Corporate weekly highlights—30 March 2017

Welcome to the weekly highlights from the Lexis®PSL Corporate team for the week ending 30 March 2017, which provide news updates and a comprehensive list of dates for your diary. This week’s edition features: the newly published Market Tracker Trend Report—AGM season 2017–what’s new?; the OECD’s paper on responsible business conduct for institutional investors; the news that Tesco will compensate investors for its market abuse; the FRC’s proposed amendments to FRS 102; Commercial analysis of the Supreme Court decision in Wood v Capita Insurance Services Limited; and IP & IT analysis of the proposed Fox/Sky merger.

This update is part of the Lexis®PSL Corporate team’s news offering. Some of the links require a LexisPSL subscription. If you are not a subscriber, you can take a free trial here.

Market Tracker Trend Report

Market Tracker Trend Report: AGM season 2017–what’s new?

Lexis®PSL Corporate has published a new Market Tracker Trend Report ‘AGM season 2017–what’s new?’ As the 2017 annual general meeting (AGM) season gets underway, Lexis®PSL Corporate summarises the latest developments, changes and topics of interest to companies and their advisers when preparing for the AGM.

Topics covered include: pre-emption resolutions; remuneration; risks, viability and Brexit; diversity; and modern slavery statements.

For details see: Market Tracker Trend Report—AGM season 2017—what's new?

Headlines (News updates & analysis)

Investor due diligence

Responsible conduct in financial sector 'vital to sustainable global economy'

The Organisation for Economic Co-operation and Development (OECD) has published a paper, ‘Responsible business conduct for institutional investors’, which highlights key considerations for institutional investors in carrying out due diligence to identify and respond to environmental and social risks in their investment portfolios. OECD has said responsible business conduct in the financial sector is vital to building a sustainable global economy. As the OECD acknowledges ‘the inherent complexities’ of the financial sector make practical application of effective due diligence systems challenging, its paper includes an explanation of the application of the OECD guidelines for multinational enterprises in the context of institutional investors.

For details see news, LNB News 29/03/2017 71.

Market abuse

Tesco market abuse compensation could reach £85m

The Financial Conduct Authority (FCA) has, for the first time, used its powers under section 384 of the Financial Services and Markets Act 2000 to require a listed company to pay compensation for market abuse. Tesco will compensate shareholders in relation to a trading update published on 29 August 2014, which gave a false or misleading impression about the value of publicly traded Tesco shares and bonds. Investors who purchased Tesco shares and bonds on or after 29 August 2014, and who still held those securities when the statement was corrected on 22 September 2014, are due to receive compensation totalling around £85m, plus interest.

For details see: LNB News 28/03/2017 72.

Reports

FRC plans amendments to FRS 102

The Financial Reporting Council (FRC) has launched a consultation reviewing the FRS 102—The Financial Reporting Standard applicable in the UK and Republic of Ireland. Incremental improvements and clarifications to Financial Reporting Standard (FRS) 102 have been proposed by the FRC in the Financial Reporting Exposure Draft (FRED). The FRED includes marked-up versions of FRS 102 and the other affected standards, highlighting proposed changes and amendments.

The proposals aim to make the standard clearer and easier to use, resulting in more cost-effective financial reporting.

Comments on the FRED should be submitted by 30 June 2017.

For details see: LNB News 23/03/2017 102.

Relevant updates from other practice areas

Commercial

Alert: Supreme Court rules on contract interpretation—Textualism versus contextualism (Wood v Capita Insurance Services Limited)

This Commercial analysis considers Wood v Capita Insurance Services Limited [2017] UKSC 24 where the Supreme Court has ruled on the correct approach to contractual interpretation.

This case concerned the true construction of an indemnity clause in a sale and purchase agreement (SPA), a detailed and professionally drafted contract, under which Capita purchased an insurance brokerage company from Mr Wood and two other sellers. The Commercial Court endorsed Capita's construction that the indemnity covered certain claims by Capita but the Court of Appeal had overturned that decision. Capita appealed against the Court of Appeal’s order, arguing that it had fallen into error because it had been influenced by the respondent’s submission that the decision of the Supreme Court in Arnold v Britton [2015] UKSC 36 had ‘rowed back’ from the guidance on contractual interpretation which the Supreme Court gave in Rainy Sky SA v Kookmin Bank [2011] UKSC 50. Capita argued that this had caused the Court of Appeal to place too much emphasis on the words of the SPA and to give insufficient weight to the factual matrix.

The Supreme Court unanimously dismissed Capita’s appeal.

For details see News Analysis, Alert: Supreme Court rules on contract interpretation—Textualism versus contextualism (Wood v Capita Insurance Services Limited).

IP & IT

Media plurality and the proposed Fox/Sky merger

Twenty-First Century Fox (21CF) recently announced its intention to take full control of Sky plc by acquiring all the shares that it does not already own—raising concerns and calls for intervention on media plurality grounds. In this IP & IT analysis, Stephen Smith, partner at Bristows, and Francion Brooks, associate at the firm, explain the background to the merger and consider the legal issues surrounding the potential deal.

For details see News Analysis: Media plurality and the proposed Fox/Sky merger.

Dates for your diary

Date Subjects covered
30 March 2017 Deadline for comments on FRC consultation on views on which corporate reporting issues it should research in the immediate future. Questions include whether the FRC should continue with its research activities at the current level, or increase or decrease the extent of its work in this area. For further information, see LNB News 09/12/2016 73.
31 March 2017 Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 come into force. The regulations will impose specific duties, including gender pay gap reporting requirements, on certain public authorities, in order to enable the better performance by the authority of the public sector equality duty imposed by the Equality Act 2010. For further information, see LNB News 19/01/2017 136.
31 March 2017 Deadline for comments on FRC consultation on proposed amendments to FRS 101—Reduced Disclosure Framework. In the consultation paper, Financial Reporting Exposure Draft (FRED) 66, the FRC proposes limited amendments to FRS 101 in relation to IFRS 16 Leases. FRED 66 asks respondents whether they agree that qualifying entities should be required to continue to provide detailed analyses of leases. For further information, see LNB News 13/12/2016 97.
31 March 2017 The government will invoke Article 50 by this date. The EU (Notification of Withdrawal) Bill has been given Royal Assent. The Bill was passed by MPs and Peers on Monday 13 March 2017. For further information, see: LNB News 16/03/2017 129.
1 April 2017 Rules that limit the tax deductions that large groups can claim for their UK interest expenses will come into force. These rules, contained in the Finance Bill 2017, will limit deductions where a group has net interest expenses of more than £2m, net interest expenses exceed 30% of UK taxable earnings and the group’s net interest to earnings ratio in the UK exceeds that of the worldwide group. For further information, see: LNB News 23/11/2016 100 and Draft Finance Bill 2017—corporation tax loss relief.
3 April 2017 Deadline for comments on the FCA proposed changes to PR 1.2.3R in anticipation of the Prospectus Regulation coming into force. These changes were proposed in the FCA's Quarterly Consultation Paper No. 16 (CP17/6). For further information, see LNB News 03/03/2017 145.
Further dates To look further ahead, see: Corporate horizon scanning—2017 and beyond.

Relevant Articles
Area of Interest