Key items on the agenda for businesses this month include the expected publication of secondary legislation on corporate governance reform and the deadline for responses to the FRC consultation on proposed revisions to the UK Corporate Governance Code.
Corporate governance reform: secondary legislation expected
Responses to the FRC consultation on proposed revisions to the UK Corporate Governance Code should be submitted by 28 February. In addition to this deadline, the government is expected to publish and lay before Parliament the draft secondary legislation set out in the government’s response to the Green Paper on corporate governance reform. The secondary legislation will cover:
- Section 172. All private and public companies of a significant size will be required to explain how their directors have had regard to the employee and other non-shareholder interests set out in section 172 of the Companies Act 2006.
- Corporate governance arrangements. All private and public companies of a significant size will be required to outline their corporate governance arrangements in their directors’ report and on their website, including whether they follow any formal code.
- Pay ratios. Quoted companies will be required to report on pay ratios comparing CEO remuneration to average pay in the wider company workforce.
- Outcomes of LTIPs. Quoted companies will be required to provide clearer explanations in their remuneration policies of the possible outcomes of their long-term incentive plans (LTIPs).
Practical Law has published a note for in-house counsel to give to the board outlining the corporate governance reforms taking place in 2018 and a set of slides that can be used in a presentation to the board or when offering training on the forthcoming reforms.
As a result of the reforms, certain other narrative reporting requirements and evolving market practice, Practical Law What’s Market will be tracking additional disclosures in its 2018 summaries, including:
- Whether a company is to hold its AGM in virtual-only or hybrid form.
- Mechanisms by which the board engages with its employees.
- Board policy on ethnic diversity and whether the annual report discloses if there is at least one director of colour on the board.
- Ratio of CEO pay to the average pay of their UK workforce.
One final corporate governance development to note in February: the new and amended policies of the ISS 2018 Proxy Voting Guidelines will be applied to shareholder meetings taking place on or after 1 February.
GDPR: less than four months to go
With a little over four months before the General Data Protection Regulation ((EU) 2016/679) (GDPR) becomes directly applicable in all EU member states, Practical Law continues to update its existing suite of resources and publish new, practical content designed to support in-house teams in their compliance efforts. Rob Beardmore highlights the materials that have been added since the start of 2018.
The GDPR will introduce new, specific legal responsibilities for organisations processing children’s data from 25 May 2018. The deadline for responses to the Information Commissioner’s Office’s consultation on draft guidance on children and the GDPR is 28 February.
Pimlico Plumbers case to be heard at the Supreme Court
On 20 and 21 February, the Supreme Court will hear Pimlico Plumbers Ltd v Smith. Last year the Court of Appeal held that a plumber was a worker for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998, as well as an employee within the extended meaning of that term in the Equality Act 2010. This is one of several cases brought in recent years, often backed by unions, arguing that individuals engaged as self-employed contractors by companies are in fact “workers” or “employees”.
New Office for Product Safety and Standards
The government has recently accepted the recommendations of the Working Group on Product Recalls and Safety and set out its plans for implementing them, including the immediate establishment of a new Office for Product Safety and Standards (OPSS). The OPSS will be tasked with, among other things, setting up an incident management capability to respond to national product safety issues and making the government’s product recall webpages more accessible.
A detailed Code of Practice on product corrective actions (including recalls) will be published in early 2018. These developments will be of interest to manufacturers and retailers of relevant consumer products, such as white goods, electrical goods, toys, clothes and cosmetics. There will also be opportunities for businesses to be involved in consultations and research as the OPSS develops its role.
Proposals for a disclosure pilot scheme in the Business and Property Courts
In November, details were announced of proposals for a mandatory disclosure pilot scheme to run for two years in the Business and Property Courts with a view to achieving a wholesale cultural change in the disclosure process. A consultation on these proposals comes to a close on 28 February.
Practical Law has published a tracker to help users follow the key developments on the proposals.