Corporate News - December 2017

by Hogan Lovells

Hogan Lovells

Corporate Governance – recent developments

This article looks at the following recent developments in corporate governance: ISS 2018 Proxy Voting Guidelines updates, the Hampton-Alexander Review supplementary report on gender balance in FTSE leadership, the Investment Association principles of remuneration for 2018, the FRC Lab report on risk and viability reporting, the FRC FAQs on non-financial reporting, and the IA position statement on virtual only AGMs. MORE>


Consultation on revised Corporate Governance Code and future direction of UK Stewardship Code

The FRC has published a consultation on its proposals for a revised UK Corporate Governance Code. The FRC has carried out a wide-ranging review of the Code, with particular focus on the themes of responsibility to wider stakeholders, including the workforce, shareholder engagement, corporate culture, the remuneration committee and diversity. The consultation also raises some high-level questions about the future direction of the UK Stewardship Code. The consultation closes on 28 February 2018.  MORE>  


Takeover Code amended from 8 January 2017 – asset sales and statements of intention

The Panel has confirmed changes to the Takeover Code with effect from 8 January 2018. The changes relate to recent consultations in respect of asset sales in competition with an offer and other matters; and statements of intention and related matters. The changes have, largely, been adopted as proposed. MORE> 


Complying with SPA notice provisions: united we stand, divided we fall

A recent High Court decision has delivered a pertinent reminder of the importance of complying with the strict terms of notice provisions in a sale and purchase agreement, both in terms of the contents of those notices and how they are served, and of giving careful consideration to the effects of limitations of liability in a sale and purchase agreement. MORE>


LSE consults on changes to the AIM rules

On 11 December 2017, the London Stock Exchange (LSE) published a Feedback Statement which sets out an overview of the market's responses to its Discussion Paper: AIM Rules Review which was published in July, this year. The Feedback Statement summarises the market's views, sets out the LSE's feedback and proposes new rules for consultation. MORE> 


LSE applies for AIM to be a SME Growth Market   

On 3 January 2017, the Markets in Financial Instrument Directive (MiFID II) will introduce a new designation of "SME Growth Market" that operators of qualifying markets may apply for. In AIM Notice 48, the London Stock Exchange (LSE) confirms that it has applied for AIM to be registered as an SME Growth Market, which, if approved, will take effect from 3 January 2018.

As the eligibility requirements for SME Growth Markets require that certain regulatory information remains available for five years once published, the LSE is making minor consequential changes to the AIM Rules to clarify that AIM Rule 26 (Company information disclosure) will require that (i) any prospectus an AIM company has published; (ii) all annual financial reports and half yearly reports; and (iii) all inside information notifications made pursuant to MAR must be posted and maintained on the AIM company's website for a period of at least five years. The new rules will take effect on 3 January 2018.


FCA quarterly consultation paper: minor amendments to the LRs and DTRs 

The FCA has published its quarterly consultation paper no. 19  in which, amongst other things, it proposes some minor changes to the Listing Rules (LRs) and Disclosure Guidance and Transparency Rules (DTRs). In particular, Premium Listing Principle 6 will be amended to provide that a premium listed company must communicate information to holders and potential holders of its listed equity shares in such a way as to avoid the creation or continuation  of a false market in those listed equity shares. Additionally,  the DTRs have been amended to clarify that required information on a company's diversity policy must be included in the corporate governance statement - whether such statement is set out in its directors' report, in a separate report published together with the annual report or, in a document published on the company's website.   

Responses to the consultation must be submitted to  by 1 February 2018.   


ESMA updates its MAR Q&As      

On 21 November 2017, ESMA published a revised version of its Q&As on the Market Abuse Regulation  (MAR) which contains two new questions and answers concerning PDMR transactions. 

In the updated version, ESMA clarifies that, when an issuer allows a PDMR to trade during a closed period, the general insider dealing provisions under MAR would still apply and, consequently, the PDMR must still give consideration as to whether or not the relevant transaction would constitute insider dealing. Additionally, ESMA confirms that those types of PDMR transactions which are prohibited during a closed period are the same types of transactions as must be notified under MAR. ESMA clarifies, however, that the MAR provision which permits issuers to allow a PDMR to trade during a closed period only applies to a PDMR conducting transactions on his or her own account or for the account of a third party, whereas the notification requirement in respect of PDMR transactions also applies to persons closely associated with a PDMR.  


What's on the horizon?   

Our corporate law horizon spotter looks ahead at the regulatory agenda for 2018 and 2019 and highlights the key items which may affect you and your business.

In the meantime, we wish you and your families a very happy festive season and best wishes for the new year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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