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This week’s edition of Corporate highlights includes the Pre-Emption Group’s reaffirmation of the expectations for disapplication of pre-emption rights thresholds, a recent Supreme Court judgment on the application of limitation periods on trustees who are company directors, an updated Precedent in our Equity Capital Markets topic area and a new Practice Note on 2017/2018 Corporate governance reforms.
In response to a new exemption from the requirement to publish a prospectus where the company wishes to admit securities to trading on a regulated market and those securities represent less than 20% of a class of securities already admitted to trading set out in the early provisions of the Regulation (EU) 2017/1129 (Prospectus Regulation) the Pre-Emption Group announced there would be no change to the flexibility permitted by its 2015 Statement of Principles.
In setting out their expectations of companies and investors, the Pre-Emption Group state that ‘whilst decisions about specific placings are a matter for individual shareholders’, the Statement of Principles reflect a generally agreed position (supported by the Pensions and Lifetime Savings Association and the Investment Association) and affirm that ‘to assist in a constructive discussion between companies and shareholders, companies should be mindful of the expectations included within the Statement of Principles’.
For further information, see LNB News 05/03/2018 132.
The Financial Reporting Council (FRC) has published the first in a series of podcasts. In the podcast David Styles, Director of Corporate Governance at the FRC, discusses the proposed changes to the UK Corporate Governance Code and how it will help promote trust in business for long term sustainable growth in the UK economy post Brexit.
Issues considered in the podcast include the broader interpretation that the FRC has taken of what governance means, which focuses on the relations between the board, the company and a wider range of stakeholders, the new requirement for chairs to remain independent throughout their tenure and the new requirement for remuneration committees to take workforce policies and practices into account when setting the policy for director remuneration.
For further information, see LNB News 07/03/2018 120.
The Supreme Court has unanimously dismissed an appeal by two former directors and controlling shareholders of Burnden Holdings (UK) Ltd (Burnden), a company which issued proceedings against them for the unlawful distribution in specie of the claimant’s shareholding in a trading subsidiary, Vital Energi Utilities Ltd (Vital). The Supreme Court ruled that contrary to the defendants’ submissions, section 21(1)(b) of the Limitation Act 1980 (LA 1980) does not become inapplicable merely because the misappropriated property has remained legally and beneficially owned by corporate vehicles, rather than having become vested in law or in equity in the defaulting directors.
The alleged unlawful distribution in specie of the claimant’s shareholding took place six years before Burnden issued proceedings against Mr and Mrs Fielding. This was outside of the six-year limitation period set out in LA 1980, s 21(3) in respect of an action by a beneficiary for breach of trust. The Fieldings applied to the High court on the basis that the claim was time barred.
While the High Court ruled in favour of the Fieldings, the Court of Appeal set this order aside, on the basis that the limitation period did not run against the claimant, because LA 1980, s 21(1)(b), provides that no limitation period applies to an action by a beneficiary under a trust to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.
The Fieldings applied to the Supreme Court on the proper construction of section 21(1)(b). The court dismissed this appeal, finding section 21(1)(b) applies to trustees who are company directors, who are to be treated as being in possession of the trust property from the outset.
For further news, see LNB News 28/02/2018 143.
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.
We have thoroughly reviewed and updated the following Precedent in our Equity Capital Markets (Main Market) topic area:
We have also published the following Practice Note in our Corporate Governance topic area:
New Q&As added this week:
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