An interesting and reflective article by Laurence Kaye of Shoosmiths on some of the legal issues prominent in the digital revolution.
The Enterprise and Regulatory Reform Act 2013 received Royal Assent on 25 April 2013.
Part 6 of the Act contains the provisions which will give shareholders in quoted companies a binding vote over the pay of their directors, by amending Part 15 of the Companies Act 2006. It is expected that those amending provisions will come into effect on 1 October 2013, with the provisions applying to quoted companies with financial years beginning on or after that date.
The Quoted Companies Alliance published on 1 May 2013 a revised edition of its Corporate Governance Code for Small and Mid-Size Quoted Companies. The revised Code can be obtained from the QCA for a fee.
The covering QCA press release summarised the changes to the Code:
“Last published in 2010, the QCA Code has been revised and updated to take into account a number of corporate governance developments. Some key changes include:
Emphasising the benefits of good governance to a public company, including how it can build trust between the company, its shareholders and potential shareholders;
Focusing on the prime importance of companies delivering good quality explanations of its approach, actions and behaviour;
Emphasising the central role of the chairman in delivering good governance;
Further embedding the principle of constructive engagement between companies and shareholders in light of the UK Stewardship Code;
Including greater detail on the characteristics of an effective board; and
Reordering the Quoted Companies Alliance’s 12 principles of corporate governance to place greater emphasis on the delivery of growth in long term shareholder value.”
The Insolvency Service published in April 2013 a guide for directors “of any company involved in compulsory liquidation (winding up by the court) in England and Wales”. The guide also “talks about the disqualification of company directors and criminal offences in relation to a company [and] also summarises the other insolvency procedures that can apply to companies and explains some common insolvency terms”.
The guide (URN: 13/769) can be downloaded here.
A UK government guide, “Small businesses: what you need to know about cyber security“, was published on 23 April 2013.
The associated BIS press release is here.
A good short note from Manches on the recent Court of Appeal judgment in Dorchester Project Management Ltd v BNP Paribas Real Estate Advisory Property Management UK Ltd, where an NDA was litigated.
From Manches’ note:
“When entering into a confidentiality agreement (or NDA) with another business or organisation there may be times when, in order to meet your objectives, you want to allow the recipient to go on to disclose confidential information to third parties. In such cases it is critically important to have proper protection in place.
Businesses concerned about protecting opportunities where third parties may need to become involved should give proper consideration to whether ‘standard’ confidentiality agreements contain adequate provisions. If the intention is that a recipient of information needs to procure a back-to-back agreement on terms equivalent to those contained in the original confidentiality agreement, the original agreement should clearly say so.”
Dairy Crest has used £60 million of maturing cheese.
Kodak has sold two business to its UK scheme, enabling it to exit Chapter 11 in the US.
Reporting: European Commission proposed directive on disclosure of non-financial and diversity information
On 16 April 2013 the European Commission published a proposed directive on the disclosure of non-financial and diversity information by large companies and groups.
From the FAQs:
“This proposed Directive would amend the Accounting Directives (Fourth and Seventh Accounting Directives on Annual and Consolidated Accounts, 78/660/EEC and 83/349/EEC, respectively). The objective is to increase EU companies’ transparency and performance on environmental and social matters, and, therefore, to contribute effectively to long-term economic growth and employment.
Companies concerned will be required to disclose in their annual reports relevant and material information on policies, results and risks concerning environmental aspects, social and employee-related matters, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors.”
Here (dated “Spring 2013″).
The Investment Management Association’s February 2013 guidance on the use of dealing commission to pay for corporate access can be downloaded here.
Following the Kay Review’s suggestion that the operation of fiduciary duties in the investment management industry should be reviewed, in March 2013 the Law Commission announced that its has started work on this project. The Commission expects to open a consultation in October 2013, with recommendations to Government being made by June 2014.
The Law Commission’s page on its review, containing its terms of reference, is here.
The Institute of Chartered Accountants in England and Wales published a new technical guidance note (Tech 01/13CFF) in March 2013 (with an effective implementation date of 1 September 2013) giving “Guidance on financial position and prospects procedures” on London IPOs.
“ICAEW has published guidance that addresses a regulatory requirement of companies seeking a listing (or admission to trading) on a UK market.
Directors of a company that is seeking a Premium Listing of its shares on the Main Market of the London Stock Exchange have a regulatory obligation to have established procedures that provide a reasonable basis for them to make proper judgements on an ongoing basis about the company’s financial position and prospects. There are also regulatory requirements regarding financial position and prospects (FPP) procedures for companies seeking an admission to trading on AIM or the ISDX Growth Market. A reporting accountant will usually be requested to perform services in this regard.
Technical Release TECH 01/13CFF was published following a consultation launched in June 2010 and an exposure draft published in March 2012. TECH 01/13CFF is aimed at:
- directors of companies preparing for an IPO, explaining how they can demonstrate that they have established FPP procedures to address relevant objectives and;
- reporting accountants undertaking an assurance engagement to address relevant objectives and providing an assurance report in relation to FPP procedures established by directors.
TECH 01/13CFF replaces the guidance in FRAG 10/95 The London Stock Exchange Listing Rules paragraphs 2.11 and 2.8. It should be implemented by 1 September 2013.”
The TUC’s “Trade Union and Engagement Guidelines” of March 2013 are here.
Where…is the dividing line between an unenforceable agreement to agree and a contract which binds the parties, despite leaving some issues for future agreement?
A good note from Macfarlanes discussing this question in the light of the Court of Appeal’s decision in MRI Trading AG v Erdenet Mining Corp LLC  EWCA Civ 156.
From the Macfarlanes note:
“The Court of Appeal held that the critical question was whether the parties intended that the contract would be binding in the event that agreement on the outstanding points was not achieved. There was a distinction between situations:
- where the parties must be taken to have intended that the matter should be left to their future agreement on the basis that either was to remain free to agree or disagree about that matter as his own perceived interest dictates – in which case there would be no bargain to enforce; and
- where the true intention of the parties was that the matter to be agreed in the future was capable of being determined, in the absence of future agreement, by some objective criteria of fairness or reasonableness.
The contract in this case fell into the second category and was, therefore, enforceable.”
Here is the LSE’s webpage on the new High Growth Segment, the “new segment of the Main Market, designed to assist mid-sized European and UK companies that require access to capital and a public platform to continue their growth”, which launched in March 2013.
Here is a useful note by Osborne Clarke on the HGS.
Here. Includes “a high level summary of what you need to know about the AIFMD”.
From Paul Johnson’s FT column: “There are a host of websites and magazines for entrepreneurs, but no one who works for themselves can afford to spend hours a day surfing. So I have selected a handful of my favourite sites to save you time.”
The list is here.
The Mental Health (Discrimination) Act 2013 is here; the relevant provision is section 3. A short note from Manches explaining the changes, which are effective from 28 April 2013, to the model articles of association (for private and public companies and for companies limited by guarantee) is here.
Extract from Manches note: read more »
“How paywalls are evolving” – Felix Salmon. Refers to MediaPass.
“…it’s a mistake — at least from a purely financial perspective — to treat all readers equally. Some readers have a much greater propensity to pay than others; ideally, you want to extract a lot of money from those readers, while also allowing the vast majority of your visitors — the ones who will never pay you anything — to still consume your content and view the associated ads…
…And certainly it seems to be a good idea to offer a range of subscription lengths, priced so that there’s a strong incentive to go for the longer-dated annual subscription, even if again that means a substantially lower rate on a per-month basis.
I’s not all that hard to tell who’s likely to be willing to subscribe, and who isn’t. Print subscribers, for instance, are much more likely to be willing to pay for a digital subscription than a reader who doesn’t already pay for the print version. And people who visit frequently, and who read a lot of local news, or sports news, are also more likely to subscribe.
In general, the trick is to get as many subscribers as you can — because once a person subscribes, they generally turn out to be surprisingly loyal and price-inelastic. You can keep on charging their credit card, even at steadily-rising rates, and they’re not going to unsubscribe. And then, for the 90% of readers who don’t subscribe, it’s a good idea to find content for them, too. The paywall shouldn’t just be a “pay here or get nothing” option: the “no thanks” button should take you to valuable free content…
…the act of putting up a paywall is the act of “essentially harvesting revenue from a loyal long-term audience” — people who have been reading the publication for years, and have turned it into a habit they don’t want to give up. That’s fine, as a short-term means of maximizing revenues. But it’s dangerous in terms of getting new loyal readers. Which is one reason why online media startups almost never have paywalls: they want as many people as possible to discover them.”
Herbert Smith charged £1.8 million in fees for work on the Salz Review of Barclays’ Business Practices
See page 172 of the Salz Review document.
The 244 page Review only makes one mention of Barclays’s General Counsel (and that is in the context of his membership of a board committee).
The Review’s section on Board governance and the Appendix on “What is Culture and How Can It Go Wrong?” are vaguely interesting. Otherwise, the Review adds little to the recommendations of the Walker Review of Corporate Governance in UK banks.
It cost the Pru hundreds of millions in abort costs and fees in 2010, and today it has cost them another £30 million in an FSA fine.
Prudential, according to the Financial Services Authority, didn’t tell the regulator what it was intending – even when the regulator pretty much asked and even though its own advisers emphasised the importance of keeping the FSA informed. The CEO is also censured. FSA press release here and Final Notices here (the Pru) and here (the CEO).
From the FSA press release (our emphasis added): read more »
Here, following Yam Seng Pte Limited v International Trade Corporation Limited.
- Shareholding disclosures
- Powers of significant shareholders
- Applicability of the Takeover Code
- Insider dealing and market abuse.
The Financial Services Authority published on 18 March 2013 a consultation paper (CP 13/8) on the Financial Conduct Authority’s approach to the issue of warning notices. Press release here and consultation paper here.
“The main point of our proposals is to be transparent about our enforcement action early on. The financial services industry and consumers will be able to understand the types of behaviour that we consider unacceptable at an earlier stage, which will help promote credible deterrence.”
The consultation closes on 18 June 2013.
Here. The changes take effect on 6 April 2013.
On 11 March 2013 the Department of Business, Innovation and Skills published a second draft of the regulations which will implement the Government’s changes to the corporate governance framework for executive remuneration. As we discussed in this post of June 2012, the big change is to give shareholders in quoted companies a binding vote over executive remuneration.
On 22 March 2013 BIS published a useful set of FAQs on these new regulations. Section C of those FAQs attempts to explain the implementation of the timing of the new regime.
The Financial Reporting Council’s “Financial Reporting Lab” published on 5 March 2013 the results of its second project on reporting remuneration, “this time exploring the views of investors and companies on two new aspects of the draft reporting regulations on remuneration:
- scenario charts demonstrating how directors’ pay varies with performance, and
- a chart comparing CEO pay based on the single figure for remuneration, with company performance, measured using Total Shareholder Return”.