26 October, 2018
1. The final version of the Wates Corporate Governance Principles for Large Private Companies will be published in December 2018.
2. The UK Government recently issued a series of proposals to enhance powers of The Pensions Regulator aimed at protecting defined benefit pension schemes. The key changes are intended to broaden the scope of The Pension Regulator’s existing powers. These changes, if passed, will increase the risk of non-compliance for directors and officers of employers who provide defined benefit pension schemes.
3. The Government has asked the ICSA to convene a group including representatives from the investment community and companies to identify further ways of improving the quality and effectiveness of board evaluations. One aspect of this will be the development of a code of practice for external board evaluations.
21 September, 2018
1. On 8 March 2018, the London Stock Exchange issued AIM Notice 50 confirming changes to be made to the AIM Rules for Companies. The revised AIM Rules came into effect on 30 March 2018. One of the principle amendments to the AIM Rules was made to Rule 26. This Rule now includes the requirement that an AIM company must supply details of the recognised corporate governance code its board of directors has decided to apply, how the AIM company complies with that code, and where it departs from its chosen corporate governance code an explanation of the reasons for doing so. This information should be reviewed annually, and the website should include the date on which this information was last reviewed.
In April 2018, the Quoted Companies Alliance updated the QCA Corporate Governance Code for Smaller Quoted Companies (QCA Code). The revised QCA Code now has ten principles (reduced from twelve). The updated principles cover three main areas requiring AIM listed companies to deliver growth, maintain a dynamic management framework and build trust. In accordance with the revised QCA Code, AIM-listed companies are required to demonstrate an appropriate application of the first nine principles to help ensure good governance is in place. The tenth principle is to ensure those governance principles are adequately reported and communicated to shareholders. An AIM company must set out the extent of compliance with all ten of the QCA Code principles on its website or in its Annual Report on or before 28 September 2018.
2. In August 2018, Business Secretary Greg Clark announced a new crackdown on reckless directors. The new proposals are being introduced to safeguard workers, pensions and small suppliers when a company goes bust. The Government also plans to announce new measures to improve the quality of directors’ work by developing proposals to introduce new and better training for directors to make them more aware of their legal duties. These measures, which will be set out in further detail in the autumn, are being put forward as part of the Government’s response to the corporate governance and insolvency consultation launched in March this year. More information can be found at www.gov.uk/government/news/new-crackdown-on-reckle...
3. In July 2018, the Financial Reporting Council (FRC) published Guidance on the Strategic Report. The FRC first published the Guidance in June 2014. This revised version of the Guidance has been updated to strengthen the link between the purpose of the strategic report and the director’s section 172 duty to promote the success of the company. The legislative requirements relating to s172 are effective for financial years beginning on or after 1 January 2019. A copy of the Guidance can be downloaded from the FRC website. www.frc.org.uk
1 August, 2018
1. An Independent Review of the Financial Reporting Council was launched in early June. The Review is being led by Sir John Kingman. The FRC sets UK accounting standards and works to influence international accounting standards. Through the Conduct Committee the FRC reviews the financial statements of public and large private companies for compliance with the Companies Act. The FRC also monitors and maintains the UK Corporate Governance Code and the Stewardship Code. The questions being asked in the call for evidence paper are whether the FRC and its current regulatory structure are as effective as they need to be in current circumstances and for the future. More information can be found at www.gov.uk/government/consultations/financial-repo...
2. The Wates Corporate Governance Principles for Large Private Companies Consultation was published in June. The draft governance principles seek to accommodate the different management and ownership structures of large private companies in the UK by introducing a high-level approach to good governance. The consultation closes on 7 September 2018. More details can be found on the FRC website www.frc.org.uk
3. The Sentencing Council has published new guidelines on sentences for breaching Director Disqualification Orders or Director Disqualification Undertakings. The new guidelines come into effect on 1 October 2018 and increase the possibility for the Court to order longer prison sentences for Directors who default on their disqualifications. The guidelines can be downloaded from www.sentencingcouncil.org.uk
2 July, 2018
1. The new UK Corporate Governance Code will be published on Monday 16th July www.frc.gov.uk The revised Code focuses on the importance of long-term success and sustainability, addresses issues of public trust in business and aims to ensure the attractiveness of the UK capital market to global investors through Brexit and beyond.
2. In March 2018, the London Stock Exchange announced that all AIM companies will be required to apply a recognised corporate governance code from 28 September 2018. The updated AIM Rules for Companies can be found at www.londonstockexchange.com. Many AIM companies are choosing to apply the QCA Corporate Governance Code which was updated in April 2018. The new QCA Code covers the meaning of good corporate governance, the 10 corporate governance principles to follow and step-by -step guidance on how to effectively apply the principles within a company. Some AIM companies follow the Financial Reporting Council UK Corporate Governance Code, or at least some aspects of it.
3.In June, the Department of Business, Energy and Industrial Strategy published an explanatory document on new company reporting regulations – The Companies (Miscellaneous Reporting) Regulations 2018. The draft regulations set out the requirements for large companies to include a statement as part of their strategic report describing how directors have had regard to matters in section 172(1)(a)-(f) (director’s statutory duties). Very large and public unlisted companies will also be required to include a statement as part of their directors’ report stating which corporate governance code, if any, has been applied and how. Subject to Parliamentary approval, the new requirements will apply to company reporting on financial years starting on or after 1 January 2019. The full document setting out all details of all the requirements can be found on www.gov.uk/government/publications/corporate-gover...
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