-business contracts, not just those involving SMEs. Member States can also provide that it should apply to domestic contracts as well as cross-border contracts. 2014 TMT Cyber security: The issue of cyber security continues to be high on the political agenda at both a European and national UK level. At the European level, the Commission published a Cyber Security Strategy and draft Directive in February 2013 to establish a unified approach to cyber vulnerabilities across Member States. The Cyber Security Strategy sets out how Europe plans to prevent and respond to online security incidents. The proposed Directive was a key element of the strategy and its implementation, and required all Member States and certain other market operators to ensure a secure and trustworthy digital environment throughout the EU. An amended draft of the Directive was published by the European Parliament in March 2014 and the amended text will now be reviewed by the Council of the EU. The draft Directive is listed as one of the priority items to be adopted by the legislator in the Commission’s annual work programme for 2014. Once adopted, Member States are likely to have 18 months to bring the requirements into force. At the national UK level, the Government published a call for evidence in May 2013 setting out its intention to encourage industry-led standards and guidance that could be used by organisations to manage the risk to their information. The Government subsequently published voluntary guidance principles on cyber security for internet service providers in December 2013 and, among other initiatives, this year will continue to work with industry to develop a preferred standard and assurance framework for cyber security, with the new profile expected later in 2014. Given the Commission’s own efforts to improve standardisation as part of the draft Directive, it remains to be seen whether or not the UK will impose a security standard on organisations before implementing the European proposals. Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 12 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS 2014 TMT Media ownership and plurality: The development and wide use of digital and internet media means that the media market has changed considerably since the current media plurality regime in the UK was last considered in the Communications Act 2003. In 2011, Ofcom recommended that the Government consider a wider review of the current media plurality system to ensure that it accurately reflects the current media market. Media plurality was also one of the issues considered in Lord Justice Leveson’s report into the “culture, practice and ethics of the press,” published in November 2012. As a result the Department for Culture, Media and Sport (DCMS) published a related consultation in July 2013. Taking each of Lord Justice Leveson’s recommendations as a starting point, the consultation considered the scope of a measurement framework for media plurality, including the types of media, organisations, services, and genres which should be covered, whether the BBC should be included and the audiences with which the framework should be concerned. The consultation closed in October 2013 and the responses to it will inform the commissioning of a media plurality measurement framework that will be used to develop the first analysis of plurality in the UK. Although no formal date has been announced, the DCMS is expected to comment on the outcome of the consultation during the year ahead. In the meantime, the House of Lords Select Committee on Communications published its own report on media plurality in February 2014. In response to Lord Justice Leveson’s recommendation for a mechanism to address plurality concerns raised as a result of organic change in the media, the Committee’s report includes a recommendation that Ofcom should undertake a statutory periodic review of media plurality on a four or five year basis. It remains to be seen whether the DCMS will take the Committee’s recommendations into account in preparing the media plurality measurement framework. 2014 TMT Electronic Communications Code: In June 2012, the Law Commission published its consultation paper on the Electronic Communications Code (the Code), which regulates access to land for telecoms infrastructure such as mobile phone masts and telecoms cables. The consultation was launched as part of the wider Communications Review conducted by the Department for Culture, Media and Sport with a view to the Law Commission making recommendations for the revision and re-drafting of the Code. Following closure of the Law Commission consultation, the Government separately announced its intention to legislate a series of new measures relating to next generation telecoms networks and to remove the “red tape” which it feels is preventing suppliers and operators from quickly and cheaply rolling out such next generation networks. The Law Commission published its report on the Code consultation in February 2013. It advised that the Code should be completely redrafted, rather than simply amended, and that it should not be retrospective. The Law Commission also made various specific recommendations, which include the moving and removal of telecommunications apparatus. Following the Law Commission’s report, the Government is now considering the recommendations and has committed to draft a Bill to implement certain proposed changes; although it is not clear when (or if) this is likely to take place, possibly around the same time as the “incremental” changes to the Communications Act 2003 that are being considered as part of the wider Communications Review. 2014 Pensions The Pensions Bill 2013: The Pensions Bill 2013 is expected to receive Royal Assent in 2014. The Bill contains provisions relating to (among other things) the following: Reforms to the state pension so as to create a single-tier state pension from April 2016 (which will mean the end of contracting-out on a final salary basis). Power for the Secretary of State to issue statutory guidance on statutory provisions relating to Guaranteed Minimum Pensions (GMP) conversion. The GMP conversion process allows schemes to convert guaranteed minimum pensions into ordinary scheme benefits (subject to various safeguards) but due to the difficulty with some of the legislative requirements, has not been used by schemes to date. Regulations to be made for the automatic transfer of small pots (initially £10,000 but subject to review every three years) in defined contribution (DC) schemes. Regulation on making power to impose a statutory cap on charges for DC auto-enrolment schemes. 2014 Intellectua l prope rty Intellectual Property Bill: The Intellectual Property Bill was published in May 2013 and has at the time of writing passed its third reading in the House of Commons and been returned to the House of Lords for consideration of the latest amendments. The timetable for Royal Assent is therefore yet to be announced. A key element of the Bill includes new powers to enable the UK to implement the Unified Patent Court Agreement, with the London part of the central division of the Court adjudicating on pharmaceutical and life sciences patent disputes. Additionally, the Bill proposes the introduction of criminal penalties for intentional copying of UK registered designs and the strengthening of design protection. 2014 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 13 Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 1 Janua ry 2015 Corpo rate Accounting Directive and project-by-project reporting of government payments: The new Accounting Directive which repeals and replaces both the Fourth Company Law Directive (Directive 78/660/EEC) and the Seventh Company Law Directive (Directive 83/349/EEC) (together often referred to as the Accounting Directives) was published in July 2013, and must be implemented by Member States by 20 July 2015. The new Directive makes it mandatory for large companies in the extractive or logging industries to report publicly on all payments they make to governments on a project-by-project basis. In March 2014, the UK Government published its consultation on implementing these provisions into UK law. This proposes that companies will have to produce reports for financial years beginning on or after 1 January 2015. The Transparency Directive (please see the entry entitled “Transparency Directive” below) extends the same project-by-project reporting requirement to all companies listed on an EU regulated market operating in the affected industry sectors. 1 Janua ry 2015 Corpo rate New financial reporting requirements in UK and Republic of Ireland: The Financial Reporting Council has issued three new accounting standards which will replace existing UK Generally Accepted Accounting Principles (UK GAAP) from 1 January 2015. These are: (i) FRS 100 (Application of Financial Reporting Requirements) – lays out the overall framework for UK financial reporting and gives companies a choice of accounting requirements depending on factors such as size and whether or not they are part of a listed group; (ii) FRS 101 (Application of Financial Reporting Requirements) – provides a reduced disclosure regime based on IFRS accounting standards that will be most useful for individual subsidiary and parent company accounts where the group’s financial statements are prepared under full IFRS; and (iii) FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland) – provides accounting and reporting requirements for unlisted entities, again including a reduced disclosure regime for individual companies within a group. The three new FRSs will be effective from 1 January 2015, but may be adopted early for accounting periods ending on or after 31 December 2012. All existing UK standards (other than the insurance standard FRS 27) and related documents will be withdrawn from 2015. 10 Janua ry 2015 Dispute reso lut ion Reforms to Brussels Regulation on jurisdiction and enforcement of judgments within the EU: Significant reforms to the Brussels Regulation (Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) will take effect on 10 January 2015. The key changes are: strengthening jurisdiction agreements by requiring Member State courts to stay proceedings where there is an exclusive jurisdiction agreement in favour of another Member State’s court and that court has also been seised of proceedings, thereby defusing “torpedo” actions; clarifying that there is an absolute exclusion of arbitration from the ambit of the Regulation, and that exclusion also extends to court proceedings surrounding or in support of arbitration; making Member State judgments immediately enforceable across the EU without the need for an intermediate registration process in the enforcing state; extending the rules relating to jurisdiction agreements to apply where neither party is EU-domiciled; and extending the rules relating to consumers and employees to apply to non-EU domiciled traders and employers. March 2015 ENERGY AND ENVIR ONMENT DEFRA review of environmental guidance: The Department for Environment, Food and Rural Affairs (DEFRA) is expected to conclude its review and reform of environmental guidance, which aims to produce simpler and clearer guidance across a range of topics. DEFRA is also reviewing environmental data reporting requirements and expects to implement a number of simplification reforms by March 2016. March 2015 TAX Budget 2015: The Chancellor of the Exchequer is due to hand down the 2015 Budget. 1 April 2015 TAX Corporation tax: The main rate of UK corporation tax is reduced to 20% on 1 April 2015. 2015 14 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS 1 April 2015 Employment Shared parental leave: The Government plans to implement the provisions of the Children and Families Act 2014 enabling parents to divide leave between them during the first year of a child’s life. Parents may opt into the shared parental leave system and share 50 out of 52 weeks of statutory maternity leave, and 37 out of 39 weeks of statutory maternity pay. Shared parental leave can either be taken by each parent consecutively, or by both parents concurrently, as long as the combined amount of leave does not exceed the amount which is jointly available to the couple. The pattern of leave must be agreed with the respective employers. If agreement cannot be reached, employees will be entitled to take their flexible parental leave in a single block commencing on a date of their choice. Additional paternity leave and additional paternity pay will be abolished. 6 April 2015 Rea l Estate and Planning Use of planning obligations to be limited, encouraging authorities to charge Community Infrastructure Levy (CIL): The Government made further amendments to the CIL Regulations which came into force on 24 February 2014 (the Regulations require property developers to pay an up front levy on new development over 100 square metres or comprising more than one dwelling). Highlights of the new CIL amendments include giving local authorities an extra year in which to get their CIL charging schedules up and running before the pooling of planning obligations is limited, on 6 April 2015. After this date, no more than five planning obligations may be used to fund the same piece of infrastructure, whether or not a local authority has adopted a CIL charging schedule. The amended regulations have also made other useful changes to the CIL regime since February 2014, including allowing developers to spread out payments for large projects built in phases, as well as allowing an abatement for CIL already paid if design changes are made to a scheme after development has started, and making it easier to claim certain exemptions from CIL . Local authorities throughout England and Wales continue to bring in CIL charging schedules on an ongoing basis and property developers should be aware that the levy can add very significant costs to new development. 6 April 2015 Pensions Public sector pension schemes: Under provisions in the Public Service Pensions Bill 2013, public sector schemes (other than the Local Government Pension Scheme), such as the NHS, Teachers and Civil Service pension schemes, will be closed to future accrual. Replacement schemes will come into effect from then onwards. April 2015 Pensions The more radical measures announced in the Budget 2014: The more radical measures announced in the Budget 2014 are, subject to consultation, intended to apply from April 2015. They include the following: A change in the tax rules so that individuals with a defined contribution (DC) pension will be able to draw down some or all of it after age 55 from April 2015 as cash, subject to their marginal rate of income tax (whatever the size of the pot or the member’s circumstances). Currently, this would attract an unauthorised payment charge of, broadly, 55%. This change will not affect the current right to take a pension commencement lump sum (where 25% of a DC pot may be taken as a lump sum tax free). Measures to be put in place so that all individuals with DC pots are offered free and impartial face-to-face guidance at the point of retirement. This duty to provide access to financial guidance will be imposed on “pension providers and trust-based schemes”. April 2015 Pensions Change in relation to defined contribution (DC) arrangements, including a cap on charges, quality and disclosure requirements: Following a Command Paper issued in March 2014, the Department for Work and Pensions has issued various proposals in relation to DC schemes which are intended to apply from April 2015. These include: The imposition of a flat charge cap of 0.75% on default funds in DC schemes being used for auto-enrolment purposes. The cap will apply to all management charges, but will initially exclude “transaction costs”. The current ban on consultancy charges in auto-enrolment schemes (which effectively applies to new auto-enrolment schemes set up after 14 September 2013) will be extended to cover all qualifying schemes. Minimum quality standards in workplace pensions will also apply from April 2015 to ensure that those running schemes consider the key components of scheme quality, keeping members’ interests as their priority. The quality standards will consider the different strengths and weaknesses of trust and contract-based structures. There will be requirements for providers of contract-based schemes to operate Independent Governance Committees (IG Cs) to assess the value for money delivered and report on how the quality standards are met. Duties in relation to enhanced transparency will also be introduced, with the introduction of IG Cs and strengthened trustee boards. 2015 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 15 Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: April 2015 Re gulato ry Payment systems: The Payment Systems Regulator, established under the Financial Services (Banking Reform) Act 2013 and which will oversee the UK payment systems market, becomes fully operational. April 2015 Compet ition, Re gulat ion and Trade Financial Conduct Authority (FCA) to obtain concurrent competition law powers: The Financial Services (Banking Reform) Act 2013 (which received Royal Assent in December 2013) contained provisions giving the FCA "concurrent" competition law powers in relation to financial services markets. This will allow the FCA (concurrently with the Competition and Markets Authority) to enforce the competition law prohibitions under the Competition Act 1998 and to make market investigation references under the Enterprise Act 2002. These new powers are in addition to the FCA's current competition law objective. The relevant provisions are expected to come into force in April 2015. Spring 2015 Re gulato ry Banking reform: Secondary legislation required under the Financial Services (Banking Reform) Act 2013 is expected to be passed by the end of the current Parliament in May 2015. Banking groups are expected to organise themselves in line with ring-fencing requirements under the Financial Services (Banking Reform) Act 2013 by 2019 at the latest. By 9 July 2015 Dispute reso lut ion Implementation of Directive on consumer alternative dispute resolution (ADR): On 8 July 2013, two key European legislative measures regarding ADR in respect of consumer disputes entered into force – a Directive on ADR for consumer/trader disputes (Directive 2013/11/EU) and a Regulation on online dispute resolution (ODR ) (Regulation (EU) 524/2013). The ADR Directive seeks to promote ADR in the consumer sphere in the EU by encouraging the use of approved ADR entities, including requiring EU Member States to ensure that their approved ADR entities meet certain minimum standards. Member States are required to put in place the necessary measures to comply with the ADR Directive by 9 July 2015 at the latest. The ODR Regulation will support the Directive by providing for the establishment of a free EU-wide online platform accessible electronically in all languages of the EU to assist in resolving consumer/trader disputes online. The bulk of the Regulation’s provisions will take effect from 9 January 2016. JULY 2015 ENERGY AND ENVIR ONMENT Regulation of offshore oil and gas operations: Deadline for the implementation of the EU Offshore Safety Directive, which establishes a new regulatory framework applying to the safety of offshore oil and gas operations in the EU. The UK Government is currently considering what amendments will be needed to existing UK offshore safety and environmental regulation in order to comply with the Directive; but once enacted operators of offshore installations will need to amend, and re-apply within a short window for approval of, extended "safety case" documents in accordance with the new regime, or cease operations. 4 Septembe r 2015 TMT Information security: As with all Member States, the UK Government is required to implement provisions in the newly adopted Directive 2013/40/EU on attacks against information systems into national law by 4 September 2015. Whilst the Directive seeks to tackle large-scale cyber-attacks and will strengthen national cyber-crime laws and introduce tougher criminal sanctions, it is more likely to require “supplementing” and “enhancing” amendments to UK legislation, rather than fundamental changes. Autum n 2015 Employment Discrimination: Section 97 of the Enterprise and Regulatory Reform Act 2013 obliges the Government to make an order outlawing caste discrimination but subject to no fixed timetable. A draft order is expected in autumn 2015. Novembe r 2015 Corpo rate Transparency Directive: The revised EU Transparency Directive was published in November 2013. The key amendments to the Directive are the removal of the requirement to produce interim management statements and the extension of the notification of the major holdings regime to include holdings of financial instruments which have a similar economic effect to entitlements to acquire shares. Member States have until November 2015 to make these changes to their national laws. Decembe r 2015 ENERGY AND ENVIR ONMENT Paris International Climate Change Agreement: at the Conference of the Parties to the United Nations Framework Convention on Climate Change, held in Durban in 2011, the international community agreed to finalise a text for a successor agreement to the Kyoto Protocol to combat climate change by the end of 2015, to apply from 2020. 16 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS By end of 2015 Intellectua l prope rty Implementation of the Unitary Patent and the Unified Patent Court (UPC): Official estimates which previously indicated that early 2015 is a realistic target date for the entry into operation of the UPC have now slipped to end of 2015. Even this appears optimistic to many commentators. The UPC Agreement, an international agreement signed by 25 of the 27 Member States (Spain has both challenged the use of the enhanced co-operation procedure establishing the unitary patent and refused to sign the UPC agreement; Italy has dropped its challenge to the unitary patent but failed to sign the Agreement), aims to establish a single court system to decide patent disputes on a pan-European basis. Currently, patent disputes have to be brought on a national basis. Once the new system enters into force, there will be a period of uncertainty for companies who will be waiting to see how well it operates in practice, and this will depend on the speed, quality and consistency of the UPC’s decisions. The new, single patent right across all participating states – the Unitary Patent – will be tried in the UPC, along with current European (national designation) patents which have not been opted-out by their proprietors and future European patents (although there is a seven year opt-out right). London will be the seat of part of the central division of the UPC, dealing with pharmaceutical patents in particular. End of 2015 TAX The OECD Action Plan: The Organisation for Economic Co-operation and Development (OECD) published its Action Plan in July 2013, which sets out broad proposals to ensure that multinational companies (in particular) pay their “fair share of tax” and are not able to manipulate international tax rules to artificially reduce or even avoid their tax liabilities. Proposals focus on ensuring existing rules are less vulnerable to abuse, equipping governments and tax authorities with the mechanisms to share information about taxpayers, and introducing enhanced tax transparency which may result in country by country reporting (presumably to tax authorities although this is not clear). The proposed changes are expected by the end of 2015. 2015 Corpo rate Proposals for Directive to amend the Shareholder Rights Directive: The European Commission has published its proposals for a Directive to amend the Shareholder Rights Directive (2007/36/EC). The key aspects of the proposed amending Directive include proposals on directors’ remuneration reporting and voting requirements; a more onerous regime for related party transactions; obligations on intermediaries to disclose underlying shareholders; enhanced disclosure requirements of institutional investors and asset managers’ investment policies and strategies; and obligations on proxy advisers to ensure that their voting recommendations are accurate and reliable. The proposed Directive will be passed to the Council of Ministers and the European Parliament for their consideration and adoption. The Directive is expected to be finalised in 2015 and would need to be implemented through national legislation once approved. 2015 Corpo rate Reform of company ownership and control rules: In July 2013, the Department for Business, Innovation & Skills (BIS) published a discussion paper on “Transparency & Trust” following the G8 Summit in June, during which it was agreed that reforms to ensure sufficient visibility of the ownership and control of companies were required. BIS published its feedback on the consultation paper in April 2014. UK incorporated companies and LL Ps will have to obtain, and publish publicly, information on their “beneficial owners” (i.e. an ultimate interest in 25% of the shares or voting rights of a company or any individual who otherwise exercises control over the management of the company). The paper also includes a number of proposals relating to directors including: (i) prohibiting corporate directors (save where their use is valuable, for example, in large corporate groups); (ii) widening the directors’ disqualification regime; and (iii) giving courts the power to order fraudulent or reckless directors to compensate creditors in connection with an insolvency situation. The Government intends to introduce legislation as soon as Parliamentary time allows and intends to implement the registry of beneficial ownership as soon as practicable once the necessary legislation is in place. 2015 HE RBERT SMITH FREEHILLS CALENDA R OF KEY ISSUES – may 2014 EDITION 17 2015 Finance , insolvency and derivat ives Proposed new Insolvency Rules: Following a consultation by the Insolvency Service titled “Modernisation of the rules relating to insolvency law” run between September 2013 and January 2014, the Insolvency Service plans to replace the current Insolvency Rules 1986 (IR 1986) with a new version, the Insolvency Rules 2015 (IR 2015). The IR 2015 are intended to: make substantive amendments to the rules to reflect developments in Government policy (including those arising from its Red Tape Challenge); modernise and simplify the rules and procedures; facilitate delivery of documents electronically; reorder the rules to make them clearer and more logical; and incorporate all previous amendments made to the IR 1986 (they have been amended piecemeal numerous times since 1986). Once finalised, the IR 2015 are not expected to be in force before 2015. 2015 Finance , insolvency and derivat ives EC Regulation No 1346/2000 on insolvency proceedings (the Insolvency Regulation): The Insolvency Regulation seeks to harmonise and simplify the regulation and enforcement of insolvency proceedings among Member States by providing for the affairs of insolvent companies and individuals to be administered in the jurisdiction with which they have the closest connection. Since 2012, the European Commission and the European Parliament have proposed various amendments to the Regulation. As currently drafted, the proposals would affect (amongst other things): the scope of the Regulation; the definition of the “centre of main interests” (COMI), a concept used to determine which Member State takes precedence if competing insolvency procedures are commenced in different Member States, including the introduction of a new three month “look back” test; insolvencies of groups of companies; and co-operation between liquidators and courts in different Member States. Further developments are awaited. Insurance Intellectual property Pensions Real estate and planning Regulatory Tax Technology, media and telecommunications (TMT) Competition, regulation and trade Constitutional law Construction Corporate Dispute resolution Employment Energy and environment Finance, insolvency and derivatives Key: 18 CALENDA R OF KEY ISSUES – may 2014 EDITION HE RBERT SMITH FREEHILLS 1 Janua ry 2016 Insu rance Solvency II – EU insurance regulation: The Solvency II Directive (Solvency II ) establishes an entirely new framework for prudential supervision of insurance and reinsurance companies across Europe. It replaces existing EU legislation establishing minimum standards for insurers and reinsurers (commonly referred to as Solvency I) and introduces economic risk-based capital requirements for all EEA insurers and reinsurers for the first time. Ongoing delays in finalising key aspects of the regime mean that is now expected to come into force on 1 January 2016. April 2016 Compet ition, regulat ion and trade EU rules on public procurement – deadline for implementation by Member States: Three new EU Directives on public procurement were adopted by the EU in February 2014 and published in the EU Official Journal in March 2014. The reforms are intended to modernise and simplify the rules regulating the award of contracts and concessions by public bodies and utilities. The new Directives formally entered into force on 17 April 2014, but EU Member States had two years to implement them into national law (i.e. until April 2016). May 2016 Compet ition, regulat ion and trade Private enforcement of competition law in the EU – deadline for implementation by Member States: In June 2013 the EU Commission published a long-awaited draft Directive designed to facilitate competition law private actions in the EU. The draft Directive proposed various claimant-friendly measures on disclosure and limitation periods, as well as a presumption of loss in cartel cases. In April 2014 the revised Directive was approved by the European Parliament, and is expected to be formally adopted by the EU Council in the course of May 2014. Member States will then be required to implement its provisions into national law within two years, i.e. by May 2016. Mid-2016 Corpo rate Audit regulation: The European Parliament and Council have adopted the European Commission’s proposals for a Directive to amend the Statutory Audit Directive (2006/43/EC) and a Regulation which will apply directly in Member States. The proposals are targeted at audits of listed companies, banks and other financial undertakings, which are referred to as “public interest entities” (PIEs). The key aspects of the Regulation include: (i) limiting the term of office of an auditor to a maximum of 10 years unless a public tendering process is undertaken, in which case the maximum term of office can be extended by up to another 10 years following which there will be a mandatory rotation; (ii) audit firms will be almost entirely banned from providing non-audit services to their PIE audit clients; and (iii) where an auditor provides non-audit services to a group, the total fees for non-audit services shall be capped at no more than 70% of the average of the audit fees paid in the last three consecutive financial years, although the drafting is obscure. The Regulation and the amending Directive will come into force two years after publication in the Official Journal, expected to be mid-2014. Separately, the UK Competition Commission published its remedies package following its investigation into the statutory audit market in October 2013. Further details on implementation of the remedies package is expected in mid-2014 (see entry above entitled Competition and Markets Authority measures in relation to the UK audit market). Corpo rate Mid-2016 Re gulato ry EU Market Abuse Regulation: The EU has finalised a new Market Abuse Regulation (MAR) which will replace the Market Abuse Directive and will be directly applicable in Member States (and so for example will replace the current Disclosure Rules for UK listed companies). Key changes in MAR include: (i) broadening the definition of “market abuse” to capture a wider range of behaviour and to cover all markets rather than just listed markets; (ii) an EU-wide harmonised format for insider lists; (iii) enhanced disclosure of own account transactions by persons discharging managerial responsibilities; and (iv) stricter civil and criminal enforcement powers for competent authorities, including criminal sanctions. MAR will come into force two years after its publication in the EU Official Journal, which is expected in mid-2014, meaning that it will be in force from mid-2016. End 2016/ Early 2017 Re gulato ry Markets in Financial Instruments Directive (MiFID): MiFID II Directive and MiFIR are expected to apply in Member States. End 2016/ Early 2017 Re gulato ry Money Laundering Directive (MLD): MLD IV is expected to apply in Member States. 2016 HE RBERT SMITH FREEHILLS 19 Contacts Com petitio n, regulatio n and trade Adrian Brown T +32 2 518 1822 [email protected] Kyriakos Fountoukakos T +32 2 518 1840 kyriakos.fountoukakos@ hsf.com Stephen Wisking T +44 20 7466 2825 [email protected] Constitutio nal la w Dorothy Livingston T +44 20 7466 2061 [email protected] Constructio n Nicholas Downing T +44 20 7466 2741 [email protected] Mark Lloyd-Williams T +44 20 7466 2375 [email protected] Corporate Kathryn Cearns T +44 20 7466 2686 [email protected] Nigel Farr (Investment funds) T +44 20 7466 2360 [email protected] James Palmer T +44 20 7466 2327 [email protected] Gareth Roberts T +44 20 7466 2322 [email protected] Carol Shutkever T +44 20 7466 2013 [email protected] Dis pute Resolutio n Justin D'Agostino T +852 21014010 [email protected] Paula Hodges (Arbitration) T +44 20 7466 2027 [email protected] Anna Pertoldi T +44 20 7466 2399 [email protected] Emplo yment Tim Leaver T +44 20 7466 2305 [email protected] Christine Young T +44 20 7466 2845 [email protected] Energ y and enviro nment Mark Newbery T +44 20 7466 2225 [email protected] Julie Vaughan T +44 20 7466 2745 [email protected] Finance , insol vency and deri vati ves Dina Albagli T +44 20 7466 2390 [email protected] Simon Chadney T +44 20 7466 2993 [email protected] Kevin Pullen T +44 20 7466 2976 [email protected] Insura nce Barnaby Hinnigan T +44 20 7466 2816 [email protected] Paul Lewis T +44 20 7466 2138 [email protected] Geoffrey Maddock T +44 20 7466 2067 geoffrey.maddock@hsf. com Alexander Oddy T +44 20 7466 2407 [email protected] Contacts 20 HE RBERT SMITH FREEHILLS IRS Circular 230 Disclosure: This document is not intended to be fully comprehensive, nor to provide US tax advice. Notwithstanding this, to ensure compliance with requirements imposed by the IRS, we inform you that any US tax information contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Recipients of this document should seek advice based on their particular circumstances from an independent, appropriately qualified, tax advisor. The contents of this publication, current at the date of publication set out in this document, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication. © Herbert Smith Freehills LLP 2014 Intellectual pro pert y Mark Shillito T +44 20 7466 2031 [email protected] Pensio ns Alison Brown T +44 20 7466 2427 [email protected] Daniel Schaffer T +44 20 7466 2003 [email protected] Real Estate and Pla nning Matthew Bonye T +44 20 7466 2162 [email protected] Patrick Robinson T +44 20 7466 2129 [email protected] Donald Rowlands T +44 20 7466 2287 [email protected] Matthew White T +44 20 7466 2461 [email protected] Regulator y Karen Anderson T +44 20 7466 2404 [email protected] Susannah Cogman T +44 20 7466 2580 susannah.cogman@hsf. com Clive Cunningham T +44 20 7466 2278 [email protected] Hywel Jenkins T +44 20 7466 2510 [email protected] Jenny Stainsby T +44 20 7466 2995 [email protected] Tax William Arrenberg T +44 20 7466 2574 [email protected] Howard Murray T +44 20 7466 2124 [email protected] Isaac Zailer T +44 20 7466 2464 [email protected] TMT Nick Elverston T +44 20 7466 2228 [email protected] Amanda Hale T +44 20 7466 2961 [email protected] Nick Pantlin T +44 20 7466 2570 [email protected] Alan Watts T +44 20 7466 2076 [email protected] Contacts Contacts
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