Brexit planning dominates the agenda this month but in-house lawyers should also keep an eye on corporate governance reforms, new regulations introducing personal liability for directors for unlawful direct marketing, and two consultations on the future of audit.
Brexit planning
Despite the Cabinet reaching a collective decision that the government should agree the draft UK-EU withdrawal agreement and the outline political declaration, there is continued uncertainty surrounding Brexit. Among other things, the House of Commons must pass a resolution approving both the withdrawal agreement and the framework for the future relationship before the government can ratify the withdrawal agreement, which is far from certain.
Practical Law has published a note setting out practical steps and actions that in-house legal teams can take now to support and lead their businesses in preparing for Brexit.
Corporate governance reform and narrative reporting
The final Wates Corporate Governance Principles for Large Private Companies will be published in December 2018 to align with the Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860), which are in force from 1 January 2019 and effective for financial years beginning on or after 1 January 2019. Actual reporting will therefore start in 2020. BEIS has published an updated version of its Q&A on the Regulations.
In addition, Institutional Shareholder Services and Glass Lewis have published their UK proxy voting guidelines for 2019.
The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 have been published and come into force on 1 April 2019. The regulations will require additional reporting on emissions, energy consumption and energy efficiency action by quoted companies, large unquoted companies and large LLPs.
On 13 November 2018, The Hampton-Alexander Review published its third annual report on improving gender balance in FTSE leadership. In terms of board composition, the report reveals that FTSE 100 companies are on track to meet the 33% target with more than 30% of board positions occupied by women. This has risen from 12.5% in 2011. Women’s representation on the boards of FTSE 250 companies has increased to almost 25% (from 23% in 2017) but unless progress picks up considerably in the next two years, the 33% target is unlikely to be met.
Directors’ personal liability for unlawful direct marketing
The government has laid draft regulations amending the Privacy and Electronic (EC Directive) Regulations 2003 (SI 2003/2426) (PECR). The amendments will enable the Information Commissioner’s Office to fine officers of a body corporate up to £500,000 for breach of the PECR rules on the use of automated calling systems and unsolicited direct marketing. Officers will be liable where they have consented to or connived in the breach or it is attributable to their neglect.
The Regulations amending PECR will come into force on 17 December 2018.
Consultations on the future of audit
The BEIS Committee has launched an inquiry on the future of audit. The inquiry will focus on the likely impact of the Competition and Markets Authority (CMA) market study of the audit sector and Sir John Kingman’s review of the Financial Reporting Council (FRC) in improving quality and competition in the audit market and reducing conflicts of interest. The deadline for written submissions is 11 January 2019.
The FRC has also published a call for feedback to support its review of the 2016 changes to ethical and auditing standards. Comments should be received by 15 February 2019.
Autumn 2018 Budget and Finance Bill 2019
Key announcements in the Autumn 2018 Budget included a proposal to introduce a digital services tax (DST) targeted at the largest social media platforms, online market places and search engines. HM Treasury and HMRC have published a consultation on the detailed design, implementation and administration of the DST that is to take effect from 1 April 2020. Comments must be made by 28 February 2019.
The Finance Bill 2019 was published on 7 November 2018. Practical Law has published analysis of its business tax provisions.
GDPR: new guidance on passwords and encryption
On 1 November 2018, the Information Commissioner’s Office (ICO) published new guidance on passwords in online services and encryption under the General Data Protection Regulation ((EU) 2016/679) (GDPR). The ICO provides information on:
- How to store passwords.
- How users should enter passwords.
- Requirements for passwords (such as length and use of special characters).
The ICO also stresses that where unencrypted data is lost or destroyed, it is possible that it will pursue regulatory action.
Consultation on parental bereavement leave and pay
The government has published its response to the consultation on parental bereavement leave and pay. The Parental Bereavement (Leave and Pay) Act 2018 creates a statutory right to time off work for employed parents, with pay where certain eligibility requirements are met, following the loss of a child under the age of 18. The government will now prepare draft regulations setting out the detail of the new statutory right, which is expected to come into effect in 2020.
Dates for your diary
- 3 December 2018. EU Regulation on addressing unjustified geo-blocking starts to apply.
- 6 December 2018. Solicitor’s Regulation Authority’s new rules on improved transparency in service pricing enter into force.
- 13 December 2018. GC100 event on Disclosure Pilot Scheme.
- 27 December 2018. Deadline for CMA response to super-complaint on excessive prices for disengaged consumers.
- 31 December 2018. CMA expected to report on whether online celebrity endorsements of products and services are misleading.
