With the UK scheduled to leave the EU on 29 March 2019, Brexit planning remains paramount for in-house lawyers this month. Nevertheless, they should also be keeping abreast of developments in corporate governance, environmental reporting and gender pay gap reporting.
Brexit planning
If the UK and the EU do not conclude a withdrawal agreement by 29 March 2019, the UK will leave the EU without an agreement at 11pm (UK time) on that date unless the European Council (acting unanimously) and the UK agree to extend the two-year period.
If the UK concludes a withdrawal agreement (WA) with the EU by 29 March 2019, withdrawal takes effect on the date specified in the agreement. The UK and the EU have reached political agreement that the WA will enter into force on 30 March 2019 (11pm on 29 March 2019 UK time) although some provisions will only apply as from the end of the transition period. The parties are also allowed to agree on a later commencement date.
Several reports and guidance have recently been published on preparing for a no-deal Brexit. These include:
- An Institute for Government report.
- A House of Commons Exiting the European Union Committee report.
- Companies House guidance on changes to company registrations and forms.
- A European Data Protection Board information note on data transfers under the GDPR.
Practical Law continues to publish content for companies to help them prepare for Brexit, including a note on Brexit implications for business operations and three videos on:
- Importing and exporting goods and services post-Brexit.
- Trading under World Trade Organization (WTO) rules post-Brexit.
- Key data protection measures to prepare for a no-deal Brexit.
Corporate governance reform
The Financial Reporting Council (FRC) has proposed revisions to the UK Stewardship Code for consultation. While most of the existing principles and guidance in the 2012 Stewardship Code have been retained, new requirements have been introduced. These include, among other things:
- Requirements on purpose, objectives and governance.
- Stewardship beyond listed equity.
- Environmental, social and governance issues.
The deadline for responding to the consultation is 29 March 2019.
The Financial Conduct Authority and the FRC have published a joint discussion paper on how to improve stewardship within the existing structure of UK capital markets. The discussion paper invites stakeholder input on, among other things, the:
- Key attributes of effective stewardship by asset owners and managers.
- Appropriate institutional, geographical and asset class scope of stewardship.
Responses to the discussion paper must be submitted by 30 April 2019.
The Pensions and Lifetime Savings Association (PLSA) has published a revised version of its Corporate Governance Policy and Voting Guidelines. Most of the changes to the 2018 version of the Guidelines have been made to the section on UK Voting Guidelines, which has been revised to relate to the 2018 UK Corporate Governance Code. While the content remains substantially the same, additional guidance has been added on:
- Board leadership and company purpose.
- Division of responsibilities.
- Audit.
- Risk and internal control.
- Remuneration.
Updated environmental reporting guidelines
The Department for Business, Energy and Industrial Strategy (BEIS) has published updated environmental reporting guidelines, which include a chapter of guidance to help companies comply with the streamlined energy and carbon reporting (SECR) regime for businesses under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1155).
SECR will require additional reporting on greenhouse gas emissions, energy consumption and energy efficiency action by quoted companies, large unquoted companies and large LLPs in respect of financial years beginning on or after 1 April 2019.
New guidance on gender pay gap reporting
Two sets of guidance to help employers close their gender pay gaps have been published by the Government Equalities Office:
- Eight ways to understand your gender pay gap aims to help employers understand the root causes of pay discrepancies between male and female staff in their organisations, focusing on specific elements of employment, from recruitment to termination.
- Four steps to developing a gender pay gap action plan is based on feedback from employers with effective action plans in place. It suggests methods such as consultation and engagement and the formulation of a plan that specifically targets areas identified as influencing the gender pay gap.
Independent review into the quality and effectiveness of audit
BEIS has published the terms of reference for its independent review into the quality and effectiveness of audit. BEIS expects Sir Donald Brydon to submit his report to the Secretary of State by the end of 2019, and that the government will consult on its response to the review’s recommendations.
Independent review of Modern Slavery Act 2015
In July 2018, the Home Office launched an independent review of the Modern Slavery Act 2015 (MSA). This included considering how to ensure compliance with section 54 of the MSA 2015 and drive up the quality of statements produced by eligible companies. It is expected to report to the Home Secretary before the end of March 2019.
The independent review of the MSA has also recently issued its second interim report on transparency in supply chains and has called for a tightening of the rules on modern slavery statements.
Practical Law has published a video giving a brief recap of the requirements under the MSA, the recommendations from the independent review of the MSA, and what these mean for your business.
