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This week’s edition of Corporate highlights includes news of a Code Committee consultation on proposed changes to Rule 29 of the Takeover Code and a Department for Business, Energy and Industrial Strategy consultation on proposed ethnicity pay reporting, plus our research on which corporate governance code AIM companies are choosing to follow.
Public company takeovers
Accounts and reports; Corporate governance
Equity capital markets (Main Market)
Additional Corporate updates this week
Additional news—daily and weekly news alerts
The Code Committee of the Takeover Panel (Code Committee) has published a consultation on proposed amendments to Rule 29 of the Takeover Code (Code) which relates to asset valuations (PCP 2018/1). The deadline for sending comments is 7 December 2018.
Rule 29 requires that when a valuation of assets is given by a party to an offer ‘in connection with an offer’ an independent valuer’s opinion must be provided in support of that valuation. The proposals follow on from the Panel Executive’s review of the purpose and operation of Rule 29. Although the Code Committee agrees with the way that Rule 29 is applied in practice by the Executive, certain aspects of the Executive’s practice are not currently reflected in Rule 29.
The Code Committee proposes deleting the current Rule and replacing it with one which has been drafted broadly so that it is clear that in addition to applying to property valuations it also applies to valuations of other classes of assets, in particular to mineral, oil and gas reserves and unquoted investments.
The proposals include:
For further information, see: LNB News 17/10/2018 81.
Corporate analysis: From 28 September AIM companies are required to report against a recognised corporate governance code. In this research, we look at which governance codes companies are choosing to adopt and consider the factors that are influencing this choice. The analysis includes market commentary from Martin Webster and Gareth Jones, partners at Pinsent Masons and Edward Craft, partner at Wedlake Bell.
Our research found a clear majority of companies adopting the QCA Code in preference to the UKCG Code, particularly outside the AIM 100.
For the top 50 AIM companies (ie those with market capitalisations of approximately £495m or higher):
For the top 50–100 AIM companies (ie those with market capitalisations between approximately £260m–£495m):
For all AIM companies (which catches companies with market capitalisations ranging from £150,000 to £4.8bn):
For further information, see News Analysis: QCA Code emerges as AIM companies’ first choice under new reporting requirements.
The Department for Business, Energy and Industrial Strategy is seeking views on ethnicity pay reporting by employers, setting out options and asking questions on what ethnicity pay information should be reported by employers to allow for meaningful action, who should be expected to report and other next steps.
Consultation questions include:
For further information, see the consultation paper.
The deadline for submissions is 11 January 2019.
For further information, see: LNB News 11/10/2018 75.
The Department for Exiting the European Union has published the fourth tranche of technical notices designed to inform individuals, businesses and public bodies in the UK of the implications of exiting the EU in March 2019 without a deal in place. The 29 additional documents published on 12 October 2018 cover a range of subjects including EU funding for overseas territories, transport, import/export regulation, business regulation, product labelling and safety, consumer rights, energy regulation and travel.
The notices are published in the government collection: How to prepare if the UK leaves the EU with no deal. An overarching guidance document accompanying the collection seeks to put the notices into context, see: UK government’s preparations for a no deal scenario.
The latest notices published include the following notices of particular relevance to corporate lawyers:
Structuring your business if there’s no Brexit deal―setting out the implications and actions for businesses and legal entities which operate across the UK-EU border, or have taken the form of a European specific entity, including plans for ensuring a functioning regulatory framework for companies and that mirrors, as far as possible, the same laws and rules that are currently in place (based on retaining relevant EU rules and regulations governing companies and other legal entities operations within the EU Single Market).
Accounting and audit if there’s no Brexit deal―setting out the implications and high level guidance for accounting, corporate reporting and audit, again including plans for ensuring a functioning regulatory framework for companies and that mirrors, as far as possible, the same laws and rules that are currently in place.
The UK government warns that its technical notices are meant for guidance only and individuals, businesses and organisations should consider whether they need separate professional advice before making specific preparations.
For further information, see: LNB News 12/10/2018 107.
SI 2018/Draft: These draft Regulations are laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. They amend UK primary legislation and EU retained legislation in order to address deficiencies in retained EU law in relation to short selling and certain aspects of credit default swaps arising from the withdrawal of the UK from the EU. This ensures that the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day.
For further information, see: LNB News 11/10/2018 102.
The European Securities and Markets Authority (ESMA) has published its annual report on prospectus activity in the European Economic Area (EEA) for 2017 (encompassing both debt and equity offerings). The report shows that in 2017 the number of prospectus approvals across the EEA increased by around 1.9% compared to 2016 (from 3,499 to 3,567), putting an end to a decade-long decline observed since the start of the financial crisis. In line with 2016, in 2017, around 40% of the prospectuses approved were in the form of base prospectuses and 91% were drawn up as single documents as opposed to tripartite prospectuses. Almost 74% of prospectuses approved in 2017 related to non-equity securities with the most frequent security type being debt securities with a denomination of at least €100,000.
For further information, see LNB News 15/10/2018 63.
Companies House has published a new form to report suspicious company activity, alongside updated guidance which now refers to this new form. The new form can be used to report unauthorised director appointments, addresses or other suspicious activity.
The updated guidance can be found here.
For further information, see: LNB News 12/10/2018 14.
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.
To track key legislative and regulatory developments, see our Trackers:
New Q&As added this week:
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—12 October 2018
To read about the latest issues and developments which we are following in Market Tracker, see our latest blog post: Market Tracker weekly bulletin—19 October 2018.
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