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NEWS ROUND-UP |
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New FSA remuneration code See CLM ¶2701 The FSA has introduced a new code of practice that requires companies in the financial services industry (which are regulated by the FSA) to establish, implement and maintain remuneration policies that are consistent with effective risk management. Its aim is to promote and sustain market confidence and financial stability, recognising that inappropriate remuneration policies, practices and procedures have contributed to the current market crisis. The code will come into force on 1 January 2010, but firms are expected to make any required changes to their policies and procedures by that date, with any changes to remuneration structures and contracts being implemented with effect from that date. Transitional arrangements apply in relation to the amendment or termination of employment contracts. Full details of the requirements of the new code are available from the FSA website: http://www.fsa.gov.uk/pages/Library/Policy/Policy/2009/09_15.shtml. Further consultation on the disclosure of directors’ loans in company accounts See CLM ¶2897 The Government is once again considering the issue of disclosures about directors’ loans in company accounts. It previously consulted on proposed changes to the new Companies Act relating to such disclosures by banking companies and the holding companies of credit institutions (see CLM 2008 Newsletter Issue 6). However, the proposed changes were subsequently removed from the draft regulations (now SI 2009/1581; see CLM 2009 Newsletter Issue 3). The Government is now considering this issue more widely, including the disclosure of loans to directors of all companies. The Government has proposed three options: » amending only the provision relating to banking companies (s 413(8) CA 2006) to require these companies to disclose only aggregate figures with no breakdown for individual directors, as was the position under CA 1985; » requiring banking companies to disclose the same level of detail as other companies (by repealing s 418(8) altogether); or » requiring more detailed disclosures by all companies. The consultation paper can be found on BIS’s website: http://www.berr.gov.uk/consultations/page52469.html. Comments are invited by 23 October 2009. The timing of any resulting changes coming into force will depend upon the extent of those changes. OFT considers wider use of director disqualification powers See CLM ¶3032 The OFT has proposed changes to the circumstances in which it will apply for the disqualification of directors following breaches of competition law. The proposals aim to increase the responsibility company directors take for competition law compliance. The OFT believes that its current guidance, under which it is only likely to apply for a disqualification order in cases where the director was directly involved in the breach, does not maximise the deterrent effect. The OFT is considering revising this guidance so that it would be likely to apply for a disqualification order in more cases, including: » in all cases where it thinks a director is unfit to be concerned in the management of a company, whether or not his conduct directly contributed to the breach of competition law; » in relation to a breach of competition law which has not been proven in a decision or judgment or in cases where no financial penalty has been imposed; and » where the company has benefited from lower levels of leniency (for example, in cartel cases). More detail on the proposed changes can be found on the OFT website: http://www.oft.gov.uk/shared_oft/consultations/oft1111con.pdf. Comments are invited by 20 November 2009. Companies House and Revenue and Customs announce a joint approach to online filing See CLM ¶4185+ Companies House and Revenue and Customs have announced plans to offer a joint filing facility for company annual accounts and company tax returns. The aim is for Companies House to accept company accounts in a data format known as Inline eXtensible Business Reporting Language (iXBRL), which will enable companies to make a single online transmission for filing their annual accounts and their company tax return (including attachments). All company tax returns will have to be submitted online in this format from 1 April 2011. Revenue and Customs will introduce their iXBRL service in November 2009 and Companies House will add the iXBRL software filing for unaudited accounts to their service by the summer of 2010. It is intended that this will be available for all the main types of companies’ accounts by the summer of 2011. More information on the technical requirements and mandatory dates will be published by Companies House and Revenue and Customs in due course. ASB consults on the future of UK GAAP See CLM ¶4211+ The ASB is consulting on its proposals for the future financial reporting requirements for UK entities. The consultation follows the publication of the new International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs, published by the IASB). The ASB proposes to replace UK GAAP, for financial years beginning on or after 1 January 2012, with a three-tier approach: » Tier 1: publicly accountable UK entities would be required to apply IFRS; » Tier 2: all other UK entities could apply the IFRS for SMEs; and » Tier 3: small entities could choose to continue to apply the FRSSE. Companies which are not “publicly accountable” could choose to apply IFRS if they wished, as they can now. In addition, small companies could choose to apply the new IFRS for SMEs, rather than the FRSSE. The ASB is also seeking views on whether the current legal definitions of public accountability should be retained (ss 384, 467 CA 2006) or replaced with the IASB’s wider definition, which broadly states that a company has public accountability if: » it trades its debt or equity instruments in a public market; or » holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (e.g. banks, building societies, securities brokers). The consultation paper is available from the ASB website: http://www.frc.org.uk/asb/press/pub2054.html. Comments are invited by 1 February 2010. New Takeover Panel practice statement on shareholder activism See CLM ¶6765+, ¶6805+ The Takeover Panel has issued a new practice statement to address the concerns that activist shareholders who co-operate with each other (e.g. by acting jointly to influence a company’s board) would be treated as “acting in concert” and trigger the mandatory offer provisions in the Takeover Code (Practice Statement 26 of 2009). The Panel clarifies that the Code provisions are not intended to act as a barrier to co-operative shareholder action, and a mandatory offer will only be triggered if those shareholders: » reach an agreement or understanding to propose a “board control-seeking” resolution, i.e. one to replace the existing board with directors who have a significant relationship with the shareholders in question so that they can effectively control the board. Whether the relationship is “significant” depends on its strength and the time period over which it has developed; and » then acquire shares in the company, giving them 30% or more of the company’s voting rights (or further voting rights where they already hold more than 30%). The Panel considers that “board control-seeking” resolutions are rare in practice and therefore, for the majority of normal co-operative action, the mandatory offer provisions are not triggered. Even when they are, a mandatory offer will not be required if the activist shareholders take steps to prevent the acquisition of voting shares in the company. The Panel is also more likely to require those shareholders to dispose of the acquired shares over a time period rather than making a mandatory offer. A copy of the practice statement is available on the Panel’s website: http://www.thetakeoverpanel.org.uk/wp-content/uploads/2008/11/PS26.pdf. |
