This issue covers a few miscellaneous updates, including proposals by the FRC to revise its procedures for reviewing corporate reporting, and the Prime Minister’s proposed Great Repeal Bill.
FRC consults on revised procedures for reviewing corporate reporting
The Financial Reporting Council (the “FRC”) has launched a consultation on revising its operating procedures for reviewing corporate reporting. The consultation can be found here.
The FRC’s Conduct Committee (the “Committee”) is authorised and appointed by legislation to review the published reports and accounts of companies, in order to monitor and enforce the accounting and reporting requirements that apply to those companies.
The FRC’s Operating Procedures set out how it conducts its reviews. The Committee made minor changes to the procedures in April 2016, but it is now consulting on more significant changes. These include clarifying the early stages of the review process and underscoring the role of a premium-listed company’s audit committee in reporting on investigations by the Committee.
However, of particular interest is the Committee’s proposal to periodically publish lists of companies whose financial reports it has reviewed. This procedure is new and would happen only after the case is closed. However, disclosure would occur regardless of the outcome of the Committee’s review.
The FRC intends to start publishing lists of closed cases in 2017, beginning with companies reporting in December 2015. The names of companies would be published, not the content of the reviews.
The FRC will not publish the name of a company until that company has had the opportunity to report on the Committee’s review in its first published accounts after the case is closed. The FRC has started writing to companies to advise them when the Committee has completed a review, so that the company can comment on the review before the FRC identifies it.
Great Repeal Bill
The Prime Minister announced at the Conservative Party conference on 2 October 2016 that the Government intends to trigger Article 50 of the Treaty on European Union by the end of March 2017, and to bring forward a Great Repeal Bill in the Queen’s Speech in April or May.
The Bill would repeal the European Communities Act 1972 and, at the same time, enshrine all existing EU law into UK law until Parliament decides to repeal or modify it.
In a corporate context, this would affect areas such as market abuse (governed by the EU Market Abuse Regulation) and public issues of securities (governed, in part, by the EU Prospectus Directive Regulation). It would seem these regulations would be “grandfathered” into domestic law when the UK leaves the Union, then scrutinised in due course.
Companies House publishes guidance on filing by post
Companies House has published on-line guidance on using the postal service to file documents. The guidance can be found here. The guidance confirms several points of existing practice, including:
- The person making a filing by post bears the risk of loss or delay, and Companies House will not waive penalties for late filings caused merely by a problem with the postal service.
- Companies House will acknowledge receipt if the application contains a stamped addressed envelope and a duplicate covering letter, but this is not confirmation that the document has been officially registered.