The key event this month is the general election on 8 June. In-house lawyers may also be interested in new research highlighting an increase in legal cases against FTSE100 companies and the expected publication of the Taylor review on modern employment practices.
General election on 8 June
General Election 2017: implications for in-house lawyers highlights the manifesto pledges from each of the three major political parties. Several policy statements relate to issues that in-house lawyers may have been tracking in recent months, including:
- Executive pay.
- Employee representation at board level.
- Gender pay gap reporting.
- Employment status and the gig economy.
Queen’s speech on 19 June
The Queen’s Speech will be delivered on 19 June. The speech will be read by the Queen in the House of Lords Chamber and will outline the government’s programme of legislation and policies for the coming year.
Increase in legal cases against FTSE100 companies
New research by Thomson Reuters shows that the number of High Court cases involving FTSE100-listed companies hit a five year high of 279 in the 12 months to 30 June 2016. This represents a 6% increase on the previous year and is more than double the 114 cases of five years ago.
The sharp rise is partly due to the growing number of legal risks that UK-listed businesses face, as their increasingly complex and globalised businesses operate in a wider number of legal jurisdictions. The rise is also driven by legal disputes that the big UK-listed banks are still facing almost a decade after the banking crisis. Banks continue to face litigation across a wide range of areas including the mis-selling of hedging products (such as interest-rate swaps), Libor market manipulation claims and disputes over loan agreements.
Another factor driving the continued rise in claims being brought against banks and other businesses is the increasing number of litigation funders helping finance cases that might not otherwise have been pursued. Litigation funders often pay for the cost of litigating against banks in exchange for a share in any damages received. For example, Harbour Litigation Funding has financed several claims against banks and a recent shareholders action against a major UK bank for £200 million in damages is funded in a similar way.
Taylor review on modern employment practices due to report
The Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, is expected to report in June. The review focuses on the implications of new models of working (such as the gig economy) on the rights and responsibilities of workers, as well as on employer freedoms and obligations.
Distributions: potential impact of updated ICAEW guidance
In April, the Institute of Chartered Accountants in England and Wales (ICAEW) published updated guidance on realised and distributable profits, clarifying that an upstream guarantee can constitute a distribution even if it is not reflected in the accounts. This will be of interest to in-house lawyers given that companies within a group may give, for example, upwards guarantees to parent companies.
William Underhill of Slaughter and May, who is also the chair of the City of London Law Society Company Law Committee, has commented that whether a transaction constitutes a distribution is a question of law rather accounting. The Company Law Committee will be discussing the impact of the updated ICAEW guidance on upstream guarantees at its next meeting, especially as previously it had taken the view that an upstream guarantee would only constitute a distribution if it was required to be provided for in the accounts.
Transposition deadline of the Fourth Money Laundering Directive on 26 June
The beneficial ownership provisions of the 4th Money Laundering Directive, which are expected to amend the PSC register requirements, must be implemented by 26 June. However, given the general election and the dissolution of Parliament, it is not clear how or if the UK will be able to comply, as draft regulations have not been published or laid. The anticipated changes to the PSC regime were set out by Companies House in a press release on 19 April 2017, although these have not yet been confirmed by the government.
IPO consultation on proposed changes to patent fees closes
The Intellectual Property Office’s (IPO) consultation on patent fees closes on 6 June.
The IPO has proposed changes to the patent fees currently set out in the Patents (Fees) Rules 2007 to triple application fees, increase search fees by £20-30, introduce a new £30 fee per claim for 16th and subsequent claims, and charge a new fee of £10 for each additional page of description above 35 pages. The IPO also puts forward an alternative regime under which these increases would be lower, but would be combined with an increase in renewal fees.