Key themes and developments on the agenda for businesses in January include the government’s Green Paper on corporate governance reform, the duty to report on payment practices and performance and the rise of the “gig economy”.
Green Paper on corporate governance reform
Companies will need to review the government’s Green Paper on corporate governance reform, which was published at the end of November. It focuses on three specific aspects of corporate governance:
- Executive pay. Strengthening shareholder influence over directors’ remuneration, increasing transparency and simplifying and improving long-term incentive plans.
- Employee and customer voice. Enhancing the employee, customer and wider stakeholder voice in the boardroom.
- Corporate governance in large private businesses. Whether, and to what extent, large privately-held businesses should meet higher minimum corporate governance and reporting standards.
Companies are also invited to suggest other themes, ideas or proposals that could be explored which could strengthen the UK’s corporate governance framework.
The Business, Energy and Industrial Strategy Committee is also currently taking oral evidence in its on-going inquiry on corporate governance.
Action items: The deadline for responding to the Green Paper is 17 February 2017.
Duty to report on payment practices and performance
In December, the government published revised draft regulations to bring the new duty to report on payment practices and performance into effect. The government expects the regulations to come into force on 6 April.
It is expected that large companies will have a duty to report on their payment practices and performance relating to certain specified contracts, together with their performance by reference to those practices and policies, for suppliers in relation to financial years beginning on or after 6 April.
The contracts that will fall within the scope of the reporting requirements are for goods, services, or intangible assets (including intellectual property) and entered into by the parties in connection with the carrying on of a business. The contracts must also, broadly, have a significant connection with the UK. Contracts for financial services will not fall within scope.
Action items: Organisations should review their existing payment policies and practices in light of this new requirement for public reporting. In-house counsel may not have previously had much insight into their organisation’s approach and may need to work with the finance team to audit current arrangements and put in place new internal systems to support reporting.
New non-financial annual statement required for years commencing after 1 Jan 2017
For financial years commencing on or after 1 January 2017, certain large listed companies, who have more than 500 employees, will need to draw up a new annual statement relating to environmental, social and employee-related matters, respect for human rights, anti-corruption and bribery under the new Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016.
The Regulations amend Part 15 of the Companies Act 2006 to implement article 1(1) and (3) of Directive 2014/95/EU (Non-Financial Reporting Directive) and to complete transposition of article 23(1) of the Accounting Directive.
Cross-border debt recovery regulation comes into force
Creditors in relation to cross-border debts will have a new preservation measure available to them (in addition to those available under national law) from 18 January, with the application of the European Account Preservation Order (EAPO) Regulation to facilitate cross-border debt recovery in civil and commercial cases.
The Regulation establishes an EU procedure enabling a creditor to obtain an EAPO, which prevents the subsequent enforcement of the creditor’s claim from being jeopardised through the transfer or withdrawal of funds up to the amount specified in the Order, which are held by the debtor or on his behalf in a bank account maintained in a member state.
Gender Pay Gap Reporting Regulations
From 4 April 2018 and annually thereafter, private and voluntary sector employers with 250 or more employees will be required to publish gender pay gap information. The final version of the draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 were published in December and are expected to come into force on 6 April. Employers that have already made headway with their reporting plans, based on the original draft, will need to check that their methodology is in line with the new, highly prescriptive requirements.
Action points: Although the publication deadline for the first gender pay gap report is some way off, the report must be based on pay data as at 5 April 2017, including bonuses paid within the 12 month period ending on 5 April 2017, so employers will need to have systems in place in good time to capture that data.
The rise of the “gig economy”
The “gig economy”, which enables businesses to use technology platforms to outsource tasks that would normally be delegated to a single employee to a large pool of workers, has become a hot topic in recent months. Companies may therefore be interested in the forthcoming results of three government and independent reviews of the changing nature of the workplace:
- The Taylor review of modern employment practices will consider the implications of new models of working on the rights and responsibilities of workers, and employer freedoms and obligations.
- A Business, Energy and Industrial Strategy Committee inquiry into the future world of work will focus on the rapidly changing nature of work, as well as the status and rights of agency workers, the self-employed, and those working in the gig economy.
- The Office of Tax Simplification has published a focus paper exploring the tax issues and implications of the gig economy (and the sharing economy to which it is related).
Trade marks: 11the edition of Nice Classification now in force
The 11th edition of the Nice Classification entered into force on 1 January 2017. There are several significant additions and amendments to the previous edition, including amendments to 15 class headings and the addition of 334 new terms.
The Intellectual Property Office and the Office for Harmonisation in the Internal Market use the Nice Classification in the registration of UK trade marks and EU trade marks respectively. Each class has a heading giving a broad indication of the type of goods or services in that class. A detailed alphabetical list of goods and services specifies the class in which each listed item falls.
Key Brexit developments in December
The Supreme Court heard the government’s appeal in R (Gina Miller and Deir Tozetti Dos Santos) v The Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin) in December, and judgment is expected early this year.
The CBI published a report on making a success of Brexit, which sets out six common principles to guide the UK-EU negotiations. The report is the result of a detailed consultation exercise undertaken by the CBI across every sector of the UK economy.
The House of Lords European Union Committee published a comprehensive report on the various trade options available to the UK after Brexit. The four main options considered are EEA membership, membership of the EU’s customs union, a UK-EU free trade agreement, and trade under WTO rules. This article summarises the WTO rules.
Detailed coverage of Brexit, including how it may impact different industry sectors, can be found on the Brexit homepage.
Last orders: consultations coming to a close in January
Consultations on the following matters are closing in January:
- Overall responsibility and the legal function under the senior managers regime.
- New rules prohibiting the sexual portrayal or sexual representation of under-18s (or those who appear to be under 18) in advertising.
- Proposals to amend DTR 2.5 (delaying disclosure of inside information).
