Corporate weekly highlights—25 May 2017

Welcome to the weekly highlights from the Lexis®PSL Corporate team for the week ending 25 May 2017, which provide news updates and a comprehensive list of dates for your diary. This week’s edition features: the publication of the Shareholders’ Rights Directive in the Official Journal; the Law Society and CLLS’s joint responses to the FCA’s discussion and consultation papers on the effectiveness of UK primary markets; ESMA’s guidance on the concept of ‘traded on a trading venue’ under MiFID II; ESMA’s follow-up report on the actions undertaken by ten National Competent Authorities in addressing deficiencies identified in relation to MiFID; the Conservatives’ pledge to reform rules on takeovers and mergers if elected; the Law Society’s support for transparency in owners of overseas companies; links to webcasts on the Insolvency (England and Wales) Rules 2016; analysis setting out how to prepare for GDPR; and analysis on the Supreme Court’s Waterfall decision (The Joint Administrators of LB Holdings Intermediate 2 Ltd v The Joint Administrators of Lehman Brothers International).
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Headlines (News updates & analysis)

Corporate governance

Directive amending Shareholders' Rights Directive published in the Official Journal

Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC (Shareholders' Rights Directive) as regards the encouragement of long-term shareholder engagement has been published in the Official Journal.

Directive (EU) 2017/828 amends Articles 1 and 2 of Directive 2007/36/EC and inserts chapters on: identification of shareholders, transmission of information and facilitation of exercise of shareholder rights; transparency of institutional investors, asset managers and proxy advisors; and implementing acts and penalties.

The Shareholders' Rights Directive will enter into force on the twentieth day following that of its publication in the Official Journal (9 June 2017). Member States will have up to two years to incorporate the new provisions into domestic law.

For details see news, LNB News 20/05/2017 1.

Equity capital markets

Law Society responds on the review on the effectiveness of UK primary markets

The Law Society and City of London Law Society (CLLS) released a joint response to the discussion paper issued by the Financial Conduct Authority (FCA) in February 2017 based on feedback it received from stakeholders as part of its review of the effectiveness of primary markets in the UK.

The Law Society and CLLS recommended that the FCA re-examine the listing rules which require at least 25 per cent of a company’s shares to be in public hands in order for the shares to be listed on the UK premium listing segment of the Official List and that instead of creating a distinct international segment, the FCA should revisit the premium listing requirements to see whether they are too onerous for overseas issuers. The bodies also agreed that the premium listing obligations for open-ended investment companies should be removed, as well as stating that premium listing rules should not apply to open-ended investment companies as the rules are not specifically designed for these companies.

For details see news, LNB News 23/05/2017 107.

CLLS and the Law Society comment on FCA listing regime consultation

The Law Society and the CLLS have published a joint response to the Financial Conduct Authority’s consultation CP 17/4, 'Review of the effectiveness of primary markets: enhancements to the listing regime'. The joint response focuses on two areas: whether there are any other possible enhancements to the calculation of the profits test that could be made, and on the question of retaining the rebuttable presumption of suspension for shell companies upon announcement or leak of a reverse takeover.

For details see news, LNB News 17/05/2017 24.

ESMA guidance on ‘traded on a trading venue’ under MiFID II

The European Securities and Markets Authority (ESMA) has issued an opinion regarding the implementation of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). The opinion clarifies the concept of ‘traded on a trading venue’ (TOTV), which is relevant for a number of provisions under MiFID II and MiFIR.

ESMA specifies that only OTC-derivatives sharing the same reference data details as derivatives for which trading venues submitted reference data should be subject to the MiFIR transparency and transaction reporting requirements.

ESMA says its opinion should help build a common supervisory culture and consistent supervisory practices among national supervisors, as well as ensuring uniform procedures and consistent approaches throughout the EU.

For details see news, LNB News 22/05/2017 43.

ESMA finds improvements by NCAs on MiFID fair, clear and not misleading information rules

ESMA has published a follow-up report on the actions undertaken by ten National Competent Authorities (NCAs) in addressing deficiencies identified in the 2014 Peer Review on the Markets in Financial Instruments Directive (MiFID) conduct of business rules relating to fair, clear and not misleading information (2014 Review). ESMA has stated that it welcomes the efforts made by most of the ten NCAs.

For the remaining four NCAs, one deficiency (Denmark, Estonia, Greece) or more (Cyprus) remain, although significant efforts have been made by Cyprus and Greece. ESMA is confident that these NCAs will address the remaining deficiencies as soon as possible and at the very latest with the new MiFID II/MiFIR regime coming into force on 3 January 2018.

For details see news, LNB News 18/05/2017 112.

Public company takeovers

Conservatives pledge to reform rules on takeovers and mergers if elected

On 18 May 2017, the Conservative and Unionist Party stated in their 2017 manifesto that, if elected, they will update the rules governing mergers and takeovers. The changes will require bidders to be clear about their intentions from the outset of the bid process; provide that all promises and undertakings made in the course of takeover bids can be legally enforced afterwards; and provide that the government can require a bid to be paused to allow greater scrutiny. The manifesto also sets out assurances that foreign ownership of companies controlling important infrastructure does not undermine British security or essential services.

For details see news, LNB News 19/05/2017 73.

Beneficial ownership

Law Society supports transparency in owners of overseas companies

The Law Society has issued a response to the Department for Business, Energy, and Industrial Strategy’s (BEIS) call for evidence seeking views on the government’s proposals for a register showing who owns and controls overseas legal entities that also own UK property or participate in UK government procurement.

The call for evidence by BEIS in April 2017 was in response to the government's concerns about possible illegal activity taking place through overseas companies investing in the UK's property sector.

The proposals are likely to affect both residential and commercial properties, while overseas entities will need to comply with the new Companies House registration requirements to buy or sell property in the UK.

For details see news, LNB News 23/05/2017 103.

Relevant updates from other practice areas

Restructuring & Insolvency

The Insolvency (England and Wales) Rules 2016—Webcasts

Click into four practical and short webcasts on some of the key issues arising from the Insolvency Rules 2016 which came into effect on 6 April 2017.

For details see News Analysis: The Insolvency (England and Wales) Rules 2016—Webcasts.

Information law

Preparing for GDPR—data protection impact assessments

What are Data Protection Impact Assessments (DPIAs) and who will be obliged to carry them out? In this analysis, Debbie Heywood, a senior professional support lawyer in Taylor Wessing’s IP & IT group, advises organisations processing data on how to prepare ahead of their implementation next May.

For details see News Analysis: Preparing for GDPR—data protection impact assessments.

Restructuring & Insolvency

Examining the Supreme Court’s Waterfall decision (The Joint Administrators of LB Holdings Intermediate 2 Ltd v The Joint Administrators of Lehman Brothers International)

In this analysis, corporate insolvency specialist Tom Smith QC of South Square, looks at the Supreme Court’s decision in the Lehman Brothers insolvency case and explores the court’s approach to the correct ranking of subordinated debt in the distribution priorities of an administration.

For details see News Analysis: Examining the Supreme Court’s Waterfall decision (The Joint Administrators of LB Holdings Intermediate 2 Ltd v The Joint Administrators of Lehman Brothers International).

Dates for your diary

Date Subjects covered
26 May 2017 Deadline for responses to the Financial Reporting Council's (FRC) consultation on guidance on obtaining bank reports for audit purposes. The FRC proposes to update guidance on obtaining bank reports for audit purposes. This will involve the withdrawal of Practice Note 16, and its replacement with additional application material in ISA (UK) 330—The Auditor’s Responses to Assessed Risks and ISA (UK) 505—External Confirmations. For further information, see LNB News 26/04/2017 99.
31 May 2017 Application date of new procedure for registering companies under the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015). SBEEA 2015 requires the Secretary of State to establish a procedure to help streamline the process for registering a company so that information only has to be submitted once, rather than to multiple departments or agencies (eg Companies House and HM Revenue and Customs). For further information, see Practice Note:The Small Business, Enterprise and Employment Act—company law reforms
31 May 2017 Deadline for responding the Office for Tax Simplification's (OTS) call for evidence on stamp duty reform. Following the initial phase of work, the OTS has now published a progress report along with a list of questions and a call for evidence. The latest progress report clarifies that the reforms will not cover stamp duty reserve tax or stamp duty land tax more widely. They have requested for input from businesses, advisers and anyone dealing with stamp duty and would like to hear of experiences of particular issues raised in the report, such as administrative costs. The OTS would also welcome ideas for reforming the current system.
1 June 2017 Deadline for responses to the FCA's CP17/5: Reforming the availability of information in the UK equity IPO process. Feedback will be considered after the consultation period has closed. Depending on the nature of feedback, the FCA expects to publish a Policy Statement outlining any Handbook changes later in 2017. For further information, see LNB News 01/03/2017 123.
Further dates To look further ahead, see: Corporate horizon scanning—2017 and beyond.

Relevant Articles
Area of Interest