Corporate weekly highlights—30 September 2016

Corporate weekly highlights—30 September 2016

pexels-photo-27406Welcome to the weekly highlights from the Lexis®PSL Corporate team for the week ending 30 September 2016, which provide news updates and a comprehensive list of dates for your diary. This week’s edition looks at the latest issue of Market Watch, a consultation on how FRS 102 should be updated and the release of the government’s arguments for the use Royal Prerogative to invoke Article 50.

Equity capital markets—Market conduct

Market Watch: FCA gives findings from Market Maker Review and update on PFOF

The Financial Conduct Authority (FCA) has published the 51st issue of Market Watch, its newsletter on market conduct and transaction reporting issues. The newsletter includes observations from the FCA’s Market Maker Review, which covered risk awareness, information barriers, wall-crossing procedures and insider lists, as well as ongoing monitoring and surveillance. Additionally, this issue of Market Watch provides an update on payment for order flow (PFOF).

Accounts and reports

FRC asks for views on how FRS 102 should be updated

As part of the triennial review of UK and Ireland accounting standards, the Financial Reporting Council (FRC) is inviting comments from stakeholders on its proposed approach to updating FRS 102 (the Financial Reporting Standard applicable in the UK and Republic of Ireland). The changes are to reflect changes in IFRS. Comments on the changes are requested by 31 December 2016.

The changes are expected to be incremental improvements and clarifications and will apply from 1 January 2019. More significant amendments to FRS 102 are expected to be effective from 1 January 2022 and these will relate to incorporating the expected loss model for impairment of financial assets, based on IFRS 9 Financial Instruments, and updating lease accounting by lessees for consistency with IFRS 16 Leases.

Following the consultation, the FRC will develop two Financial Reporting Exposure Drafts (FREDs) with detailed proposals, providing another opportunity for stakeholders to comment. The first FRED is expected towards the end of the first quarter of 2017 (incremental improvements and clarifications) and the second towards the end of the third quarter of 2017 (expected loss model and leases).


Brexit: Government legal arguments on Article 50 procedure published

The government's plans to use Royal Prerogative to invoke Article 50, instead of allowing a Parliamentary vote, have been subject to a legal challenge in a case to be heard in October.

Following an urgent application by The People’s Challenge group in connection with the litigation, Mr Justice Cranston has made an order stating ‘the parties are not prohibited from publishing the Defendant’s or their own Detailed Grounds... against the background of the principle of open justice, it is difficult to see a justification for restricting publication of documents which are generally available under the Rules’. The government’s defence was then released, along with an unredacted version of their submissions. The government objected to the publication of its defence, stating that a case management hearing in July meant all court papers should remain confidential.

John Halford of Bindmans LLP, the firm representing the The People's Challenge group, said the release of the material ‘allows a floodlight to be shone on the government’s secret reasons for believing it alone can bring about Brexit without any meaningful parliamentary scrutiny’.

30 September 2016An organisation with a financial year end of 31 March 2016 is expected to have published a slavery and human trafficking statement. Section 54 of the Modern Slavery Act 2015 requires certain organisations to produce and publish a slavery and human trafficking statement for each financial year of the organisation ending after 31 March 2016. Government guidance is clear that organisations should seek to publish this statement no later than six months after financial year end. Therefore, an organisation with a financial year end of 31 March 2016 is should have published a statement by 30 September 2016.
17 October 2016The deadline for responses to the Board of the International Organization of Securities Commissions (IOSCO) consultation report (CR04/2016) of good practices for termination of investment funds. In August 2016, IOSCO published a consultation report proposing a set of good practices for the voluntary termination of investment funds.
26 October 2016The deadline for submissions to the inquiry launched by the Business, Innovation and Skills (BIS) Committee in the House of Commons. The inquiry is on corporate governance and focusses on executive pay, directors’ duties and boardroom composition. It follows the BIS Committee's recent inquiries into BHS and Sports Direct, which highlighted certain corporate governance failings, and the commitments to overhaul corporate governance that have been made by the Prime Minister. The BIS Committee will examine executive pay, directors duties and board composition.
28 October 2016The deadline for responses to the FCA'sconsultation paper (CP16/19) seeking feedback on the implementation of the Markets in Financial Instruments Directive 2014/65/EU (MiFID II). The consultation follows on from CP15/43, published in December 2015, and covers the following issues: commodity derivatives; supervision; prudential standards; senior management arrangements, systems and controls; remuneration requirements for sales staff; whistleblowing; client assets sourcebook; complaint handling; and fees manual.

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