Corporate weekly highlights—31 January 2019

This week’s edition of Corporate highlights includes the latest updates on Brexit, news on the FCA consultation to align the FCA Handbook with the Prospectus Regulation and FCA and FRC proposals for new stewardship measures.

In this issue:

Brexit

Competition (Amendment etc) (EU Exit) Regulations 2019

SI 2019/93: These Regulations are laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. They amend and repeal provisions of UK primary and secondary legislation, and retained direct EU legislation in relation to competition, to correct deficiencies in competition legislation arising from EU exit. The Regulations prepare for a scenario where no agreement is reached between the UK and the EU. They exclude from retained EU law certain provisions of direct EU legislation and Treaty rights, which would otherwise be incorporated into UK law by operation of the savings under EU(W)A 2018. Currently, the UK antitrust enforcement and merger control systems are integrated with the EU. These Regulations separate the two systems, and make provision for a smooth transition to a standalone UK competition regime after exiting the EU. It comes into force on exit day. (Updated from draft on 24 January 2019).

For further information, see: LNB News 01/11/2018 6.

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

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. They address deficiencies in retained EU law that arise from the UK leaving the EU, specifically in relation to Regulation EU 2016/11 of the European Parliament of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and related EU tertiary legislation.

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

Money Market Funds (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. They address deficiencies in retained EU law that arise from the UK leaving the UK, specifically in relation to money market funds. They propose to amend the Financial Regulators’ Powers (Technical Standards etc) (Amendment etc) (EU Exit) Regulations 2018, SI 2018/1115 and also Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds.

For further information, see: LNB News 25/01/2019 23.

Financial Regulators’ Powers (Technical Standards etc) and Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: These draft Regulations are laid in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. They propose to amend UK subordinate legislation by adding the binding technical standards (BTS) to the list of BTS which the regulators may amend to correct deficiencies in order to ensure that the recently adopted BTS continue to operate effectively after the UK withdraws from the EU, and by making some minor amendments in order to ensure that it effectively addresses deficiencies in retained EU law relating to markets in financial instruments, so that it continues to operate effectively after exit.

For further information, see: LNB News 30/01/2019 58.

Brexit Bulletin—UK preparations in the two months to exit day

With two months to go until the end of the Article 50 withdrawal period, the government is still hoping to secure parliamentary approval of its Brexit deal, but with continued political disagreement, little time remaining and exit day fixed in law, preparations to mitigate the risk of the UK exiting the EU without a deal in place are an increasing priority. This bulletin highlights some of the latest developments in the Brexit preparations and contingency planning, plus tips for tracking Brexit related legislation and links to useful materials to help you keep up-to-date as exit day approaches.

For further information, see News Analysis: Brexit Bulletin—UK preparations in the two months to exit day.

Equity capital markets

FCA consults on aligning the FCA Handbook with the Prospectus Regulation

The Financial Conduct Authority (FCA) has published Consultation Paper 19/6 (CP19/6) on changes required to align the Prospectus Rules sourcebook with the Prospectus Regulation. The majority of the changes proposed involve reproducing text from the Prospectus Regulation directly into the new sourcebook. In this consultation, 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. The FCA is asking for comments on the consultation paper by 28 March 2019.

For further information, see: LNB News 29/01/2019 71.

Corporate governance

FCA and FRC propose new stewardship measures—CP19/7, DP19/1 and new Stewardship Code

The FCA has issued Consultation Paper 19/7 (CP19/7) and, jointly with the Financial Reporting Council (FRC), Discussion Paper 19/1 (DP19/1) to propose new measures and gather views on how to encourage effective stewardship in the interests of investors.

In CP19/7, the FCA proposes regulatory measures to implement parts of the revised Directive 2017/828, Shareholder Rights Directive, which aims to promote effective stewardship and long-term investment decision-making primarily through better transparency of engagement policies and investment strategies across the institutional investment community. The Shareholder Rights Directive also imposes transparency requirements on companies with shares admitted to trading on a regulated market in relation to related party transactions. CP19/7 has been drafted on the basis 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.

The FRC has also published a separate consultation paper on proposed revisions to the UK Stewardship Code, which set substantially higher expectations for investor stewardship policy and practice.

For further information, see: LNB News 30/01/2019 105.

Improving and clarifying corporate political reporting

Corporate analysis: A report from Transparency International found significant issues in the rate of corporate political reporting and engagement, including that only one company in its 2018 study had received the top grade for political reporting. Kathryn Higgs, director of Transparency International UK Business Integrity Programme and global business ethics and compliance lawyer, discusses the vagueness of existing regulation surrounding corporate political reporting, and the action companies should take to improve this.

For further information, see News Analysis: Improving and clarifying corporate political reporting.

Pensions and Lifetime Savings Association releases Corporate Governance Policy and Voting Guidelines 2019

The Pensions and Lifetime Savings Association (PLSA) has published its Corporate Governance Policy and Voting Guidelines 2019 (2019 Guidelines), which build upon the PLSA’s 2018 AGM Review and provide practical guidance for investors considering how to exercise their vote at AGMs in 2019. The 2019 Guidelines have been updated to mirror the new UK Corporate Governance Code (2018 Code) and highlight some of the key developments in UK corporate governance policy and practice. For the first time, the guidelines do not follow the format and order of a standard AGM agenda, but instead are arranged to highlight those issues and resolutions which the PLSA believes will be of particular interest to investors in 2019.

For further information, see: LNB News 30/01/2019 102.

Clause bank for corporate lawyers

Exploring the Law Commission’s consultation on the electronic execution of documents

Commercial analysis: Dorothy Livingston, consultant at Herbert Smith Freehills LLP, chairman of the Financial Law Committee and chair of the Electronic Signatures Joint Working Group, explains the key elements of the Financial and Company Law Committees of the City of London Law Society’s (CLLS) response to the Law Commission consultation paper on the electronic execution of documents.

For further information, see New Analysis: Exploring the Law Commission’s consultation on the electronic execution of documents.

Additional Corporate updates this week

Departure lounge clauses—use with caution

Employment analysis: Recent reports in the legal press suggest the use of departure lounge clauses is on the rise, particularly among larger firms. Peter Garry, consultant solicitor at Keystone Law, explains how such clauses work in practice and sets out what those advising both firms and individual partners should bear in mind.

For further information, see News Analysis: Departure lounge clauses—use with caution.

LexisNexis Webinars: Key corporate governance changes affecting employers (2019)

Live 12:30 (GMT) Tuesday 5 February 2019

LexisNexis Webinars are pleased to provide a FREE live webinar on 5 February 2019 at 12:30 (GMT). No log in or subscription required. This is the first of ten free-to-view live webinars we will be broadcasting across different practice areas at 12:30 on the first Tuesday of the month from February through to November. During live broadcasts you will be able to submit any questions you may have directly to our expert presenters. Once broadcast, the webinars will be available to view on demand by purchasing them individually or as part of a subscription.

Simply go to www.lexiswebinars.co.uk/live-webinars-2019 or email webinars@lexisnexis.co.uk, quoting the title of the webinar, for further information.

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 weekly 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.

Dates for your diary

DateDevelopment
1 February 2019The benchmark policies issued by Institutional Shareholder Services (ISS) will apply to shareholder meetings on or after this date.
See: LNB News 20/11/2018 21 and LNB News 07/12/2018 106.
5 February 2019Lexis®Webinar: Key corporate governance changes affecting employers (2019)
Lexis Webinars team are pleased to provide a FREE live webinar at 12:30 (GMT) on 5 February 2019. To book see: www.lexiswebinars.co.uk/live-webinars-2019 and click on the required webinar or please email: webinars@lexisnexis.co.uk quoting the title of the webinar. Once broadcast, the webinar will be available to view on demand by purchasing individually or as part of a subscription.
15 February 2019Deadline for responses to the FRC’s post-implementation review of its 2016 changes to ethical and auditing standards.
The FRC’s review looks at what the impact of its 2016 changes to ethical and auditing standards has been on auditor independence, prevention of conflicts and on audit quality.
See: LNB News 20/11/2018 76.

Trackers

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

Brexit legislation tracker

Brexit timeline

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

Market Abuse Regulation timeline

Prospectus Regulation tracker

Transparency Directive tracker

Listing Rules tracker

Disclosure Guidance and Transparency Rules Sourcebook tracker

Prospectus Rules tracker

Latest Q&As

New Q&As added this week:

What are the issues to consider when a private company communicates an open offer to its shareholders?

Will a stock transfer form executed as a deed but without a witness still be valid?

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: Market Tracker weekly round-up—25 January 2019.

To read about the latest issues and developments which we are following in Market Tracker, see our latest blog post: Market Tracker weekly bulletin—31 January 2019

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Area of Interest