Corporate weekly highlights—9 November 2017

This week’s edition of Corporate highlights includes guidance from the ICSA: The Governance Institute to help improve awareness of GDPR responsibilities, Investment Association updates on ‘principles of remuneration’ and updated MAR Q&As. There is also a new practice note on Insider Lists in our Equity Capital Markets Topic area.

Corporate Governance

Guidance released to improve awareness of GDPR responsibilities

The ICSA: The Governance Institute has published guidance for those in companies dealing with data, to ensure a smooth transition following the coming into force of the upcoming EU General Data Protection Regulation, Regulation (EU) 2016/679 (GDPR). The guidance both provides an overview of the new legal landscape and highlights strategic and practical considerations raised by the new regulation.

The guidance divides the upcoming legislation into three areas: data basics, dealing with individuals and governance and risk management.

For further information, see LNB News 06/11/2017 80.

Investment Association publishes update of ‘principles of remuneration’

The Investment Association (IA) has published the 2017 update of its ‘principles of remuneration’ document (remuneration principles) and, in advance of the 2018 AGM season, highlighted certain items of focus.

The remuneration principles set out IA members’ views on the role of shareholders and directors in relation to remuneration and the manner in which remuneration should be determined and structured. They aim to provide a guide to shareholder expectations and good practice for companies with a main market listing but are also relevant to companies on other public markets, such as AIM, and other entities.

The remuneration principles contains three principles (the principles), which concern remuneration policies, remuneration structures, and levels of remuneration. The principles are then supported by guidance to help remuneration committees apply the principles and ensure a proper level of shareholder protection. The guidance consists of sections which provide general guidance, guidance on fixed remuneration, and guidance on variable remuneration.

For further information, see LNB News 03/11/2017 96.

Equity Capital Markets

CLLS updates its MAR Q&As

The City of London Law Society has updated its set of Q&As on Regulation (EU) 596/2014—the Market Abuse Regulation (MAR). The update takes into account the European Securities and Markets Authority’s revision of its MAR Q&As published on 6 July 2017, and expands, at question 7, on the definitions in practice of a ‘person closely associated’ and a ‘person discharging managerial responsibilities’.

The Q&As set out suggested approaches to implementing certain aspects of the Regulation, and were prepared by the City of London Law Society and Law Society Company Law Committees’ joint working parties on market abuse, share plans and takeovers code.

For further information, see LNB News 02/11/2017 45.

Additional Corporate updates this week

Persad v Singh

The facts of the present case did not justify piercing the corporate veil of a limited company. So held the Board of the Privy Council (the Board), in allowing an appeal by the appellant director and shareholder of the company against a decision in which the Court of Appeal in Trinidad and Tobago had upheld the decision, at first instance, that the appellant was liable, under a lease of premises to the company, for the company's failure to pay rent and for its breaches of covenant. The Board re-emphasised that piercing the veil was only justified in very rare circumstances and held, among other things, that the appellant had not given any sort of assurance that he would personally take the lease, and, further, that the fact that the company was a 'one man company' was irrelevant.

For further information, see Persad v Singh

Law Society responds to FRC consultation on draft amendments to guidance on strategic report

The Law Society Company Law Committee has responded to a consultation published by the Financial Reporting Council (FRC) seeking views on its draft amendments to guidance on the strategic report. The draft amendments are a result of requirements of the EU Non-Financial Reporting Directive (NFRD), with the objective of helping investors, consumers, policy-makers and other stakeholders to evaluate the non-financial performance of large companies, and encouraging these companies to develop a reasonable approach to business.

The Law Society’s response to the FRC’s proposals includes a recognition of the importance of a well-written strategic report in informing members of a company and helping them assess how directors have performed their duty under CA 2006, s172.

For further information, see LNB News 08/11/2017 83.

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New and updated content

New practice note

We have published an updated practice note considering the obligation of an issuer within the scope of Market Abuse Regulation (EU) No 596/2014:

Dates for your diary

Date Subjects covered
9 November 2017 Institutional Shareholder Services (ISS) is inviting comments on proposed new voting policies or policy changes in 13 voting policy areas.  One new proposed voting policy for 2018 relates to the holding of virtual and hybrid shareholder meetings.
9 November is the deadline for submitting comments on the new policy proposals to ISS.
For further information, see LNB News 30/10/2017 69.
14 November 2017 Closing of the first part of the government’s consultation on intervening in mergers with national security implications.
The government has proposed new powers to intervene in mergers which raise national security concerns, including those involving smaller businesses. There is a particular focus on companies which design or manufacture military and dual use products, and parts of the advanced technology sector. The government has further proposed measures it believes will allow for better scrutiny of transactions that may raise national security concerns. This may involve introducing a mandatory notification regime for foreign investment in areas involving national defence.
The consultation is closing in respect of the government’s proposal to amend the Enterprise Act 2002 to: lower the threshold whereby ministers can scrutinise investment to businesses with a UK turnover of over £1m; and remove the requirement for a merger to increase a business’ share of supply to, or over, 25%.
For further information, see LNB News 17/10/2017 106.
30 November 2017 All AIM companies are required to register for an LEI code by 30 November 2017.
The LEI is a 20-digit, alpha-numeric code that enables identification of legal entities participating in financial transactions.  In order to comply with the Markets in Financial Instrument Directive (MiFID II) which requires market operators, such as the London Stock Exchange, to collate LEI codes for each issuer with securities admitted to trading, all AIM companies will be required to register for an LEI code by 30 November 2017. The AIM application form for admission of new securities to AIM has been amended to require an LEI.
See further news, AIM Notice 47
End of November 2017 The FRC have announced that they will publish amendments to the current guidance for auditors when agreeing to the publication of preliminary announcements of annual results by the end of November 2017.
In April 2017, the FRC issued a discussion paper which looked at options for bringing Bulletin 2008/2 up to date. Options included: converting the guidance to an engagement standard; consulting with the UKLA to require auditors to follow FRC guidance; and mandating that statutory financial statement audits should be complete before auditors agree to the release of preliminary announcements.
Stakeholders are broadly content with current arrangements and the Financial Reporting Council (FRC) will therefore only make minor amendments to the current guidance for auditors when agreeing to the publication of preliminary announcements of annual results.
For further information, see LNB News 27/04/2017 96 and LNB News 25/10/2017 114.

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