Corporate weekly highlights—12 October 2017

This week’s edition of Corporate highlights includes an article on the FRC’s reporting requirement changes, news analysis on the effects of corporate governance reforms on the pensions industry and new content in our Partnerships and Public company takeovers topic areas.

Accounts and Report

FRC highlights reporting requirement changes

The Financial Recording Council (FRC) has written a letter to audit committee chairs and finance directors to highlight changes to reporting requirements, as well as key areas where improvements can be made when preparing annual reports for the 2017/18 reporting season.

The FRC’s letter draws companies’ attention to implementing new accounting standards, non-financial reporting, viability statements, dividends, critical judgments and estimates and defined benefit pensions. For further information, see LNB News 10/10/2017 94.

Corporate Governance

Exploring the government’s consultation on corporate governance reform

In this piece of new analysis Anne-Marie Winton, partner at ARC Pensions Law, considers the key proposals affecting pensions outlined in the government’s consultation response and suggests there is some bark, but not necessarily much bite from the pension’s industry’s point of view.

For further information, see News Analysis: Exploring the government’s consultation on corporate governance reform.

Equity Capital Markets

ESMA urges firms not to delay LEI compliance procedures

The European Securities and Markets Authority (ESMA) has published a briefing on the Legal Entity Identifier (LEI) as part of its efforts to raise industry awareness and facilitate compliance with the LEI requirements under MiFID II ahead of its 3 January 2018 launch.

ESMA says it expects market participants to ensure full compliance with the LEI requirements under MiFID II. Based on its previous experience with EMIR reporting, ESMA urges reporting entities not to delay, as advance preparation will help in avoiding backlogs and ensuring that all market participants are ready for the new regime.

Listed companies are already required to have an LEI as the Disclosure Guidance and Transparency Rules sourcebook has been amended (from 1 October 2017) to require listed companies to give their LEI code to the Financial Conduct Authority when they file regulated information. For further information, see LNB News 09/10/2017 72.

Public Company Takeovers

UK public M&A Trend Report update (1 Jul-30 Sep 2017)

Lexis®PSL Corporate and Market Tracker has conducted research to examine the current trends in UK public M&A for the period 1 July 2017 to 30 September 2017. This report is an update to our previous Market Tracker Trend Report which reviewed trends in UK public M&A in the first half of 2017.

During the review period, 11 firm offers and 8 possible offers were announced for Main Market or AIM listed companies. A scheme structure was used in 8 out of 11 firm offers, and was more likely to be used in the larger deals.  Aggregate deal value during the review period was £13.5 billion, amounting to 70% of the aggregate deal value in H1 2017, and average deal value was £1.22 billion (compared with £722 million in H1 2017).

Continuing the trend from H1 2017, some of the biggest deals were from UK-incorporated companies; deal activity occurred across various industries; and cash consideration remains popular.

The analysis also considers possible upcoming reforms to the Takeover Code in light of the Takeover Panel’s recent public consultation papers.

For further information, see: UK public M&A Trend Report update (1 Jul–30 Sep 2017).

Additional Corporate updates this week

Consultation launched on operation of best practice principles for shareholder voting research and analysis

The Best Practice Principles Group for Shareholder Voting Research Providers has launched a consultation on its best practice principles for shareholder voting research and analysis. The consultation is part of a wider review designed to understand whether the principles have been effective in ensuring the integrity and efficiency of the services provided by shareholder voting analysts and advisors. The consultation is open until 15 December 2017.

The Principles were introduced in March 2014 to promote a greater understanding of the role of shareholder voting research providers and provide more transparency about their activities.

As well as considering the effective operation of the principles, the consultation also examines whether action is required to ensure they are compatible with the mandatory requirements for proxy advisors operating in the EU that are contained in the revised EU Shareholder Rights Directive, due to come into operation in 2019. The consultation also intends to look at the operation of other voluntary codes and principles to identify lessons that might enhance the effective operation and oversight of the principles.

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New and updated content

New Checklist

We have the following new checklist in our Partnerships topic area:

New Precedent

We have the following new precedent in our Public company takeovers topic area:

Dates for your diary

Date Subjects covered
13 October 2017 Deadline for responses on the FCA’s consultation and proposals to create a new category within its premium listing regime to cater for companies controlled by a shareholder that is a sovereign country. See further news, LNB News 13/07/2017 135.
20 October 2017 Deadline for comments on the exposure draft, FRED 68. The Financial Reporting Council (FRC) is proposing amendments to FRS 102, which would allow the tax effects of gift aid payments made by subsidiaries to their charitable parents to be taken into account at the reporting date, where it is probable that the payment will be made in the nine months following the reporting date. Comments are invited on the exposure draft, FRED 68, by 20 October 2017. See further news, LNB News 22/09/2017 26.
23 October 2017 Money Laundering:  The European Parliament will consider the proposed Fifth Money Laundering Directive (MLD5).The European Parliament has provisionally scheduled its plenary session commencing on this date for consideration of the proposed MLD5. See further news, LNB News 13/06/2017 83.
24 October 2017 The FRC is consulting on draft amendments to its guidance on the strategic report. The proposals seek to reflect the FRC’s desire to improve the effectiveness of section 172 of the Companies Act 2006. The FRC is requesting comments by 24 October 2017. Comments can be sent by email or by post to: Deepa Raval, Financial Reporting Council, 6th Floor 125, London Wall, London, EC2Y 5AS. See further news, LNB News 22/08/2017 83.
31 October 2017 The Takeover Panel has issued a public consultation paper, PCP 2017/2, setting out proposed amendments to the Takeover Code with regard to statements of intention by bidders and related matters. The key proposals include expanding the content requirements for offeror statements of intention with regard to the offeree’s business, employees and pension schemes and bringing forward the requirement for an offeror to make statements of intention at the time of its firm intention announcement. Comments on the consultation should reach the Panel by 31 October 2017.
See further news, LNB News 19/09/2017 128.

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