Corporate weekly highlights—24 January 2019

Corporate weekly highlights—24 January 2019

This week’s edition of Corporate highlights includes the latest updates on Brexit and news of the latest FT-ICSA Boardroom Bellwether survey of FTSE 350 companies, a FCA consultation on cryptoassets guidance and a report by the Financial Reporting Lab on artificial intelligence and corporate reporting.

In this issue:

Brexit

Investment Exchanges, Clearing Houses and Central Securities Depositories (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under the European Communities Act 1972, the Financial Services and Markets Act 2000 and the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. They amend UK primary and subordinate legislation in order to ensure that the regulatory regime for recognised investment exchanges, market operators (ie individuals who manage or operate the business of a regulated market, and who may be the regulated market itself), clearing houses (including central counterparties) and central securities depositories continues to be clearly defined and operable in UK domestic law after exit day in a no-deal Brexit scenario. The Regulations come into force partly on the day after the day on which they are made and fully on exit day.

For further information, see: LNB News 18/01/2019 43.

Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under the EU(W)A 2018 in preparation for Brexit. They amend and revoke retained direct EU legislation to address deficiencies in relation to the EU equivalence framework for financial services and retained EU law arising from Brexit. The Regulations make provision for elements of the UK equivalence framework in a no deal Brexit scenario. They come into force partly on the day after the day on which these draft Regulations will be made and fully on exit day.

For further information, see: LNB News 18/01/2019 48.

Brexit Bulletin—Prime Minister delivers a statement on Brexit following Commons defeat

On 21 January 2019, the Prime Minister delivered a statement in the House of Commons on the approach that is now to be taken to Brexit. This follows the previous week’s vote in the House of Commons that rejected the draft withdrawal agreement and political declaration for the future UK-EU relationship that the government has negotiated with the EU.

The Prime Minister ruled out revoking or extending the notice given by the UK to the EU under Article 50 of the Treaty on the European Union or holding a second referendum on Brexit. She made it clear that the government’s position is that approving the deal that is on the table with the EU is the only way of avoiding a no deal Brexit. However, the Prime Minister stated that the government’s approach to that deal had changed, promising to engage with Parliament and other stakeholders in a constructive spirit going forward to try and find the broadest possible consensus. Nevertheless, on the basis of the government’s outline position on the six key issues identified by recent cross-party talks, it appears that room for manoeuvre on the substance of the deal, or alternative routes forward, is very limited.

The Prime Minister has laid her statement in the House of Commons as a formal written ministerial statement and a neutral motion acknowledging it will be tabled in accordance with the EU(W)A 2018, s 13. The motion, which will be amendable, will be debated and voted on 29 January 2019. The Prime Minister will continue cross-party talks ahead of that vote and will deliver a further update on progress towards a Brexit deal during the debate on 29 January 2019.

For further information, see: LNB News 21/01/2019 93.

Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under the EU(W)A 2018 in preparation for Brexit. They propose to amend and revoke provisions of UK primary legislation and retained direct EU legislation relating to the official listing of securities and prospectus and transparency requirements in order to address deficiencies which arise from Brexit. The Regulations will therefore act to ensure that the UK’s listing regime and transparency framework continue to operate as intended in the UK once the UK has left the EU. It comes into force on exit day. The draft Regulations are identical to the draft. Official Listing of Securities, Prospectus and Transparency (Amendment etc) (EU Exit) Regulations published in November 2018 with the exception of minor non-material amendments.

For further information, see LNB News 22/11/2018 113.

Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under the EU(W)A 2018 in preparation for Brexit. They propose to amend UK primary and subordinate legislation in relation to financial services passporting rights between the UK and Gibraltar in order to address deficiencies arising from the withdrawal of the UK from the EU. The Regulations ensure authorised financial services firms in Gibraltar will continue to be able to provide services and establish branches in the UK market after exit day on current terms. The Regulations come into force partly on the day after the day on which they are made and fully on exit day.

For further information, see: LNB News 23/01/2019 43.

Corporate governance

ICSA survey of FTSE 350 published

The latest FT-ICSA Boardroom Bellwether survey of FTSE 350 companies has been published. It seeks to gauge the view of boardrooms on the UK and global business environment and key corporate governance issues, such as board diversity, gender pay, remuneration structures, risk management, regulation and compliance. In particular, the survey found that Brexit is a key concern for FTSE 350 companies, with 73% of companies predicting damage to their company as a result of Brexit and only 2% predicting an improvement in UK economic conditions post-Brexit.

For further information, see: LNB News 21/01/2019 97.

Statement of disclosure of ESG matters by issuers

The International Organisation of Securities Commissions (IOSCO) has published a guidance noteemphasising the importance of issuers considering environmental, social and governance (ESG) matters when disclosing information material to investors’ decisions.

For further information, see: LNB News 18/01/2019 100.

UK stewardship code set for major rewrite, says FRC

Law 360, London: The UK Stewardship Code, which sets out how fund managers should hold the companies they invest to account, is to undergo a major overhaul, the Financial Reporting Council (FRC) has told lawmakers.

For further information, see: UK stewardship code set for major rewrite, regulator says.

Accounts and reports

Financial Reporting Lab publishes report on artificial intelligence and corporate reporting

The Financial Reporting Lab (the Lab) has published a report: Artificial Intelligence and corporate reporting—How does it measure up? The report explains what artificial intelligence (AI) is and explores some of the possible, and current, uses for AI. In particular, it explores how AI might be used for external and internal corporate reporting and concludes that it is only a matter of time before AI becomes an important reporting tool.

For further information, see: LNB News 21/01/2019 94.

Financial services regulation for corporate lawyers

FCA consults on cryptoassets guidance

The Financial Conduct Authority (FCA) has published a consultation, (CP19/3): Guidance on Cryptoassets, on draft guidance, which, once finalised, will set out the cryptoasset activities that the FCA regulates. The guidance will help firms understand whether their cryptoasset activities fall under FCA regulation and, therefore, whether they need to be FCA authorised. The guidance will help firms to ensure that they are complying with FCA rules in this area and have appropriate consumer safeguards in place.

For further information, see: LNB News 23/01/2019 130.

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

DateDevelopment
30 January 2019The Financial Reporting Council (FRC) is expected to publish a consultation paper on the Stewardship Code, with a final version of the revised Stewardship Code expected to be published in the summer of 2019.
See FRC: UK Stewardship Code.
31 January 2019Deadline for feedback on the discussion paper published by the Financial Conduct Authority (FCA) on the impact of climate change and green finance on financial services (DP18/8).
The FCA discussion paper seeks input on four areas in which it considers a greater regulatory focus is warranted: climate change and pensions; enabling competition and market growth for green finance; ensuring that disclosures in capital markets give adequate information to investors on the financial impacts of climate change; and the scope for the introduction of a new requirement for financial services firms to report publicly on how they manage climate risks.
See: LNB News 15/10/2018 25.
1 February 2019The benchmark policies issued by Institutional Shareholder Services (ISS) will apply to shareholder meetings on or after this date.
See: LNB News 20/11/2018 21 and LNB News 07/12/2018 106.
15 February 2019Deadline for responses to the FRC’s post-implementation review of its 2016 changes to ethical and auditing standards.
The FRC’s review looks at what the impact of its 2016 changes to ethical and auditing standards has been on auditor independence, prevention of conflicts and on audit quality.
See: LNB News 20/11/2018 76.

Trackers

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

Brexit legislation tracker

Brexit timeline

Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) timeline

Market Abuse Regulation timeline

Prospectus Regulation tracker

Transparency Directive tracker

Listing Rules tracker

Disclosure Guidance and Transparency Rules Sourcebook tracker

Prospectus Rules 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—18 January 2019

To read about the latest issues and developments which we are following in Market Tracker, see our latest blog post: Market Tracker weekly bulletin—24 January 2019

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