Key themes and developments on the agenda for businesses in September include reviewing revised directors’ remuneration reporting guidance, analysing the issues for boards to consider in the light of Brexit and keeping track of EU-US Privacy Shield developments.
Revised directors’ remuneration reporting guidance
The GC100 and Investor Group have published revised directors’ remuneration reporting guidance.
Key changes to the guidance include:
- Clarifying the remuneration committee’s use of discretion in determining remuneration outcomes, including the situations in which investors generally expect the committee to consider exercising discretion to moderate formulaic remuneration outcomes.
- Expanding the guidance on companies’ use of commercial sensitivity as a reason not to disclose performance measures or targets in the remuneration report, including setting out general investor expectations on the prospective and retrospective disclosure of performance targets and measures related to short-term and long-term incentives.
Action items: Companies should review the revised guidance in order to prepare any upcoming directors’ remuneration report required for each financial year and put to shareholders for approval, and (where applicable) any new directors’ remuneration policy which is also to be approved.
Gender pay gap reporting regulations delayed
The bringing into force of the regulations requiring large companies (those with 250 or more employees) to analyse the company’s gender pay gap and publish the data within 12 months has been delayed until April 2017. The final regulations had been expected to be published in the summer and come into force on 1 October 2016. They are now expected to be published in the autumn and come into force on 1 April 2017, with the first ‘snapshot’ date on which companies must analyse the pay gap expected to remain as 30 April 2017.
Action items: Companies should stick to their current timetable and continue to prepare for the new regime so they are ready to analyse the company’s pay gap in April 2017 and report by April 2018.
Amendments to the Takeover Code take effect
Amendments to the Takeover Code in relation to the communication and distribution of information and opinions during an offer by, or on behalf of, an offeror or offeree company take effect on 12 September, including in relation to ongoing offers (but not with retroactive effect). The amendments are aimed at bringing the Code up to date to reflect various technological changes that have taken place since 2009 (when the Code was amended to enable electronic forms of communication to be used to send documents and information to shareholders and certain other relevant persons).
Action items: Review communication and distribution arrangements in relation to ongoing offers in line with the amendments to the Code.
Brexit briefing for the business
Practical Law has published a blog post that provides some practical material for an in-house lawyer to present to colleagues and prioritise the organisation’s Brexit agenda. The materials focus on engaging with senior executives and on fostering inter-departmental dialogue around key Brexit-related risk areas.
Practical Law has also published an article highlighting practical steps that all businesses should consider, and raising specific issues for particular sectors, such as the financial services industry and the manufacturing sector.
The Brexit homepage highlights resources from across Practical Law on the legal implications of Brexit.
EU-US Privacy Shield becomes operational
The EU-US Privacy Shield framework for EU-US data transfers became operational on 1 August. The Information Commissioner’s Office has summarised its position on EU-US data transfers following the introduction of the new framework, reminding organisations who continue to rely on the Safe Harbor framework that they are in breach of the Data Protection Act 1998 and potentially at risk of enforcement action.
Action items: Organisations should not delay in making valid EU-US data transfer arrangements, including by investigating whether US entities to which they transfer data will participate in the Privacy Shield.
Financial Reporting Council annual conference
The Financial Reporting Council’s (FRC) annual conference, which will be held on 20 September, will focus on aligning corporate behaviour with long term performance. In July the FRC published its report on corporate culture and the role of boards, which considered the relationship between corporate culture and long-term business success. The report set out the FRC’s observations on the key elements boards should be considering to develop a culture that delivers sustainable good performance. The FRC has stated that it will be monitoring company and investor reporting on culture over the next year.
Action items: Read up on the Big Innovation Centre call for evidence on the purposeful company, why culture matters (and what it means for you) and on what corporate purpose isn’t, according to Dominic Houlder and Nandu Nandkishore of London Business School.
HMRC consults on penalising advisers who enable tax avoidance
HMRC has launched a consultation on penalising enablers and users of defeated tax avoidance schemes. The proposals include a penalty of 100% of the tax at stake, and specifically extend to advisers such as lawyers and accountants whose work is necessary to the machinery or implementation of tax avoidance arrangements (although those who are unaware that their actions are connected with wider tax avoidance are not intended to be caught).
Action items: The consultation is open for comment until 12 October 2016.
Implementing the Market Abuse Regulation
Joint working parties of the City of London Law Society and the Law Society have published a second Q&A setting out their suggested approach to implementing certain aspects of the Market Abuse Regulation (MAR). Matters covered include market soundings, stake building on a takeover and PDMR dealings.
AIM Regulation has also set out its position on closed periods and preliminary results under MAR and published some FAQs for AIM companies on the disclosure obligations within MAR and the AIM Rules.
E-privacy directive proposal on the horizon
The European Commission is expected to prepare a new legislative proposal on e-privacy by the end of 2016, following its recent consultation on the E-Privacy Directive.
The E-Privacy Directive complements the new General Data Protection Regulation and concerns the processing of personal data and the protection of individuals’ privacy in the electronic communications sector. Among other things, it regulates telecoms companies’ and internet service providers’ handling of personal data and restricts the sending of unsolicited marketing emails or texts.
The Article 29 Working Party and the European Data Protection Supervisor (WP29) have both recently published opinions on the evaluation and review of the E-Privacy Directive.
Empty property rate relief scheme comes to an end
The empty property rate relief scheme for newly built commercial buildings, that became available from 1 October 2013, ends on 30 September.
Royal Assent to Finance Bill expected
The Finance Bill is expected to receive Royal Assent in September. Most of its provisions are already in force. One provision that will take effect for (broadly) financial years beginning on or after Royal Assent is the requirement for large businesses to publish their tax strategies.
Last orders: consultations closing in September
Consultations on changes to the SRA Handbook 2011 and solicitor’s Code of Conduct, the government’s strategic priorities for the Competition and Markets Authority and key consumer protection directives come to a close in September.
