Corporate weekly highlights—28 March 2019

This week’s edition of Corporate highlights includes the latest updates on Brexit, ESMA’s first Q&As on the Prospectus Regulation and a BEIS report on the gap between chief executive pay and the rest of the workforce.

In this issue:

Brexit

Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019

SI 2019/632: This enactment was made in exercise of legislative powers under the European Communities Act 1972 (ECA 1972) and the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. This enactment amends and revokes provisions of UK primary and subordinate legislation in relation to financial services and markets in order to address deficiencies arising from the withdrawal of the UK from the EU, ensuring that the UK’s financial services legislative framework continues to operate effectively where the UK leaves the EU. It is intended to apply in the event that no deal is reached on the UK’s withdrawal from the EU and comes into force partly on 23 March 2019 and fully on exit day.

For further information, see: LNB News 01/02/2019 46.

European Union (Withdrawal) Act 2018 (Consequential Modifications and Repeals and Revocations) (EU Exit) Regulations 2019

SI 2019/628: This enactment was made in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This enactment amends and revokes UK primary and subordinate legislation in relation to EU(W)A 2018 in order to ensure that the UK statute book accommodates retained EU law, a new body of domestic law introduced by EU(W)A 2018, coherently and effectively after the UK’s withdrawal from the EU. It comes into force partly on 22 March 2019 and fully on exit day.

For further information, see: LNB News 31/01/2019 76.

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

SI 2019/662: This enactment is made in exercise of legislative powers under ECA 1972, the Financial Services and Markets Act 2000, and EU(W)A 2018 in preparation for Brexit. This enactment amends 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 scenario. It comes into force partly on 26 March 2019 and fully on exit day.

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

Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019

SI 2019/657: This enactment is made in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This enactment addresses deficiencies in retained EU law which arise from the UK leaving the EU, specifically in relation to EU Regulation (EU) 2016/11 and related EU tertiary legislation—namely, Commission Implementing Regulation (EU) 2016/1368 and Commission Delegated Regulation (EU) 2018/64, Commission Delegated Regulation (EU) 2018/65, Commission Delegated Regulation (EU) 2018/66 and Commission Delegated Regulation (EU) 2018/67. It comes into force on exit day.

For further information, see: LNB News 25/01/2019 25.

Equity capital markets

ESMA publishes the first Q&A relating to the Prospectus Regulation

The European Securities and Markets Authority (ESMA) has published a new document containing nine Q&As relating to Regulation (EU) 2017/1129, Prospectus Regulation. ESMA is publishing these Q&As in a new document in order to separate them from the Q&As published in relation to the Prospectus Directive. The purpose of these Q&As is to promote common supervisory approaches and practices in the application of prospectus supervision. These Q&As are also intended to facilitate market parties by providing guidance as to how national competent authorities will interpret the Prospectus Regulation.

For further information, see: LNB News 27/03/2019 97.

Public company takeovers

Takeover Panel publishes instrument amending reference to the UKLA

The Takeover Panel published Instrument 2019/2 (the Instrument), which makes two amendments to the Takeover Code. First, following the announcement by the Financial Conduct Authority (FCA) that it will no longer be using the name ‘UK Listing Authority’ or ‘UKLA’, the Instrument amends references to the ‘UKLA’ and the ‘UKLA Rules’ so as to refer to, respectively, the ‘FCA’ and the ‘FCA Handbook’. Second, the Instrument makes minor amendments to Note 2 on Rule 9.1 (Collective shareholder action). The amendments will take effect on 1 April 2019.

For further information, see: LNB News 26/03/2019 21.

Corporate governance

Calls for bosses pay packages to be brought in line with employee pay ‘welcomed’

The Business, Energy and Industrial Strategy Committee (BEIS) has published a report on the differences between top bosses’ pay and the rest of their workforce. BEIS believe that companies need to do more to link bosses’ pay with their employees' pay and that the large difference in pay is ‘baked’ into the pay system. According to the report, a reliance on incentive-based executive pay, that is often supported by remuneration committees that design pay packages, is the root cause of the large executive pay packages. Over the last ten years, chief executives’ earnings in the FTSE 100 have increased four times as much as national average earnings. Alexandra Carn, partner at Edwin Coe LLP, says that ‘pay structures, particularly at the top end, are notoriously opaque and any measures that provide transparency on pay are bound to be welcomed by employees.’

For further information, see: LNB News 26/03/2019 106.

Audit

Financial Reporting Council sets out priorities for 2019/20

The Financial Reporting Council (FRC) has issued a consultation on its draft Plan and Budget for 2019/20, including details of the FRC’s strategic priorities and projects for 2019/20.

For further information, see: LNB News 27/03/2019 83.

Additional Corporate updates this week

Court finds unfairly prejudicial conduct of affairs of family business (Yusuf v Yusuf)

Private Client analysis: Timothy Evans, barrister at Maitland Chambers, examines the High Court’s decision in Yusuf v Yusuf establishing that the affairs of a family-owned company had been carried out in a manner prejudicial to the interests of the petitioners.

For further information, see News Analysis: Court finds unfairly prejudicial conduct of affairs of family business (Yusuf v Yusuf and others).

Yusuf v Yusuf [2019] EWHC 90 (Ch)[2019] All ER (D) 149 (Jan).

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 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.

New and updated content

New Practice Note—Brexit

We have published the following Practice Note concerning the impact of Brexit: Brexit—the UK corporate governance regime.

Dates for your diary

DateDevelopment
28 March 2019Deadline for comments on CP19/6: Changes to align the FCA Handbook with the EU Prospectus Regulation
On 29 January 2019, the FCA published CP19/6. The majority of the changes proposed involve reproducing text from the Prospectus Regulation directly into the new sourcebook. The FCA assumes that an implementation period will be agreed on the UK leaving the EU and that EU law will continue to apply in the UK until the end of the implementation period.
LNB News 29/01/2019 71
29 March 2019At 11 pm on 29 March 2019 UK time (which will be 00.00 am CET on 30 March 2019), the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) shall cease to apply to the UK, along with all other EU primary and secondary law and the UK's withdrawal from the EU (Brexit) will be achieved.
On 29 March 2017, the UK Prime Minister gave formal notification of the UK's intention to withdraw from the EU, commencing the withdrawal process under Article 50 TEU. Article 50 TEU prescribes a two-year period for the UK and the EU to negotiate the terms of Brexit, which may be extended by agreement.
Brexit: UK Article 50 TEU notification starts the clock—what happens now?
29 March 2019Deadline for comments on the FRC’s proposed revision to the UK Stewardship Code
In January 2019, the FRC announced intention to overhaul the UK Stewardship Code (the Code). On 30 January 2019, the FRC issued a consultation paper setting out its proposed new Code along with a summary of the changes from the existing Code.
LNB News 30/01/2019 105
1 April 2019The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, SI 2018/1155, will come into force and apply to financial years starting on or after this date.
The Regulations make changes to reporting requirements for quoted companies. They also introduce new reporting requirements for large unquoted companies and large limited liability partnerships to annually report on emissions, energy consumption and energy efficiency action in the UK.
LNB News 19/07/2018 19
1 April 2019The CRC Energy Efficiency Scheme ends (although ongoing compliance obligations in respect of the phase just ended and the phase prior to that survive after this date) and corresponding increases the climate change levy rates are introduced from this date.
The CRC Energy Efficiency Scheme (Revocation and Savings) Order 2018, SI 2018/841, came into force on 1 October 2018. It makes a number of changes to the CRC Energy Efficiency Scheme Orders of both 2010 and 2013. It brings an end to the CRC Energy Efficiency Scheme with effect from the end of the current phase (which ends on 31 March 2019), while ensuring that ongoing compliance obligations in respect of that phase (and the prior phase) survive after that date.  The CRC Energy Efficiency Scheme is the mandatory UK-wide emissions trading scheme under which large public and private-sector organisations surrender a number of allowances at the end of each scheme year equal to their total CO2 emissions. The government announced at the 2016 Budget that it would abolish the CRC Energy Efficiency Scheme in 2019.
LNB News 12/10/2017 83LNB News 19/07/2018 18LNB News 19/07/2018 114
1 April 2019The Takeover Panel published on 25 March 2019 Instrument 2019/2, which will take effect on this date.
The Instrument makes two amendments to the Takeover Code. First, following the announcement by the FCA that it will no longer be using the name ‘UK Listing Authority’ or ‘UKLA’, the Instrument amends references to the ‘UKLA’ and the ‘UKLA Rules’ so as to refer to, respectively, the ‘FCA’ and the ‘FCA Handbook’. Second, the Instrument makes minor amendments to Note 2 on Rule 9.1 (Collective shareholder action).
See LNB News 26/03/2019 21

Trackers

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

  1. Brexit legislation tracker

  2. Brexit timeline

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

  4. Market Abuse Regulation 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

Latest Q&As

New Q&As added this week:

  1. What is an affiliate or an affiliated person?

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—22 March2019.

To read about the latest issues and developments which we are following in Market Tracker, see our latest blog post: Market Tracker weekly bulletin—28 March 2019.

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