Corporate weekly highlights—13 September 2018

This week’s edition of Corporate highlights includes news of the draft Business Contract Terms (Assignment of Receivables) Regulations 2018, which will protect small businesses against unfair contracts that stop them raising money from unpaid invoices, in addition to further News Analysis on the government’s response to the BEIS consultation on insolvency and corporate governance.

In this issue:

Accounts and reports

New measures to boost funding for small businesses proposed

The Department for Business, Energy and Industrial Strategy (BEIS) has announced new measures to help small businesses access invoice finance, which are expected to provide a £1bn long-term boost to the economy. The draft Business Contract Terms (Assignment of Receivables) Regulations 2018 will protect small businesses against unfair contracts that stop them raising money from unpaid invoices. Small Business Minister, Kelly Tolhurst, said the plans will ensure small businesses have a ‘level playing field from which to set fair contracts with the businesses they supply’.

The proposed legal changes follow a number of larger businesses preventing their suppliers from assigning receivables—the right to receive proceeds from unpaid invoices—to a finance provider in exchange for an advance of funds, typically 80% of the invoice value. The initial advance is received within a few days and the balancing 20% (less fees and charges) is paid to the supplier when the customer settles the invoice.

Currently, a small supplier’s contract with a large company may prevent it from securing invoice finance from providers such as banks. The proposed statutory instrument would mean that contractual restrictions of this nature entered into on or after 31 December 2018 would, with certain exceptions, have no effect and could be disregarded. This will help prevent large businesses from abusing their strong negotiating position with suppliers.

The new statutory instrument would apply to SME suppliers and contain exceptions for certain types of contract, such as contracts for financial services, contracts with consumers and contracts connected with the sale of a business.

For further information, see LNB News 10/09/2018 13.

Insolvency for corporate lawyers; Corporate governance; Share capital

Exploring the government’s response to the insolvency and corporate governance consultation

Restructuring & Insolvency analysis: In the wake of the financial crisis and a string of high-profile administrations hitting household names of the corporate world, concern has begun to gather around whether or not UK insolvency procedures remain fit for purpose. In March 2018, BEIS launched a consultation on insolvency and corporate governance, which closed on 11 June 2018. On 28 August 2018, the government published its response to the consultation. Among other things, the government has announced measures to safeguard workers against directors who dissolve companies to avoid paying wages or pensions. The measures range from fines to disqualification from running a business.

Frank Wessely, partner at Quantuma, looks at the background to the consultation and the government’s response from the perspective of an insolvency practitioner.

For further information, see News Analyses: Exploring the government’s response to the insolvency and corporate governance consultationLNB News 20/03/2018 121 and LNB News 28/08/2018 74.

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 weekly 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.

Dates for your diary

Date Development
17 September 2018 Beneficial ownership: Deadline for responses to the BEIS consultation on the draft Registration of Overseas Entities Bill.
See further LNB News 24/07/2018 77.
21 September 2018 Audit: Closing date of the FRC consultation on proposed revisions to the International Standard on Auditing (UK), which deals with an auditor’s responsibilities relating to accounting estimates and related disclosures when carrying out an audit of financial statements.
See further LNB News 23/07/2018 28.
24 September 2018 The European Commission has implemented Regulation (EU) 2018/1212 to facilitate the exercise of shareholder rights under the Shareholder Rights Directive (2007/36/EC) (SRD). The Regulation enters into force on 24 September 2018 and will apply from 3 September 2020.
See further LNB News 05/09/2018 20.
28 September 2018 New corporate governance requirements for AIM companies come into force under Rule 26 of the AIM Rules for Companies. AIM companies will be required to disclose on their website the recognised corporate governance code that the company has decided to apply, how it applies that code and, where it departs from its chosen code, an explanation of the reasons for doing so. This information should be reviewed annually and the company’s website should include the date on which this information was last reviewed.
See further LNB News 08/03/2018 129 and LNB News 09/03/2018 85.
5 October 2018 Deadline for feedback on the consultations launched by the European Securities and Markets Authority (ESMA) under the new Prospectus Regulation. ESMA is seeking views on (i) its technical advice on exempt documents produced for the purpose of offers/admission of securities connected to a takeover, merger or division and (ii) its proposed guidelines on risk factors.
See further LNB News 13/70/2018 91.

Trackers

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

  1. Brexit legislation tracker
  2. Brexit timeline
  3. MiFID II—timeline
  4. Market Abuse—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
  10. Small Business, Enterprise and Employment Act 2015 tracker

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—7 September 2018.

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