PSC register – Government guidance published

BIS has published non-statutory guidance on the “Register of People with Significant Control” (the “Guidance”). The Guidance summarises the new PSC regime and includes indications of how certain provisions will be interpreted. For example, section 2.3 of the Guidance outlines the steps an entity obliged to keep a register should “typically take” to identify its PSCs (although it notes that these are not definitive or exhaustive). It also includes some example notices that can be sent to PSCs which a company or LLP may be obliged, or may choose, to send in compliance with the new regime e.g. a formal notice to identify PSCs or a restrictions notice where the formal notice has not been complied with.

Impact - the non-statutory Guidance is a useful overview of the PSC regime, including some worked examples to help companies identify their PSCs and, as mentioned above, gives some indication of how certain provisions may be interpreted. Whilst the Guidance is drafted from the perspective of the entity that is obliged to keep the register, it notes that it may also be of interest to those whose details could be included on the register.

Background - UK companies, LLPs and societas europaea will be obliged, from 6 April 2016, to keep a register of those individuals who: ultimately own or control more than 25 per cent of the company’s shares or voting rights (or have the right to share in more than 25 per cent of any surplus assets of the LLP); or who ultimately own or control more than 25 per cent of members’ rights to vote, or who otherwise exercise significant influence or control over the company, LLP or its management.

Gender pay gap reporting

The Government has now published draft regulations which will, when implemented, require employers with 250 or more employees to publish information relating to the difference in pay between male and female employees. The draft regulations are subject to further consultation but are expected to come into force on 1 October 2016, with employers having “about 18 months after commencement to publish the required information for the first time”. Information must subsequently be published annually. For more detail on the draft regulations please click here.


Changes to companies’ strategic reports – 1 January 2017 BIS has published a consultation on implementation of the EU’s non-financial reporting directive which must be implemented by member states by 6 December 2016 and will apply to companies’ financial years starting on or after 1 January 2017 (the “EU Regime”).

The EU Regime will broadly require large EU listed entities, credit institutions and insurance undertakings (“publicinterest entities” or PIEs) with over 500 employees (on average over the year) to include a non-financial statement in their annual report. The non-financial statement must contain information relating to, amongst other things: environmental, social and employee matters; respect for human rights; anticorruption; and bribery.

In the UK all quoted companies (unless small) are already obliged to prepare a strategic report covering certain nonfinancial matters. The required content of the report varies, depending upon the size of the company and whether it is quoted, with quoted companies subject to additional reporting requirements.

BIS is considering two implementation options. The first would apply the EU Regime to those entities within scope and otherwise leave the UK regime unaltered. The second would apply the EU Regime to those entities within scope and remove the current UK additional requirements for quoted companies not caught by the EU Regime. BIS is also seeking views on whether it would be helpful for nonfinancial statements to be produced at a different time to financial statements and only made available electronically.

Impact – the consultation highlights that the Government is keen to reduce red tape and simplify the reporting regime applicable to companies. It may mean therefore that small quoted companies which fall outside the EU Regime will be able to produce less detailed strategic reports next year. The consultation also includes a request for views on other UK and EU narrative reporting requirements that are no longer “fit for purpose” and identifies some reporting regulations that have previously been flagged as no longer producing useful disclosure or that could be improved.

Takeover Panel consultation paper on the communication and distribution of information during an offer

The Takeover Panel has published a consultation paper in relation to the communication and distribution of information and opinions during an offer. The proposals cover a number of key areas and reinforce the existing requirement in General Principles 1 and 2 (reflected in Rule 20.1) that target company shareholders are treated equally and must have sufficient time and information to enable them to reach a properly informed decision on a bid. Key proposals include:

  • new provisions restricting the use of social media and videos. Videos published by a bidder or target which include any information or opinions relating to an offer, or party to an offer, (“bid information”) must have the prior consent of the Panel and broadly comprise only a director or senior executive reading from a script. Social media must not be used to publish bid information other than in certain limited circumstances;
  • enhancing the provisions in Rule 20.1 to formally apply the rule more broadly to cover not only information about a party but also information relating to, and opinions on, the offer itself. The proposals, if implemented, would also require that any material new information or significant new opinion relating to an offer, or a party to an offer, which is: (i) published by, or on behalf of, a bidder or target (other than in a document sent to target shareholders); or (ii) provided by, or on behalf of, a bidder or target to any shareholder in, or other person interested in any securities (including debt securities), of a bidder or target, or to any investment manager, investment adviser or investment analyst (“Relevant Person”); or (iii) provided by, or on behalf of, a bidder or target to the media; must, at the same time, be published in an announcement;
  • in addition to the above, and regardless of whether it contains any material new information or significant new opinion, proposals that the following must be promptly published on a website and announced via a RIS:
  • any presentation (however transmitted or received) or other document relating to an offer, or a party to an offer, provided to, or used in any meeting (however held) with, any shareholder or other Relevant Person. Where there are multiple versions of a presentation or other document only the latest version need be published provided it does not omit any relevant information included in a previous version; and
    • any article, letter or other written communication relating to an offer, or a party to an offer, provided to the media; and
    • a new Rule 20.2, replacing note 3 to Rule 20.1, regarding the attendance of advisers. In summary, the changes are intended to make clear that the requirement for advisers to be present applies to telephone calls as well as meetings and certain modifications are proposed which are intended to make the requirements more proportionate. For example, subject to prior consultation with the Panel, it is suggested that there should normally be no requirement for an adviser to supervise a meeting or telephone call following the announcement of a firm offer recommended by the board, where there is no competitive situation. In such a case a senior adviser of the bidder or target who attended the meeting could confirm in writing to the Panel that no material new information or significant new opinion had been expressed. A summary table of the new proposals is included at Appendix D.

Impact – the proposed changes are fairly extensive and intended to clarify the current requirements in the Code and market practice, regarding communication and distribution of information during an offer. The consultation closes on 15 April.