Corporate weekly highlights—11 April 2019

This week’s edition of Corporate highlights includes the latest updates on Brexit, the draft Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the Sir Donald Brydon Independent review into audit quality and effectiveness call for views and the Small Business, Enterprise and Employment Act 2015 (Commencement No 7, Consequential, Transitional and Savings Provisions) Regulations 2019.

In this issue:

Brexit

Brexit Bulletin—EU agrees to extend the Article 50 withdrawal period until 31 October

On 10 April 2019, the EU27 met to consider the UK’s request to extend the Article 50 withdrawal period beyond 12 April 2019. The UK had originally repeated its request for an extension until 30 June 2019. Following extended talks, the European Council adopted a decision, taken in agreement with the UK, providing for an extension until 31 October 2019 at the latest. The decision notes that the extension should last only as long as necessary, and no longer than 31 October 2019. The Withdrawal Agreement may enter into force on an earlier date if approval and ratification procedures are completed sooner. On this basis, UK withdrawal would take place on the first day of the month following the completion of the ratification procedures or on 1 November 2019, whichever is the earliest. If the UK fails to adhere to the obligation to hold European Parliament elections, the extension will end on 31 May 2019.

The European Council decision confirms that the UK will remain an EU Member State for the duration of the extension, with full rights and obligations in accordance with Article 50 TEU. It also notes that the extension excludes any re-opening of the Withdrawal Agreement and the UK has a right to revoke its notification to withdraw from the EU at any time. These points were echoed in the remarks of European Council President Donald Tusk.

The European Council conclusions emphasised the position of the EU27 that the further extension cannot be allowed to undermine the regular functioning of the EU and its institutions. Taking note of the UK’s aim to avoid participating in the European Parliament elections, the decision confirms that if the UK fails to approve the Withdrawal Agreement by 22 May 2019 and is still a Member State on 23 May 2019, it will be under an obligation to hold the elections in accordance with EU law. If the UK fails to do so, the extension will end on 31 May 2019.

For further information, see: LNB News 11/04/2019 76.

Financial Services (Miscellaneous) (Amendment) (EU Exit) (No 2) Regulations 2019

SI 2019/Draft: These draft regulations are laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. This draft enactment is being laid in order ensure a coherent and functioning financial services regulatory regime once the UK leaves the EU. It is proposed to make amendments to a number of financial services EU exit statutory instruments and to an EU delegated regulation, correcting errors identified in legislation after it was made, making proposed amendments to ensure consistency between EU exit instruments and introducing a transitional provision. These proposed amendments will ensure that these instruments operate effectively after the UK leaves the EU. It comes into force on the day after the day on which these regulations are made.

For further information, see: LNB News 04/04/2019 35.

Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 2019

SI 2019/834: This regulation is made in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This regulation makes amendments to legislations in the field of private international law and, in particular, amends legislation determining the law applicable to contractual and non-contractual obligations in the case of conflict of laws. This regulation will address issues created by the UK leaving the EU so that they will continue to operate effectively after Brexit. It comes into force on exit day. This statutory instrument was updated from draft on 10 April 2019.

For further information, see: LNB News 14/02/2019 48.

AFME Q&A for issuers on enabling equity capital market mandates to continue in a no deal Brexit

The Association for Financial Markets in Europe has published a Q&A document to help issuers understand why UK investment banks and capital markets firms will require additional flexibility to ensure certain equity capital market mandates continue after a no deal Brexit without disruption.

For further information, see: LNB News 09/04/2019 5.

Directors and company secretaries

Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019

SI 2019/Draft: These draft regulations are laid before Parliament to implement in part Directive 2017/828/EU of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (the Directive). Articles 9a and 9b of the Directive are implemented to ensure that these provisions work with the framework already in place in UK legislation with regards to directors’ remuneration. The regulations come into force on 10 June 2019.

For further information, see: LNB News 09/04/2019 6.

Revised shareholder Rights Directive: amendments to the directors’ remuneration regime

Corporate analysis: The government has published draft regulations implementing parts of the revised Shareholder Rights Directive. The draft regulations update the existing UK legal framework relating to directors’ remuneration to make it consistent with the requirements of the Directive.

For further information, see News Analysis: Revised Shareholder Rights Directive: amendments to the directors’ remuneration regime.

Audit

Independent review of audit quality and effectiveness launches call for views

The Independent review into audit quality and effectiveness has launched a call for views on the quality and effectiveness of statutory audit in the UK. This follows the Department for Business, Energy and Industrial Strategy publishing—in February 2019—the terms of reference for the independent review by Sir Donald Brydon into the quality and effectiveness of the UK audit market. The consultation closes on 7 June 2019.

For further information, see: LNB News 10/04/2019 85.

Additional Corporate updates this week

Small Business, Enterprise and Employment Act 2015 (Commencement No 7, Consequential, Transitional and Savings Provisions) Regulations 2019

SI 2019/816: Certain provisions of the Small, Business, Enterprise and Employment Act 2015 (SBEEA 2015) come into force in Scotland on 6 April 2019 pursuant to these regulations. The commenced provisions will bring into force for Scotland, specified provisions of SBEEA 2015 which were introduced in England and Wales by the Small Business, Enterprise and Employment Act 2015 (Commencement No 6 and Transitional and Savings Provisions) Regulations 2016.

For further information, see: LNB News 05/04/2019 83.

Additional news—daily and weekly news alerts

This document contains the highlights from the past week’s news. To receive all our news stories, whether on a daily or a basis, amend your personal settings within your ‘News’ tab on the homepage by clicking on either ‘Email’ or ‘RSS’ (depending on how you prefer to receive them) on the right hand side of the blue banner.

New and updated content

New Practice Notes

We have published the following Practice Notes concerning the impact of Brexit:

  1. Brexit—impact on private M&A transactions

  2. Brexit—impact on corporate joint ventures

Dates for your diary

DateDevelopment
30 April 2019Deadline for comments on DP 19/1: Building a regulatory framework for effective stewardship.
On 30 January 2019, the Financial Conduct Authority and the Financial Reporting Council (FRC) issued DP 19/1 concerning the importance of effective stewardship. The objective of DP 19/1 is to advance the debate about what effective stewardship should look like, what the minimum expectations should be for financial services firms that invest for clients and beneficiaries, what higher standards the UK should aspire to and how these might best be achieved. It also considers the potential public and private benefits of improved stewardship.
LNB News 30/01/2019 105
30 April 2019Deadline for comments on the FRC’s consultation on business reporting of intangible assets.
The FRC has published a consultation paper, which invites comments on how business reporting of intangible assets could be improved. The FRC argues that intangible assets are increasingly important in a knowledge-based economy and notes concerns that financial statements often fail to recognise important intangibles, such as intellectual capital.
LNB News 06/02/2019 37

Trackers

To track key legislative and regulatory developments, see our Trackers:

  1. Brexit legislation tracker

  2. Brexit timeline

  3. Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) timeline

  4. Market Abuse Regulation timeline

  5. Prospectus Regulation tracker

  6. Transparency Directive tracker

  7. Listing Rules tracker

  8. Disclosure Guidance and Transparency Rules Sourcebook tracker

  9. Prospectus Rules tracker

Latest Q&As

New Q&As added this week:

  1. What are the formalities for an attorney executing a deed on behalf of a company?

Useful information

To view analysis of the latest deals in the market and the underlying transaction documents, use our Market Tracker deal analysis tool.

To read about the latest corporate announcements, see our Market Tracker weekly round-up—5 April2019.

Relevant Articles
Area of Interest