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This week’s edition of Corporate highlights includes news of draft legislation to amend UK merger thresholds for certain transactions impacting national security and a government consultation in relation to new proposals to improve the corporate governance of companies when they are in or approaching insolvency.
On 15 March 2018, the UK government published a draft statutory instrument which (subject to approval by Parliament) will amend the share of supply notification threshold for the UK merger control regime (section 23 of the Enterprise Act 2002) for certain sectors impacting national security (namely the development or production of items for military or military and civilian use, quantum technology and computing hardware), so that the threshold can be met solely by the activities of the target. The government has also announced that it intends to reduce the turnover threshold to £1m for these sectors if parliament accepts the change to the share of supply threshold. The CMA has launched a consultation on draft guidance on the proposed changes. The purpose of these changes is to enable the Secretary of State to intervene in mergers in these sectors which might give rise to national security implications.
The CMA’s consultation runs until 12 April 2018. For further information, see LNB News 16/03/2018 36.
The House of Commons Library has published a debate pack providing an overview of the proposed takeover of GKN Plc by Melrose.
For further information, see LNB News 15/03/2018 141.
The Department for Business, Energy & Industrial Strategy (BEIS) has launched a consultation in relation to new proposals to improve the corporate governance of companies when they are in or approaching insolvency.
Following on from proposals to improve the corporate governance regime in relation to executive pay, strengthening the employee and wider stakeholder voice in the boardroom and corporate governance in large privately-held businesses, the consultation focuses on further improvements to the corporate governance framework to reduce the risk of major company failures occurring through shortcomings of governance or stewardship, and to strengthen the responsibilities of directors of firms when they are in or approaching insolvency.
The proposals include, among other things, clawing back money for creditors including workers and small suppliers by reversing inappropriate asset stripping of companies on the verge of insolvency, disqualifying and/or holding directors personally liable when found to have sold a struggling company or subsidiary recklessly or knowing it would fail, giving the Insolvency Service new powers to investigate directors of dissolved companies, consideration of the legal and technical framework within which decisions are made on payment of dividends, and strengthening the role and responsibilities of shareholders in stewarding the companies in which they have investments.
The consultation closes on 11 June 2018.
For further information, see LNB News 20/03/2018 121.
The European Commission has opened up a consultation that aims to gauge the effectiveness of the EU framework on public reporting by companies. The consultation is seeking views from a wide variety of stakeholders, particularly providers and users of financial and non-financial information.
The objectives of the consultation include assessing whether the EU public reporting framework is overall still relevant for meeting the intended objectives, adds value at the European level, is effective, internally consistent, coherent with other EU policies, efficient and not unnecessarily burdensome, as well as reviewing specific aspects of the existing legislation relating to public reporting as required by EU law.
The consultation ends on 21 July 2018.
For further information, see LNB News 21/03/2018 142.
ESMA has published the 28 responses received to its consultation on draft regulatory technical standards (RTS) under the new Prospectus Regulation (Regulation (EU) 2017/1129). The Prospectus Regulation requires ESMA to submit, by 21 July 2018, draft RTS on: key financial information for the prospectus summary, data for classification of prospectuses and the practical arrangements to ensure that such data is machine readable, provisions concerning advertisements, and situations in where a significant new factor, material mistake or material inaccuracy relating to the information included in the prospectus require a supplement to the European Commission.
For further information, see LNB News 21/03/2018 151.
In its latest report on trends, risks, and vulnerabilities (TRV), the European Securities and Markets Authority (ESMA) warns that markets, infrastructures and investors in the EU remain at risk, and says it has concerns about retail investors investing in speculative and risky products, such as virtual currencies and initial coin offerings.
The report, which covers the second half of 2017, finds that overall risk levels for the EU’s securities markets remained stable but at high levels for most risk categories. However, February 2018 saw severe market corrections and the return of equity market volatility, confirming ESMA’s prevailing concerns. On the other hand, the level of credit risk eased, from very high to high, reflecting a strengthening macroeconomic environment and higher credit ratings in several EU Member States. ESMA have identified four key risks in EU securities markets: market risk, credit risk, operational risk and retail investor risks associated with investments in virtual currencies and initial coin offerings.
For further information, see LNB News 20/03/2018 119.
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