Corporate weekly highlights—17 January 2019

18 Jan 2019 | 10 min read

This week’s edition of Corporate highlights includes the latest updates on Brexit, reports by ECON on Commission proposals to upgrade the European Supervisory Agencies framework, and an annual report from ESMA on the application of accepted market practices in accordance with the Market Abuse Regulation. Also included is a Commercial news analysis reflecting on the Law Society’s reply to Law Commission’s consultation on electronic execution of documents.

In this issue:

Brexit

Companies, Limited Liability Partnerships and Partnerships (Amendment etc) (EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. It proposes to amend primary and subordinate legislation and revoke subordinate legislation and retained direct EU legislation in the field of company law in order to address deficiencies in retained EU law which arise from the withdrawal of the UK from the EU. It also ensures that the UK’s company law framework will be able to function effectively, providing clarity and a smooth transition for business on and after exit day. It comes into force on exit day. Note that the draft enactment is identical to the draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc) (EU Exit) Regulations 2018, which were published in October with the exception of some additional footnotes which reference the fact that certain Companies Act 2006definitions are to be amended by other regulations published in connection with the UK’s exit from the EU.

For further information, see: LNB News 15/01/2019 76.

Department for Business, Energy & Industry publishes for update on EU exit preparations

The Department for Business, Energy & Industry Strategy (BEIS) has published an update regarding steps being taken to prepare businesses in the event of a no-deal Brexit. BEIS has also recruited 700 new staff to work on EU exit policy using additional funding allocated by HM Treasury for Brexit preparedness.

For further information, see: LNB News 11/01/2019 62.

Brexit Bulletin—UK and EU exchange views on the Withdrawal Agreement and political declaration ahead of meaningful vote

As the Lords and the Commons prepared for their delayed votes on the Withdrawal Agreement and political declaration on the future UK/EU relationship, the Prime Minister made a final attempt to secure support for the deal, publishing correspondence with the Presidents of the European Commission and Council, setting out their respective assurances, clarifications and interpretations, with particular focus on the Northern Ireland backstop. Following previous publication of his legal advice on the issue, the Attorney General also gave an opinion, concluding that the Withdrawal Agreement represents the ‘only politically practicable and available means’ of securing the UK’s exit from the EU.

For further information, see: LNB News 14/01/2019 107.

Financial Services Contracts (Transitional and Saving Provision)(EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment (which was published on 17 December 2018—see Financial Services News Analysis: HM Treasury publishes draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019) is laid before each House of Parliament in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This draft enactment proposes to amend UK subordinate legislation in relation to the EEA's ‘financial services passport’ which allows firms in EEA states to offer services in any other EEA state on the basis of their home state authorisation and to non-UK central counterparties and trade repositories which provide certain services in the UK under the European Market Infrastructure Regulation in order to address deficiencies in retained EU law. Without this instrument, where these firms do not enter the UK's temporary regimes, they may not be able to meet existing contractual obligations or provide services.

For further information, see: LNB News 16/01/2019 75.

Financial services regulation for corporate lawyers

ECON Reports on proposals to enhance powers of ESAs

The European Parliament’s Economic and Monetary Affairs Committee (ECON) has published Reports on Commission proposals to upgrade the European Supervisory Agencies (ESAs) framework to ensure they can assume an enhanced responsibility for financial market supervision (Report A8-0013/2019), and to amend MiFID II and Solvency II to strengthen the role of the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (Report A8-0012/2019). The European Parliament has also published Report A8-0011/2019 on the Commission’s proposal to amend Regulation (EU) 1092/2010 to strengthen the role of the European Systemic Risk Board.

For further information, see: LNB News 15/01/2019 98.

ESMA reports on accepted market practices under MA Regulation

The ESMA has published its annual report on the application of accepted market practices (AMP) in accordance with the Market Abuse Regulation (MAR). AMPs are a defence against allegations of market manipulation. In particular, dealings in financial markets which are carried out for legitimate reasons and in conformity with an established AMP will not constitute market manipulation. ESMA's report provides an overview on the establishment and application of AMPs in the EU, with particular reference to the AMPs established on the basis of the Market Abuse Directive and which were still in force when MAR became applicable, and the AMPs which have been established under MAR.

For further information, see: LNB News 16/01/2019 106.

House of Commons European Scrutiny Committee considers progress of the revised EU prudential framework for investment firms, the banking reform packaged and proposed Regulation on sustainable finance disclosures

The House of Commons European Scrutiny Committee has published details of documents considered at its meeting on 9 January 2019. The Committee looks at the significance of EU proposals and decides whether to clear the document from scrutiny or withhold clearance and ask questions of the government. The Committee is now looking at documents in the light of the UK decision to withdraw from the EU. From a financial services perspective, the 9 January 2019 meeting considered the progress of the revised EU prudential framework for investment firms, EU regulation of crowdfunding platforms and the proposed Regulation on sustainable finance disclosures.

For further information, see: LNB News 16/01/2019 109.

Commercial law for corporate lawyers

Reflections on the Law Society’s reply to Law Commission’s consultation on electronic execution of documents

Commercial analysis: Christina Gill, associate at Walker Morris, considers the Law Society’s response to the Law Commission’s consultation on electronic execution of documents.

The Law Society published evidence and opinions in response to the Law Commission’s consultation to consider how to simplify the execution of documents electronically (see: LNB News 27/11/2018 74). This commercial analysis considers the practical implications of the Law Society’s response, the extent to which the response agrees with the position taken by the Law Commission, the key take-aways from the Law Society’s response and the likely next steps.

For further information, see News Analysis: Reflections on the Law Society’s reply to Law Commission’s consultation on electronic execution of documents.

Additional Corporate updates this week

UK mergers: £300,000 fine imposed on Ausurus and EMR for breach of initial enforcement order

On 10 January 2019, the Competition and Markets Authority (CMA) published a notice (dated 20 December 2018) of a penalty imposed on Ausurus Group Ltd (Ausurus) and European Metal Recycling Ltd (EMR) (its wholly owned subsidiary) for failure to comply with an initial enforcement order (IEO) issued by the CMA on 11 September 2017. The IEO related to the completed acquisition by Ausurus, through EMR, of CuFe Investments Limited (CuFe)—including its wholly-owned subsidiary, Metal & Waste Recycling Limited (MWR). The CMA imposed a total fine of £300,000 on Ausurus and EMR for two separate infringements of the IEO.

For further information, see: LNB News 10/01/2019 79.

Additional news—daily and weekly news alerts

This document contains the highlights from the past week’s news. To receive all our news stories, whether on a daily or a weekly basis, amend your personal settings within your ‘News’ tab on the homepage by clicking on either ‘Email’ or ‘RSS’ (depending on how you prefer to receive them) on the right hand side of the blue banner.

New and updated content

New Practice Note

We have published a new Practice Note in our Directors and company secretaries topic: ICSA and Henley Business School guidance on conflict and tension in the boardroom.

Dates for your diary

DateDevelopment
21 January 2019The first parts of the technical advice published by the ESMA on the Prospectus Regulation is expected to form the basis for the delegated acts to be adopted by the European Commission from this date (subject to endorsement by the Commission).
ESMA has published the first part of its technical advice under the Prospectus Regulation. The technical advice covers the areas of format and content of prospectuses, the EU Growth Prospectus and the scrutiny and approval of prospectuses. In developing the advice, ESMA has taken into account responses to three consultation papers published on 6 July 2017.
See: LNB News 03/04/2018 79.
21 January 2019Deadline for responses to the update paper published by the CMA in relation to its statutory audit market study.
On 18 December 2018, the CMA published an update paper to its statutory audit market study identifying serious competition concerns in, and proposing changes to legislation to improve, the audit sector. The CMA is now consulting on proposed legislation to separate audit from consulting services, introduce measures to substantially increase the accountability of those chairing audit committees in firms' and impose a ‘joint audit’ regime giving firms outside the Big Four a role in auditing the UK’s biggest companies.
See: LNB News 18/12/2018 43.
30 January 2019The Financial Reporting Council (FRC) is expected to publish a consultation paper on the Stewardship Code, with a final version of the revised Stewardship Code expected to be published in the summer of 2019.
See FRC: UK Stewardship Code.
31 January 2019Deadline for feedback on the discussion paper published by the Financial Conduct Authority (FCA) on the impact of climate change and green finance on financial services (DP18/8).
The FCA discussion paper seeks input on four areas in which it considers a greater regulatory focus is warranted: climate change and pensions; enabling competition and market growth for green finance; ensuring that disclosures in capital markets give adequate information to investors on the financial impacts of climate change; and the scope for the introduction of a new requirement for financial services firms to report publicly on how they manage climate risks.
See: LNB News 15/10/2018 25.
1 February 2019The benchmark policies issued by Institutional Shareholder Services (ISS) will apply to shareholder meetings on or after this date.
See: LNB News 20/11/2018 21 and LNB News 07/12/2018 106.

Trackers

To track key legislative and regulatory developments, see our Trackers:

Brexit legislation tracker

Brexit timeline

MiFID II—timeline

Market Abuse—timeline

Prospectus Regulation tracker

Transparency Directive tracker

Listing Rules tracker

Disclosure Guidance and Transparency Rules Sourcebook tracker

Prospectus Rules tracker

Latest Q&As

New Q&As added this week:

1. What form must company records be kept in?

2. Does a UK subsidiary of an overseas parent have to provide CEO pay ratio information in its annual report?

Useful information

To view analysis of the latest deals in the market and the underlying transaction documents, use our Market Tracker deal analysis tool.

To read about the latest corporate announcements, see our Market Tracker weekly round-up—11 January 2019.

To read about the latest issues and developments which we are following in Market Tracker, see our latest blog post: Market Tracker weekly bulletin—17 January 2019

Area of Interest