A NOTEPAD ON COMPANY AND FINANCIAL LAW, NEWS AND REGULATION
FRC review of how the UK Corporate Governance Code and the UK Stewardship Code are being implemented
The Financial Reporting Council published its first analysis of the “Impact and Implementation of the UK Corporate Governance and Stewardship Codes” on 14 December 2011. The analysis shows:
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Disclosure and communication by private equity firms and their portfolio companies
The Guidelines Monitoring Group (the GMG) has produced its fourth report (the Report), summarising the private equity industry’s conformity with the Guidelines for Disclosure and Transparency in Private Equity (the Guidelines). The Guidelines were introduced following Sir David Walker’s review in November 2007 of the adequacy of disclosure and transparency in private equity.
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Formalising the retail cascade exemption, and extending the exemptions 
for securities offered to employees
In November 2010 the European Parliament and Council adopted the Amending Directive (the AD (Directive 2010/73/EU)), which revises the Prospectus Directive and the Transparency Directive. Member States have until 1 July 2012 to implement the AD into national law. On 13 December 2011 HM Treasury and the Financial Services Authority published a joint consultation paper (CP (CP11/28)) setting out how they propose to implement the AD in the UK.
The purpose of the AD is, in the words of the CP:
“to increase legal clarity and the overall efficiency of the prospectus framework, as well as an opportunity to simplify the regime for the benefit of issuers, without compromising investor protection.”
The AD also makes changes to the Prospectus and Transparency Directive to ensure that issuers are not required to duplicate their disclosures under the two regimes and to ensure the two regimes are aligned.
Two of the measures contained in the AD have already been implemented into UK law, as we discussed in this post. Those changes increased, from 1 July 2011:
The CP summarises the key changes that have been made to the Prospectus Directive:
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Changes to the Fourth Company Law Directive pave way for UK Government to develop a new reporting regime for the smallest companies
UPDATE 24 March 2012: Following the EU’s adoption of the Directive on micro-entity reporting in February 2012, the Government has now announced that it intends to take advantage of the new EU regime and will consult on implementation in due course. See this post for details.
The European Parliament on 13 December 2011 agreed its position on a draft directive on the accounting and financial reporting requirements of very small companies – what are now referred to as “micro entities”. The effect is to create a new reporting regime better suited to micro entities than that set out in the 1978 Fourth Company Law Directive and the 1983 Seventh Company Law Directive (and in turn reflected in the UK Companies Acts), which is considered too demanding for the very smallest companies.
A set of FAQs on the draft directive is here and a press release is here.
The draft directive is expected to come into force in early 2012. The result will be that the UK Government will be able to proceed – should it decide to – with its proposal to develop a reporting regime for the smallest companies. That proposal was set out in a joint Department of Business, Innovation and Skills and Financial Reporting Council discussion paper titled “Simpler Reporting for the Smallest Businesses” in August 2011, which we discussed in this post.
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