Welcome to the weekly highlights from the Lexis®PSL Corporate team for the week ending 13 April 2017, which provide news updates and a comprehensive list of dates for your diary. This week’s edition features news of: the coming into force of new rules on gender pay gap reporting, the publication of the PIRC UK Shareowner Voting Guidelines 2017; a recent poll on stakeholder engagement; updated ICAEW and ICAS guidance on realised and distributable profits; Companies House’s updated guidance on filing accounts; a proposed public beneficial ownership register for overseas entities holding UK property; the impact of the Insolvency (England and Wales) Rules 2016; and ESMA’s updated Q&As on AIFMD and UCITS. There is also analysis of the Supreme Court case, Wood v Capital Insurance Services, concerning contractual interpretation. This update is part of the Lexis®PSL Corporate team’s news offering. Some of the links require a LexisPSL subscription. If you are not a subscriber, you can take a free trial here. Headlines (News updates & analysis) Gender pay gap Gender pay gap reporting comes into force New legislation has come into force which requires private and public sector employers with 250 or more employees to publish their gender pay gap figures by April 2018. The government hopes the requirements will help ‘break the glass ceiling’ and create a more modern workforce. The regulations will cover approximately 9,000 employers and over 15 million employees, representing nearly half of the UK’s workforce. As part of the new regulations, employers will be required to publish: their median and mean gender pay gap figures, the proportion of men and women in each quartile of the pay structure, and the gender pay gaps for any bonuses paid out during the year. For details see news, LNB News 06/04/2017 126. Corporate governance PIRC UK Shareowner Voting Guidelines 2017 published Pensions and Investment Research Consultants Ltd (PIRC) have published their UK Shareowner Voting Guidelines 2017. The guidelines set out PIRC’s views on issues of corporate governance, including board composition, share capital changes, remuneration policy, financial reporting and the management of social and environmental issues. They are intended to give companies and investors a clear understanding of PIRC’s views on best practice on those issues and, in turn, how they are likely to recommend shareowners vote in relation to them. The key changes relate to chairmen and chief executives, director competency and suitability, diversity, non-audit work, response to 'significant vote', and reporting on corporate responsibility issues. For details see news, LNB News 10/04/2017 78. Poll reveals extent of stakeholder engagement ICSA: The Governance Institute and recruitment specialist, The Core Partnership, has conducted a poll on stakeholder engagement. The results indicate that nearly three-quarters of organisations actively consider the views of their wider stakeholder base. However, the results also suggest that there is room for improvement in the level and extent of stakeholder engagement. Ways in which companies currently engage with stakeholders include: employee and customer surveys, feedback, test environments, focus groups, roadshows, and regular meetings with key investors. Areas identified as offering additional opportunities for engagement included: better openness and transparency, increased use of social media, directors spending more time with the business and speaking with stakeholders, continually reviewing the stakeholder base and working out how to engage with individual stakeholder groups, allowing sufficient time to receive and consider stakeholder views before decisions need to be made, putting employees higher up the list of priorities, and making employees and advisers understand the importance of complying with the Companies Act 2006, s 172. For details see news, LNB News 11/04/2017 108. Distributable profits Updated guidance on realised and distributable profits Guidance on realised and distributable profits under the Companies Act 2006 (CA 2006) has been issued by the Institute of Chartered Accountants in England and Wales and Institute of Chartered Accountants of Scotland. The technical release is an updated version of the guidance issued in October 2010. Amendments from the previous guidance include: clarification of the definition of a distribution, consequences of accounting for off-market intragroup loans in accordance with FRS 102, and reflecting the change in the law concerning distributable profits in relation to long-term insurance business made by Companies Act 2006 (Distributions of Insurance Companies) Regulations 2016, SI 2016/1194. The guidance reflects accounting standards as at 31 December 2016. Accounts Companies House updates filing accounts guidance Companies House has updated its ‘Life of a company: annual requirements guidance’ to cover legislative changes relating to accounts filing requirements introduced by the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, SI 2015/980. The guidance has also been streamlined to remove information that is outdated or no longer relevant. The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, removed the option for small companies to file abbreviated accounts for accounting periods starting on or after 1 January 2016. Small companies which file Companies Act accounts will now have the following options for filing accounts (provided it meets the specified criteria): micro-entity accounts, abridged accounts, full accounts with Companies House and HMRC, and dormant company accounts. For details see news, LNB News 11/04/2017 86. Beneficial ownership Public beneficial ownership register proposed for overseas entities holding UK property Proposals to create the world’s first public beneficial ownership register to increase transparency of overseas investments in UK property have been set out by the Department for Business, Energy & Industrial Strategy (BEIS). The proposed register would list the beneficial owners of: overseas companies and other legal entities which control UK property, and overseas-registered firms who are involved in central government procurement exercises. The intention is that the information contained in the register will help law enforcement agencies track down and recover proceeds of crime. BEIS has published a call to evidence, asking overseas investors, property and transparency experts for their opinions on how this register could be delivered and its impact. The deadline for responses is 15 May 2017. For details see news, LNB News 06/04/2017 54. Insolvency Modernisation of insolvency rules The Insolvency (England and Wales) Rules 2016, SI 2016/1024, which guide insolvency practice have come into force, replacing the Insolvency Rules 1986 and their 28 subsequent amendments. The updated rules have been recast to reflect modern business practice and to make the insolvency process more efficient, and apply in England and Wales. Changes include: enabling electronic communications with creditors, removing the automatic requirement to hold physical creditors meetings, and enabling creditors to opt out further correspondence and for small debts to be paid by the office holder without requiring a formal claim from creditors. Statutory forms relating to insolvency procedures have now been withdrawn. The Insolvency Service has produced a limited number of templates for matters that fall under its responsibility. Companies House and HM Courts & Tribunals Service have also produced a number of templates for insolvency matters which fall under their responsibility. For details see news, LNB News 06/04/2017 123. Equity capital markets ESMA updates AIFMD and UCITS Q&As The European Securities and Markets Authority (ESMA) has updated its Q&As on the application of the Alternative Investment Fund Managers Directive (AIFMD) and the application of the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS). For details see news, LNB News 01/01/0001 1946. Clause bank for corporate lawyers Contractual interpretation Reconciling differences in the interpretation of contracts (Wood v Capital Insurance Services) In this analysis, Edward Cumming, barrister at XXIV Old Buildings, examines the Supreme Court’s reconciliation in Wood v Capita of perceived differences in its earlier approaches to contractual interpretation. He also explains that lawyers should take note of the difficulty of applying what the Supreme Court views to be settled principles to individual contracts. In this case, the Supreme Court held that the appellant, which had purchased a company from the respondent, could not recover compensation it subsequently had to pay to the company’s customers who had been affected by mis-selling before it took over the company. The court found that, properly construed, the indemnity clause in the purchase agreement did not apply to the compensation, save to the extent that it arose out of claims or complaints. The decision is significant for practitioners for the guidance that it gives as to the proper approach to the interpretation of contracts. For details see News Analysis: Reconciling differences in the interpretation of contracts (Wood v Capita Insurance Services). Dates for your diary Date Subject 17 April 2017 Deadline for comments on the government's green paper on the UK's new industrial strategy for the UK post-Brexit. Ten 'strategic pillars' underpin the proposals, including the need to support businesses as they start and grow and deliver affordable energy and clean growth. For further information, see LNB News 23/01/2017 176. 21 April 2017 Deadline to register interest in Financial Reporting Lab project on effective risk and viability reporting. The Financial Reporting Council have requested listed companies, investors and analysts indicate their interest. For further information, see LNB News 17/03/2017 102. 26 April 2017 Deadline for comments on the consultation on draft powers for the new Office for Professional Body Anti-Money Laundering Supervision. HM Treasury is seeking further views on the mandate and powers for the new office, as well as how the regime could evolve over time, especially in the legal and accountancy sectors, and how certain shortcomings could be addressed. For further information, see LNB News 16/03/2017 107. Further dates To look further ahead, see: Corporate horizon scanning—2017 and beyond.