Corporate weekly highlights—30 May 2019

This week’s edition of Corporate highlights includes guidance issued by the Department of Business, Energy & Industrial Strategy (BEIS) on audit and accounting in the event of a no-deal Brexit, the publication of the Investment Association’s report calling for more transparency on FTSE companies’ dividend policies and new AIM guidance notes on nominated advisers and the use of the AIM Designated Market route to admission.

In this issue:

Brexit

Accounting and auditing requirements—no deal Brexit guidance

The Department for Business, Energy & Industrial Strategy (BEIS) has published new guidance for stakeholders on how companies can ensure they comply with accounting and reporting requirements (see Accounting if there’s no Brexit deal), as well as how auditing professionals should prepare (see Audit if there’s no Brexit deal), if the UK leaves the EU in a ‘no deal’ scenario.

For further information, see: LNB News 24/05/2019.

Corporate Governance

Preparing for the new corporate governance requirements on executive pay and employee engagement

Share Incentives analysis: Several corporate governance developments affecting remuneration come into effect this year. Nicholas Stretch, head of the Incentives practice at Ashurst, picks out the key changes and considers how companies will need to get to grips with them when reporting on executive pay.

For further information, see News Analysis: Preparing for the new corporate governance requirements on executive pay and employee engagement.

Directors and company secretaries

Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019

SI 2019/970: These Regulations were made on 22 May 2019 to implement in part EU Directive 2017/828/EU of the European Parliament and of the Council of 17 May 2017 amending EU Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement in the UK. Articles 9aand 9b of Directive 2017/828/EU are implemented to ensure that the implementation works with the framework already in place in UK legislation with regards to directors’ remuneration. The Regulations will come into force on 10 June 2019.

For further information, see: LNB News 09/04/2019 6.

Share capital

Investment Association calls for companies to state dividend distribution policy

The Investment Association (IA) has published a report, ‘Shareholder votes on dividend distributions in UK listed companies’, which calls for companies to be more transparent on their approach to paying dividends. The report forms part of an investigation into dividend payment practices carried out by the IA at the request of the UK government as part of its consultation 'Insolvency and Corporate Governance'. Lexis®PSL Corporate has also been following and tracking developments in the arena of dividends; see: Dividends 2019—Market Tracker Trend Report.

For further information, see: LNB News 28/05/2019 11.

Accounts and reports

Commission publishes Q&As on ESEF RTS

The European Commission has published a Q&A document on Commission Delegated Regulation (EU) 2018/815, which was published in the Official Journal of the EU on 29 May 2019 and sets out regulatory technical standards (RTS) on the specification of the European single electronic reporting format (ESEF).

For further information, see: LNB News 29/05/2019 61.

Equity capital markets (AIM)

Inside AIM newsletter reveals guidance notes on nominated advisers

The London Stock Exchange (LSE) has published two guidance notes as part of its Inside AIM newsletter, which look at staffing of nominated advisers (Nomads) and the use of the AIM Designated Market route to admission.

For further information, see: LNB News 28/05/2019 72.

Additional Corporate updates this week

Auden McKenzie (Pharma Division) Ltd v Patel

This case related to a company’s share purchase agreement. The first defendant had no real prospect of successfully defending the claimant companies' claim for damages for, among other things, deceit in relation to the alleged misrepresentation of the financial circumstances of the first claimant company following the entry by the second claimant company into a share purchase agreement for the purchase of the first claimant's holding company. Consequently, the Commercial Court granted summary judgment on the first claimant's claim for damages against the first defendant. However, the court was not prepared to decide any other points on a summary basis, including the first defendant's counterclaim and additional claim.

For further information, see: Auden McKenzie (Pharma Division) Ltd v Patel [2019] All ER (D) 130 (May).

Additional news—daily and weekly news alerts

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Dates for your diary

DateDevelopment
31 May 2019Deadline for feedback on NEX Exchange’s consultation regarding its Growth Market Rules for Issuers.
The main reason for the consultation is to reflect the changes being brought in by the Prospectus Regulation in July 2019, which introduces the new EU growth prospectus for certain issues by SMEs. The EU growth prospectus will have a standardised format and allow reduced disclosure requirements. It is intended that the Growth Market Rules for Issuers, will reflect many of the requirements of the new EU regime
For further information, see: LNB News 02/05/2019 35.
7 June 2019Closing date for the call by the BEIS for views on the quality and effectiveness of statutory audit in the UK. This follows BEIS publishing in February 2019 the terms of reference for an independent review by Sir Donald Brydon into the quality and effectiveness of the UK audit market.
The Brydon Review is seeking views, information and evidence from anyone with a direct or indirect interest in UK audit on the extent of the assurance that audit currently provides to users of financial statements and how it might develop to better meet those users' needs, as well as serve the interests of other stakeholders and the public interest.
For further information, see: LNB News 10/04/2019 85.
10 June 2019HM Treasury has issued a consultation document on the steps that the UK government proposes to take to meet the UK’s obligation to transpose the Fifth Money Laundering Directive (MLD5) into national law and on the potential costs and benefits of the changes considered.
In implementing MLD5, the government is catering for the scenario where an implementation period is in place after the UK leaves the EU. During this implementation period common rules will remain in place, meaning that EU law will continue to have effect in the UK in the same way as now until the end of an agreed implementation period. This would require the UK to implement MLD5 by January 2020.
For further information, see: LNB News 15/04/2019 77.
10 June 2019EU Member States shall by this date bring into force the laws, regulations and administrative provisions necessary to comply with the majority of the requirements of Directive EU 2017/828 amending the Shareholder Rights Directive (the Amending Directive).
The principal amendments to be made by the Amending Directive relate to identification of shareholders; facilitation of the exercise of shareholder rights; investor engagement policy; directors' remuneration and related party transactions.
For further information, see: LNB News 14/03/2017 117LNB News 03/04/2017 138LNB News 05/04/2017 148LNB News 20/05/2017 1 and Practice Notes: EU developments and influences in corporate governance and The UK Stewardship Code — Revised Shareholder Rights Directive.
10 June 2019Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, SI 2019/970 come into force.
These draft Regulations are laid to implement in part Directive 2017/828/EU of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement in the UK. Articles 9a and 9b of the Directive are implemented to ensure that the implementation works with the framework already in place in UK legislation with regards to directors’ remuneration.
For further information, see: LNB News 09/04/2019 6.
10 June 2019Proxy Advisors (Shareholders’ Rights) Regulations 2019, SI 2019/926 come into force.
These provisions are made to transpose Article 3j of the revised EU Shareholder Rights Directive (SRD II) into UK law, in line with the UK’s obligations as a member of the EU. Article 3j of SRD II places requirements on proxy advisors, which primarily offer voting services and/or advice to shareholders in publicly listed companies, to make certain disclosures about the way in which they conduct their business.
For further information, see: LNB News 14/05/2019 53.
11 June 2019BEIS launched a consultation on 11 March 2019 seeking views on the recommendations made by the Independent Review of the Financial Reporting Council to create a new regulator responsible for audit, corporate reporting and corporate governance.
For further information, see: LNB News 12/03/2019 12.

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 the difference between a traded company, a quoted company, and a listed company?

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—24 May2019.

Relevant Articles
Area of Interest