1 January, 1970

January 2021

19 January, 2021

Q: We have been holding virtual board meetings over the last few months. Is there anything we need to consider as we continue to hold board meetings in this way?

A: Many companies had to quickly adapt last year to holding virtual board meetings. The way board meetings were conducted to deal with the challenges presented by Covid-19, and the way they must continue to be run over the coming months, it is worth ensuring there is a robust plan in place for the board to continue to meet on this basis.

Whilst the Companies Act 2006 generally allows e-communications, the articles should be checked for any provisions on telephone or video conferencing. The Model Articles allow directors’ meetings to be held remotely using video, telephone or other electronic means, however even if the Articles are not explicit on allowing board meeting electronically, it is generally deemed that the meetings will be legally effective.

The Company’s articles should also be reviewed for other practical issues such as the quorum requirements for board meetings, the appointment of alternate director and short notice as deemed appropriate etc. For any companies with overseas entities in the UK, there may be tax implications for companies that are no longer meeting in person and specialist advice on possible exemptions should be sought.

Given the speed with which companies had to adapt to holding virtual meetings, it also may be worth taking into consideration if any improvements can be made, to the meeting process. Boards should consider whether the frequency, length, format, and security arrangements for meetings remain fit for purpose for ongoing virtual meetings.

The Chartered Governance Institute (ICSA) has published a guidance note about virtual board meetings. Key points covered in the guidance are as follows:

• Choosing the right technology and communication channel
• Structuring virtual meetings and avoiding complexity
• The value of preparation
• Establishing ground rules for the meeting
• Clear instructions on accessing the meeting
• The necessity for good boardroom practices
• Alternatives to meetings, such as written resolutions, delegation to a committee or subsequent ratification.

good-practice-for-virtual-board-and-committee-meetings-web1-002(1).pdf (icsa.org.uk)

If you need any help with managing board meetings generally, please contact us. All our contact details are on our website www.brucewallace.co.uk.

January 2021

5 January, 2021

Q: During 2020, our company received Government support through the Job Retention Scheme. Our Remuneration Committee will be meeting in early 2021, what should they be considering in terms of the impact on Executive Pay?

A: Where companies received Government support through the Job Retention Scheme as well as any additional shareholder support, it is generally expected that this needs to be reflected in the outcomes on executive remuneration. Remuneration Committees need to ensure that executives are not detached from the impact of Covid-19 and should consider how employees, shareholders and other stakeholders have all been affected.

The Investment Association issued updated guidance on Executive Remuneration in November 2020 which stated that shareholders would generally not expect the payment of any annual bonuses for FY 2020 or FY2020/21 unless there are truly exceptional circumstances. The guidance indicated that they would not support Remuneration Committees adjusting performance conditions for in-flight annual bonuses or long-term incentive awards to account for the impact of Covid-19. The Committee may therefore need to be prepared to exercise its discretion to ensure the performance of the company and the experience of shareholders over the last year is proportionate to any outcomes on executive pay. The Investment Association acknowledged the challenge of balancing the need to incentivise executive performance at a time when significant leadership and resilience is needed with the experience of shareholders, employees and other stakeholders over the preceding months.

The Remuneration Committee’s report will need to disclose how it reached its conclusions on executive pay for the past year and ensure this ties into the s172 statement in the annual report.

If you need assistance with advising your Remuneration Committee, or with supporting your Board with corporate governance generally, please contact us. All our details are on our website www.brucewallace.co.uk

December 2020

9 December, 2020

Q. In our UK company we have a corporate director that is a legal entity incorporated in Germany, will there be any additional filings that we will have to attend to post 1 January 2021?

A. The UK formally left the EU on 31 January 2020. From 1 January 2021, the filing requirements for a UK company or LLP with EEA corporate officers will change. In the main, changes to filing requirements will only impact UK companies or LLPs that appoint or that have appointed the services of an EEA corporate officer.

UK companies and LLPs with a corporate officer will have to provide additional information to Companies House (amendments to sections 164 and 278 of the Companies Act 2006). The additional information is:

• Legal form and its governing law

alongside existing information which is:

• name
• registered (or principal) office address
• register and registration number (if applicable)

This change will not affect a company or LLP which has a UK registered limited company as a corporate officer.

The changes apply for new incorporations/new appointments and existing appointments and the relevant forms have been updated and can be found on the CH website. https://www.gov.uk/guidance/changes-to-companies-house-forms-from-1-january-2021#corporate-officers

If you need any help with your CH filing obligations or with any of your compliance or governance policies generally, please contact us. All our contact details are on our website www.brucewallace.co.uk

December 2020

November 2020

12 November, 2020

Q: We are a large unquoted company in the process of planning for our 2020 Annual Report (year end 31 December 2020). What do we need to consider in relation to the new energy and carbon regulations?

A: The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (the “2018 Regulations”) came into force on 1 April 2019 and apply to companies in scope for financial years starting on or after 1 April 2019. The aim of the 2018 Regulations is to increase awareness of energy costs within large organisations as well as provide greater transparency for investors and other stakeholders on business energy efficiency and emissions

Unquoted companies or LLPs are defined as ‘large’ if they meet at least two of the following three criteria in a reporting year:

•a turnover of £36 million or more;

•a balance sheet of £18 million or more; or

•250 employees or more.

Requirements have existed for quoted companies to report on Greenhouse Gas emissions since 2013. These have been updated by the new regulations but are not considered here.

The new disclosures will need to be included in the Directors Report. If the information is considered to be of strategic importance to the company, it can be included in the Strategic Report, with a note explaining this in the Directors Report.

The following information will need to be disclosed:

Total UK energy use.

Greenhouse gas emissions due to UK energy use.

An ‘intensity ratio’ – being a relevant ratio of emissions against a factor associated with the company’s activities. Intensity ratios compare emissions data with an appropriate business metric or financial indicator, such as sales revenue or square metres of floor space.

Comparative figures on energy use and emissions for previous years (these can be excluded for the first year of disclosure).

Energy efficiency action taken in the reporting period, for example a company had installed smart meters across all sites and increased video conferencing technology for meetings to reduce the need for travel between sites.

A statement of the methodologies used in the calculation of these disclosures.

Organisations which use 40,000 kilowatt-hours (kWh) or less a year are exempt under de minimis rules but will need to include a statement confirming they are a low energy user. Public-sector organisations are exempt from the 2018 Regulations.

With investors increasingly expecting information to be disclosed on climate-related issues it is worth noting that the FRC announced in November 2020 that their future work may include undertaking a review of reporting under these new regulations during 2021.

If you need any help with your year-end reporting planning or with any of your compliance or governance policies generally, please contact us. All our contact details are on our website www.brucewallace.co.uk.