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NEWS |
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EC consults on European Company (SE) legislation See CLM ¶88+ As part of its review of the practical application and effectiveness of the legislation governing European Companies (SEs), the European Commission has published a consultation paper seeking views on how the legislation works. The intended benefit of a European Company is that administrative and management savings can be made if a pan-European business is registered in just one member state. However, whilst European Companies have proved to be quite popular in some member states, they have not in others. The European Commission is aiming to increase the use of European Companies and is consulting to determine whether changes to the existing legislation are needed. The deadline for responses is 23 May 2010. Copies of the consultation paper and further information are available from: http://ec.europa.eu/internal_market/company/se/index_en.htm. Companies House announce new fee See CLM ¶1493, ¶1509 Companies House is introducing a new fee payable for the registration of Form SH19 (644 & 649) following a reduction of share capital. This form is used to register a reduction of share capital by court order or under the solvency statement procedure. The fee will be payable to Companies House on all such forms delivered to it on or after 6 April 2010. The fee will be £10 (or £50 if the same-day service is used) and should be attached to the form. BIS evaluation of the new Companies Act See CLM ¶2317+, ¶3628, ¶3695+, ¶3777+, ¶3907+, ¶4252 BIS has started a post-implementation evaluation of the Companies Act 2006. Due to the scale of the new Act, only certain provisions have been selected for evaluation including the business review required in the directors’ reports of large and medium-sized companies, electronic communications, directors’ duties, annual general meetings and directors’ addresses. The purpose of the evaluation is to assess the main outcomes of the new Act and the consequences of the regulatory changes for companies, shareholders and other stakeholders. BIS proposes changes to requirements for registering charges at Companies House See CLM ¶3979+, ¶4636+ BIS has published a consultation paper seeking views on various amendments to the current scheme of registering charges at Companies House to simplify the process and bring it into line with changes in commercial procedure. Currently, certain types of charges must be registered at Companies House within 21 days of their creation. The proposals put forward by BIS include: » a scheme of registration which applies the same rules to all UK companies (slightly different rules apply to companies registered in Scotland, as compared to companies registered in the rest of the UK, because of the differences in the underlying property law in Scotland); » all charges created by UK companies to be registerable, unless they are: - a Lloyd’s trust deed (other than a Llolyd’s deposit trust deed or a Lloyd’s security and trust deed); - existing on property acquired; or - otherwise specifically excluded; » introducing a requirement that only the company that created the charge can register it; » modifying the particulars required to be registered and removing the requirement for the charge document to be delivered to Companies House; and » removing the requirement for companies to maintain their own register of charges. The consultation paper also includes a number of questions, including: » whether the same rules should apply to all UK companies; » whether the 21-day time limit for registration should be abolished; » what the advantages of electronic registration would be; » how often respondents access information about company charges, both at Companies House and companies’ own registers; and » whether there would be any consequences if the register at Companies House did not include charges over particular assets for which there is a different public register (for example the Land Register). Responses are requested by 18 June 2010. The consultation paper can be downloaded from the BIS website: http://www.bis.gov.uk/Consultations/registration-of-charges?cat=open. Responses received on the ASB’s proposals for the future of UK GAAP See CLM ¶4211+ The ASB has published the responses received to its recent proposals for the future financial reporting requirements for UK entities (see CLM 2009 Newsletter Issue 5). It received over 150 responses with a wide range of views on the significant points within the ASB’s proposals. The ASB intends to take some time to consider the responses before undertaking further public consultations on the best way forward for UK GAAP later this year. The responses are available from the ASB website: http://www.frc.org.uk/asb/technical/projects/resposes_policy.cfm. Guidance for auditors on company accounts that have been tagged for XBRL purposes See CLM ¶4290+ The APB has published guidance for auditors who are auditing company accounts that have been tagged for XBRL purposes (APB Bulletin 2010/1). The use of XBRL is a developing area, which will increase dramatically in the very near future. For instance, XBRL tagging of statutory financial statements will be required for company tax returns filed on or after 1 April 2011 (see CLM 2009 Newsletter Issue 5). The APB recognises that there may be a demand for non-audit services to be performed by audit firms in relation to XBRL tagging. It gives guidance on the application of the APB’s Ethical Standards for Auditors to XBRL-related non-audit services that auditors may be asked to perform. The guidance also confirms that currently ISAs (UK and Ireland) do not impose a requirement on auditors to check XBRL tagging of the financial statements as part of the audit. However, this may well change at some stage in the future as the use of XBRL becomes more commonplace. The guidance is freely available to download from the APB website: http://www.frc.org.uk/apb/publications/pub2225.html. European co-operation on exchange of audit papers See CLM ¶4300 The European Commission has adopted a decision recognising the adequacy of the auditor supervisory bodies in certain third countries, namely Canada, Japan and Switzerland. This will enable recognised supervisory bodies within EU member states to co-operate and exchange audit working papers, or other documents held by statutory auditors, with the recognised auditor supervisory bodies of these countries. Revenue and Customs proposes to simplify capital gains rules for group companies See CLM ¶6433+ Revenue and Customs has published a consultation paper outlining its proposals to simplify the legislation on capital gains for group companies in the following areas: » capital losses following a change in ownership; » value shifting and depreciatory transactions; and » degrouping charges. Degrouping charges apply if a company leaves its group with an asset acquired from another company within that group, within the prior 6 years, to reinstate any gain or loss for capital gains tax purposes which was deferred at the time the asset was transferred. Revenue and Customs’ proposals to simplify the legislation in relation to these rules include (ss 171, 179 TCGA 1992): » instead of the chargeable gain (and liability for any tax payable) falling on the leaving company, the tax would be payable by the holding company; » where a company leaves the group as a result of a sale of shares, effect would be given to the degrouping charge by way of an increase in the consideration payable, or an increase in the costs allowable as a deduction, as appropriate; » where two or more share sales happen at the same time, and a degrouping charge arises, groups would be given the freedom to determine to which disposal the adjustment would apply; » enabling groups to claim a reduction in the degrouping charge where it is just and equitable to do so. For example, where a group retains dormant companies solely for the purpose of ensuring that a company does not leave the group within 6 years of acquiring an asset; and » clarifying the circumstances in which the degrouping charge will apply where two companies are within the same subgroup at the time when an asset is transferred between them, until immediately after they both leave the group. The consultation paper, which includes full details of the proposals and draft legislation to implement them, is available from the HM Treasury website: http://www.hm-treasury.gov.uk/d/consult_simplification_capitalgains.pdf. Comments are invited by 17 May 2010. City Code consultations See CLM ¶6685+ The Takeover Panel has published a consultation paper on proposals to make a number of amendments to the City Code to improve the consistency of the requirements for profit forecasts, asset valuations and merger benefits statements (i.e. quantified statements about the expected financial benefits of a proposed takeover or merger) to be accompanied by a report from professional advisers, when published either before or during the course of an offer. The proposals include: » relaxing the reporting requirements in relation to profit forecasts and asset valuations given in connection with an offer, but which are in fact published in the “normal course” of a company’s business and which are neither used in the debate on the offer nor otherwise a material issue; » requiring reports to be provided when a profit forecast is made for part of a business; » extending the exemptions in relation to certain unaudited interim and preliminary results, which are not to be treated as profit forecasts, reported by companies traded on the AIM and PLUS markets; and » extending the requirement relating to merger benefits statements, to other quantified statements of the potential financial effects of a course of action which is put forward in the course of an offer (for example, cost savings to the offeree company) and an extension of the circumstances in which reports on such statements would be required. Full details are available in the consultation document, which can be downloaded from the Takeover Panel’s website: http://www.thetakeoverpanel.org.uk/wp-content/uploads/2008/11/PCP201001.pdf. Comments are requested by 21 May 2010. The Takeover Code Committee has also announced an intention to consult on whether certain City Code provisions and the timetable for determining the outcome of offers could usefully be improved. It intends to publish a consultation paper on these matters as soon as practicable. Amendment to Rule 5.2 of the City Code See CLM ¶6791 With effect from 8 March 2010, rule 5.2(c)(iii) of the City Code has been amended to widen the scope of the exception to the rule against stakebuilding. An acquisition is now permitted after a firm unconditional takeover offer has been announced and the first closing date has passed, whether or not the merger control regulations are relevant. This amendment broadens the application of the exception for cases where there was no realistic prospect of the offer being referred by the OFT to the Competition Commission and, therefore, avoids the filing of unnecessary merger notices with the OFT. Further details and the revised Code are available from the Takeover Panel’s website: http://www.thetakeoverpanel.org.uk. Publication of final sentencing guidelines for corporate manslaughter offences and health and safety offences causing death See CLM ¶7178, ¶7180 The definitive sentencing guideline for corporate manslaughter and health and safety offences causing death has been published by the Sentencing Guidelines Council. It applies to sentences passed on or after 15 February 2010 (whether or not the offence was committed before that date). As expected, the guideline stipulates that the appropriate fine for a corporate manslaughter offence should seldom be less than £500,000 and could be millions of pounds. For a health and safety offence which is shown to have caused death the appropriate fine should seldom be less than £100,000 and could be hundreds of thousands of pounds. The figure will then be adjusted to take into account factors which aggravate or increase the seriousness of the offence and any mitigating factors. By definition both offences are serious, but the guideline sets out factors likely to be regarded as aggravating or affecting the seriousness of the offence, including: » if the serious injury was foreseeable; » the company falling far short of the applicable standard; » if that kind of breach was common in the company; » the responsibility for the breach going high up in the company; » more than one death, or grave personal injury, occurring; » failure of the company to heed to warnings or advice; and » cost-cutting at the expense of safety. It also gives examples of factors likely to afford mitigation, such as: » a prompt acceptance of responsibility; » a good health and safety record; and » genuine efforts to remedy the defect. The court should consider the financial consequences of a fine, including the resources of the offending company and its ability to pay. For this purpose companies will be expected to provide the court with their published audited accounts for a 3-year period, including the year of the offence. In relation to corporate manslaughter offences the guideline stipulates that a publicity order should be imposed in virtually all cases. This is to be seen as part of the penalty. Copies of the definitive guideline can be freely downloaded from the Sentencing Guidelines Council’s website at: http://www.sentencing-guidelines.gov.uk/docs/guideline_on_corporate_manslaughter.pdf. First corporate manslaughter trial delayed See CLM ¶7179+ The trial of the first company prosecution under the Corporate Manslaughter and Corporate Homicide Act 2007 (see CLM 2010 Newsletter Issue 1) has been delayed. It was due to take place in Bristol Crown Court from 23 February 2010, but has been adjourned due to the company’s director requiring urgent and intensive medical treatment. The case is now expected to be heard in July. Insolvency Service consults on removing the requirement to file “no meeting” notices See CLM ¶8205, ¶8210, ¶8281 The Insolvency Service has published a consultation document in which it asks for comments on a proposal to remove the requirement for the official receiver to file a “no meeting” notice at court in certain cases. These “no meeting” notices must be filed at court (and given to creditors and contributories of the insolvent company) in cases where the official receiver is the liquidator and he decides not to summon meetings of the creditors or contributories for them to appoint a liquidator in his place (s 136(5) IA 1986). The official receiver’s decision whether or not to summon the meetings must be taken within 12 weeks of the winding up order. The Insolvency Service proposes to remove the requirement to file this notice at court in insolvency cases where the official receiver applies to the secretary of state to have someone appointed in his place within the 12-week period (s 137 IA 1986). It is proposed that the official receiver would still be required to send an initial statutory report to creditors (r 4.43 IR 1986), so that creditors are kept informed of the action taken. Comments and views on any consequences not already identified are requested by 31 May 2010. The consultation document can be freely downloaded from the Insolvency Service website: http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/ORTrusteemarch10/ConsultationLetter.pdf. Insolvency Service’s second report on compliance with guidelines for pre-packs See CLM ¶8901 The Insolvency Service has continued to monitor compliance with SIP 16 “Pre-packaged sales in administration” following the publication of its initial report (“Report on the First Six Months’ Operation of Statement of Insolvency Practice 16”) (see CLM 2009 Newsletter Issue 4). It has now published its second report (“Report on the Operation of Statement of Insolvency Practice 16: July - December 2009”). During the latter half of 2009 the Insolvency Service received SIP 16 information from insolvency practitioners relating to 497 companies in administration whose business or assets were sold through a pre-pack sale. Of these, 309 cases (62%) were compliant with the requirements, and spirit, of SIP 16. This shows a surprising and disappointing decline in compliance when compared to the first half of the year, despite the Insolvency Service issuing further guidance in October 2009 (see CLM 2009 Newsletter Issue 6). However, a significant improvement in the quality and timeliness of information being provided has been reported. It was also reported that it remains the case that directors’ misconduct reported by insolvency practitioners does not appear to be more prevalent in pre-pack sales as compared to other company administrations. Looking at 2009 as a whole, approximately one third of all administrations involved a pre-pack sale and 76% of all pre-pack sales were to parties connected with the company in administration. Although, the Insolvency Service suspects that the figures may be somewhat distorted as currently there is no statutory requirement for insolvency practitioners to comply with SIP 16 and there is no statutory definition of what constitutes a pre-pack sale. No recommendations to amend SIP 16 (as was suggested in the initial report) have yet been made. However, the Government has announced that in the near future it will consult on a range of new measures to boost confidence in pre-pack administrations. Some of the options put forward in the consultation are expected to include: » introducing a statutory requirement to comply with SIP 16, with penalties for non-compliance; » automatic scrutiny of directors’ and administrators’ actions by the official receiver following a pre-pack administration; » provision to ensure that the insolvency practitioner advising on a pre-pack sale cannot be appointed as the administrator to implement it; and » requiring court or creditor sanction for pre-pack sales involving connected parties. |
