Key themes and developments on the agenda for businesses in August include dealing with the aftermath of the EU referendum result, managing the compliance requirements of the Modern Slavery Act 2015 and implementing guidance on the Market Abuse Regulation.
Brexit: the aftermath
The implications of the vote to leave the EU remain at the top of the agenda for companies with operations in the UK. Practical Law is continuing to publish articles providing analysis on its impact, including coverage of specific industry sectors:
We have also published Practical Law’s Brexit summary: a watching brief and an EU legislation tracker: pre-Brexit. Both these resources can be found on our new look Brexit homepage, together with articles on the implications of Brexit by topic and background on the EU legislative process.
Modern Slavery Act 2015: one year on
To mark one year since the Modern Slavery Act 2015 (MSA) came into effect, the government has published an independent review into the effectiveness of the criminal justice provisions in the MSA. Among other things, the review found that law enforcement agencies are using the powers in the MSA to increase the number of prosecutions and to support more victims of modern slavery; and that better training, better intelligence and a more structured approach to identifying, investigating, prosecuting and preventing slavery is required.
Thomson Reuters recently hosted a complimentary webinar that considered how companies were managing the compliance requirements of the MSA. Speakers included Steve Gibbons (Director, Labour and Human Rights, Ergon Associates), who talked about the challenges companies face in addressing the MSA and the difficulty in detecting slavery in complex supply chains.
Practical Law has published a checklist designed to help organisations prepare their annual statement under section 54 of the MSA, and to help assess the risk of modern slavery and human trafficking in their supply chains.
Network and Information Security Directive due to enter into force
The Network and Information Security Directive (NIS Directive) is expected to enter into force in August. Member states will then need to adopt and publish the laws, regulations and administrative provisions necessary to comply with the NIS Directive by 9 May 2018.
The NIS Directive aims to increase co-operation between member states and lays down security obligations for operators of essential services (such as transport, health and finance) and digital service providers (such as online marketplaces, search engines and cloud services).
Theresa May’s proposals on making remuneration report votes binding
Before becoming Conservative Party leader, and subsequently Prime Minister, Theresa May made a speech in which she announced her intention to make annual shareholder votes on corporate pay binding rather than advisory. She also highlighted plans to make businesses more accountable by having both worker and consumer representation on main UK company boards. Now that she is leading the government, it will be interesting to see how quickly, and to what extent, those proposals are taken forward.
The Executive Remuneration Working Group has also recently published its final report on the current structure of executive remuneration in the UK. The core recommendation in the report is that there needs to be increased flexibility for companies to choose the remuneration structure that is most appropriate for their business. There is concern that there is a single one-size-fits-all model for executive remuneration in the UK to the exclusion of other possible structures. The report contains a framework of possible structures to illustrate what this flexibility might mean in practice.
Implementing guidance on the Market Abuse Regulation
The Market Abuse Regulation (MAR) came into effect on 3 July, with the aim of updating and strengthening the EU market abuse regime by introducing a wider range of, and tougher, sanctions. The European Securities and Markets Authority has since published final guidelines on market soundings and delayed disclosure of inside information and an updated version of its Q&A on MAR, which includes a new entry on the 30-day closed period requirement.
GC100 has also published guidelines on the requirements of MAR for companies to maintain insider lists.
Investment Association to Amber-top NED re-elections following profit adjustments
The Investment Association has recently written to the chairs of FTSE companies regarding its policy change in response to the practice of changing profit expectations and cutting dividend policy following changes in management.
For AGMs held after 1 August 2016, the Investment Association intends to “Amber Top” the re-election of non-executive directors of companies making significant changes to profit expectations and writing down the value of assets following the appointment of new management.
Pre-Emption Group template resolutions expected to be used
In May, the Pre-Emption Group published a monitoring report on the implementation of its 2015 Statement of Principles for disapplying pre-emption rights and a template resolution for disapplying pre-emption rights. The template resolutions represent good practice and are drafted for companies incorporated in the UK but companies with premium listings incorporated outside the UK should adopt resolutions in an appropriate form.
For meetings held on or after 1 August 2016, the Pre-Emption Group will expect companies to use template resolutions for the disapplication of pre-emption rights.
Third Parties (Rights against Insurers) Act 2010 comes into force
On 1 August, the Third Parties (Rights against Insurers) Act 2010 comes into force. It repeals and replaces the Third Parties (Rights against Insurers) Act 1930, except for cases where both the insured incurs liability to a third party and its insolvency proceedings commenced before 1 August 2016.
The 2010 Act introduces a less complex and potentially cheaper procedure for claiming directly against the insurer of an insolvent individual or corporate defendant. This reflects the reality of litigation where legal liability insurance is in place, which is that claims against defendants are often handled by their insurers.
Royal Assent to the Finance Bill delayed
HMRC has confirmed that Royal Assent to the Finance Bill 2016 will be delayed until the autumn.
Last orders: consultations closing in August
Consultations on the following matters are closing in August:
- Reform of corporation tax loss relief.
- Progression in the labour market by people from black and minority ethnic backgrounds.
- Secondary transfer pricing adjustments.