What is your new year’s resolution? It could be to join a gym, to learn a new skill or perhaps it is to read more Talking Business blogs(!), but what about a new year’s resolution for your business? Well, ensuring compliance with a raft of new legal developments expected in 2018 should be one of them.
There are many unknowns this year, not least the outcome of Brexit negotiations and everything that is likely to follow them. This blog outlines some of the key legal developments in 2018.
The introduction of the GDPR will result in significant changes to data protection law from 25 May. Businesses will need to ensure the more onerous statutory requirements are followed or they could be faced with hefty fines and reputational damage. With the economy becoming increasingly digitised, data privacy is of paramount importance to consumers.
The GDPR will affect all businesses and, if preparations have not started already, businesses should be considering how they can become compliant. You can use Gateley’s GDPR toolkit to help you establish the key concerns for your business and its operations. This should be a principal area of focus in the coming year, anything less could have severe repercussions.
You can download our GDPR guidance for corporate transactions here.
This year will also see significant changes to corporate governance and the manner in which businesses are expected to be managed. Last year we saw a large number of proposals which resulted in proposed changes relating to executive pay, employee and customer voice, and governance in private businesses.
The FRC has published proposals for a revised UK Corporate Governance Code to reflect the changing business environment and to help UK companies achieve the highest levels of corporate governance. The revised code is shorter and builds on the proposals that were seen in 2017. It focuses on, amongst other things, effective engagement with a wider stakeholder base and the operation and adoption of remuneration policies. The revised code is expected to be implemented in the summer.
The UK Corporate Governance Code is only mandatory for companies with a premium listing on the Main Market. But private companies also need to keep an eye on corporate governance developments as a voluntary corporate governance code for larger private companies is likely to be introduced later this year.
Brexit (sorry, we had to mention it!)
We still have no idea what the post-Brexit corporate landscape will look like. Fingers crossed(!) negotiations will conclude this year and we will have a much clearer idea of how businesses will be affected. For many companies who rely on overseas trading and EU markets, there may be a significant impact, but as company law in the UK is largely governed by the Companies Act, there are not likely to be any changes of huge significance to the legal framework for UK companies.
Some may be affected more by employment, import and export, and dispute resolution issues and so these should be high on the list of priorities.
Despite the lack of clarity, it would be foolish for businesses to ignore the fact that considerable change is on the horizon.
Corporate directors – still to be banned?
Last year should have seen the introduction of a ban on corporate directors. Companies can currently appoint corporate directors as long as they have at least one other director who is an individual. In order to increase transparency, a ban on the appointment of corporate directors was proposed and due to come into force, originally, in October 2016.
However, no developments were seen last year and we still await the ban. Brexit is a likely cause of this delay with the Government’s parliamentary sessions being focused predominantly on the EU.
Update your PSC register
Following the rather rapid introduction of changes to the PSC regime, businesses were forced to make quick changes to their statutory registers and many filed a holding statement to ensure compliance whilst they investigated the position. This year, Companies House is committed to stronger enforcement and will chase those businesses with holding statements.
If your business still has a holding statement in place this should be actioned or removed. You should now either know the details of PSCs or have established that you have nothing to put in the register. You must ensure the register reflects the current position or that the relevant notices are sent to allow any missing information to be obtained.
Advances in technology have led to an increased use of digital media by UK businesses. It is likely that 2018 will see even further developments as Blockchain continues apace. However, despite technological developments no virtual AGMs were held last year. Our blog discussed how Jimmy Choo held the first virtual meeting which many thought would be a catalyst for, at the very least, hybrid meetings but this has yet to be seen.
The increased use of e-signatures in many sectors also shows how technology is making business processes simpler and more streamlined. This year may see further developments in e-signature technology and further guidance could boost confidence in this form of document authentication.
It is important that the benefits of using technology do not outweigh the principal risks with its use and businesses must consider how the use of technology will impact obligations under other requirements, particularly the GDPR.