Key themes and developments on the agenda for businesses in October include a likely consultation on a proposed Criminal Finances Bill, an inquiry into corporate governance and new minimum wage rates.
Responses to inquiry on corporate governance due
The Business, Innovation and Skills Committee has launched an inquiry on corporate governance, which will focus on executive pay, directors’ duties and the composition of boardrooms, including worker representation and gender balance in executive positions.
The Committee requests submissions on, among other things, whether executive pay should take account of companies’ long-term performance and whether it should reflect the value added by executives relative to junior employees, and proposals for worker representation on boards and remuneration committees.
The Conservative MP and Treasury Select Committee member, Chris Philp, has also released a paper that examines and recommends proposals on corporate pay. Philp argues that highly fragmented shareholdings in listed companies and a focus commonly on the short term by fund managers has often resulted in a failure by shareholders to exercise proper oversight of the companies they own.
Action points: Submissions to the inquiry are requested by 26 October.
Criminal Finances Bill consultation expected
In a speech at the Cambridge Symposium in early September, the Attorney General said that the government will soon consult on plans to extend the scope of the criminal offence of a corporation “failing to prevent” offending beyond bribery to other economic crimes, such as money laundering, false accounting and fraud.
Among other things, the proposed Criminal Finances Bill will introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion and improve the ability of law enforcement agencies and courts to recover criminal assets more effectively, particularly in cases such as those linked to grand corruption.
If the Bill operates in the same way as section 7 of the Bribery Act 2010, companies will face large fines following conviction for failure to prevent, but a deferred prosecution agreement would be available as an alternative disposal.
There is currently no timetable for when this consultation will take place.
ICSA guidance on minute taking
The Institute of Chartered Secretaries and Administrators (ICSA) has published guidance on best practice in minute taking. The guidance discusses how quorum and conflicts of interest should be covered in board minutes, the style of writing, the level of detail and how to deal with dissent in the minutes.
Action points: Review the company’s approach to minute taking in the light of the ICSA guidance.
Prohibition on corporate directors delayed
Implementation of the prohibition on corporate directors has been further delayed and the prohibition is no longer expected to come into force on 1 October. However, we understand that the government does intend to implement the prohibition on a future, but as yet unspecified, date.
Action points: Check whether any group company has any corporate directors and, once the exemptions from prohibition are finalised, consider whether any of them apply.
New specified persons with whom Insolvency Service can share investigatory findings
Regulations come into force on 1 October that add several bodies to the list of “specified persons” to whom information obtained during an investigation by the insolvency service may be disclosed. The change will mean that the insolvency service will also be able to share information with the following:
- The Commissioners for Her Majesty’s Revenue and Customs.
- The Director of the Serious Fraud Office.
- The registrar of companies.
- The Gangmasters and Labour Abuse Authority.
Continuing to prepare for the General Data Protection Regulation
The Article 29 Working Party (WP29) has recently discussed the priorities for the General Data Protection Regulation (GDPR) and is seeking input from interested stakeholders, particularly industry bodies. So far, the WP29 has looked at the new data portability right, data protection impact assessments, the use of certification and codes of conduct, and the role of the data protection officer.
The GDPR will apply in the UK from May 2018, notwithstanding the outcome of the EU referendum, and will continue to form backdrop to data protection policy following Brexit, especially for any organisations that need to make or receive data transfers within the EU.
Action items: Interested parties can submit their views on any of these topics by emailing PresidenceG29@cnil.fr. They should also use our new toolkit of key resources designed to assist organisations with preparing for and complying with the GDPR.
National minimum wage rate increases take effect
The following hourly rates of national minimum wage apply from 1 October 2016:
- The rate for workers aged 21 to 24 increases to £6.95.
- The development rate (workers aged 18 to 20) increases to £5.55.
- The young workers rate (non-apprentices aged under 18 but above compulsory school age) increases to £4.00.
- The apprenticeship rate increases to £3.40.
Action items: Company pay rates should be reviewed to ensure that they are aligned with the increased rates.
Changes to registered design fees come into effect
Changes to registered design fees will come into effect from 1 October 2016 under the Registered Designs (Fees) Rules 2016 (SI 2016/889). The registration fees have been restructured to provide designers with more choice and flexibility, and the renewal fees have been reduced significantly.
Action items: Read the Intellectual Property Office’s short guidance note for businesses on the changes to registered design fees. The guidance sets out some of the changes in table form, includes a Q&A section, and sets out scenarios for renewals made on different dates.
Consumer Rights Act 2015 starts to apply in full to transport services
The Consumer Rights Act 2015 (CRA) will apply in full to all transport services, including mainline passenger rail services, from 1 October 2016. This means that rail operators will not be able to cap compensation for its failure to use reasonable care and skill or comply with information it has provided about the service to less than the ticket price paid. The existing rail industry compensation schemes will continue to be available after 1 October 2016, and will remain the main means of redress for customers.
Commercial litigation: changes to Civil Procedure Rules take effect
The automatic right to renew a permission to appeal application at an oral hearing in the Court of Appeal is to be removed from 3 October, when several amendments to the Civil Procedure Rules (CPR) come into force. From that date, the Court of Appeal will determine the permission to appeal application on paper, unless the judge considering the application directs an oral hearing.
Action items: Read our new note to help get to grips with the revised layout and content of CPR 52. The note includes a destination table identifying the location of key appeals provisions for commercial litigators.
Join us: GC leadership forum on leading small and medium legal teams
Practical Law’s third annual leading small and medium legal teams conference is being held in London on 5 October. Tailored to GCs of small and medium-sized legal teams, the forum offers a unique opportunity to discuss key issues with your peers, hear from experts, hone your leadership skills and take away techniques and tips to action in your business. Topics include:
- How to deal with the volume, complexity and uncertainty of regulatory, legal and commercial changes.
- How to best manage your limited resources to deliver value.
- How to align your departmental strategy with the business’ strategy.
Brexit noise: updates from September
The Solicitor’s Regulatory Authority (SRA) has published an update on the issues it is considering in light of the EU referendum. Among other things, it confirms that there has been no change to the regulatory position of EU lawyers working in the UK and, in particular, no change in the Registered European Lawyers, Exempt European Lawyers or Registered Foreign Lawyers arrangements, or the Qualified Lawyer Transfer Scheme.
The House of Commons Library has also published a lengthy document considering the impact of Brexit in several policy areas, including consumer protection. Various outcomes are discussed, depending on the results of the Brexit negotiations, in particular whether the UK stays in the European Economic Area, and how the government fills any policy gaps left by withdrawal.
Our Brexit homepage highlights resources from across Practical Law on the legal implications of Brexit.
Last orders: consultations closing in October
Consultations on the following matters are closing in October:
- Penalties for enablers and users of defeated tax avoidance arrangements.
- Simplifying tax and NICs on termination payments.
- Implementation of the new UK and Ireland accounting standards.
- Amendments to FRS 101 (Reduced Disclosure Framework).
- Simplifying the PAYE Settlement Agreement process.
- Reforming company car tax for ultra-low emissions vehicles from 2020-21.
- Restricting the use of salary sacrifice for the provision of benefits in kind.