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The ICSA Scotland Conference16 June 2016
WiFi: RCPE – WiFiPassword: chiron1681
Conference ChairGary Gray, Chair, ICSA Scotland Branch
To view all the slides, go to the conference webpage and click the link.
Follow us on: @ICSA_News
Please use the hashtag #ICSASco16
Regulatory round upLindsay Wallace, Director of Risk and Knowledge Management and Morag Moffett, Director, Employment Division, Burness Paull LLP
Execution of Documents under Scots Law
The ICSA Scotland Conference - 16 June 2016
Lindsay Wallace, Director of Knowledge and Risk Management
AberdeenEdinburghGlasgow
Execution of Documents: Overview
• Quick reminder of key Scots law provisions• Recent additional Scots law provisions
– counterparts– electronic delivery
• Practical considerations
Quick reminder: Scots Law
• Requirements of Writing (Scotland) Act 1995• No requirement for Scots law contract to be in writing, except:
– interests in land– gratuitous unilateral obligations– trusts in which the transferor is the sole trustee– wills
Informality Leads to...
• Numerous cases where central issue is whether there is a legally binding contract– Email exchanges– comfort letters– letters of support– side letters– verbal assurances
• there may or may not have been execution• in all these cases, intention is deciding factor
Don’t get caught out by informal communications
Valid v Probative:• Additional signatory/witness in prescribed manner makes
document probative• evidential value• probative does not mean “more valid” – simply confers
presumption re subscription• a document which requires to be in writing requires to be
validly executed – but does not necessarily need to be probative too BUT
• only probative documents can be registered at Land Register/Books of Council and Session
It’s an issue of evidence, not validity
Electronic execution
• Land Registration etc. (Scotland) Act 2012– amended ROW(S)A to allow for all documents to be executed electronically
• except wills: continue to require paper and ink– but not electronic registration
• Electronic Documents (Scotland) Regulations 2014– simple electronic signature not valid under ROW(S)A
• “I accept” button on computer screen– advanced electronic signatures
• certification of identity• is valid under ROW(S)A• probative if “qualified” electronic signatures issued by approved
certification provider (Smartcards)
Law is now ahead of practical reality
Updated Scots Law Provisions – Counterparts• Legal Writings (Counterparts and Delivery) (Scotland) Act 2015• effective from 1 July 2015• permits the signing of Scots law documents in two or more counterparts
– each party may sign a different copy• no requirement to have a contractual counterparts provision• requirements for validity/probativity re execution of a counterpart do
not change• applies to electronic and traditional documents• Agreement may be made up of
– all counterpart versions; OR– one version in its entirety plus other signature pages
Counterparts are easing completions
Counterparts – Not So Straightforward...• And not exactly the same as English law• Delivery now critical
– to all parties; OR– to nominated person
• Nominated person– must hold and preserve– unless otherwise agreed
• Date of effect of document?– when all counterparts delivered and any enactment/law
complied with• unless one counterparty requires it to be treated as
undelivered• unless subject to specified conditions precedent
Delivery requires decisions
Electronic Delivery• Delivery may be by electronic means
– even if traditional document– even if not executed in counterparts– part of document sufficient – but must be by “accepted method” or statutory fallback as to means
and form• Does hard copy need to follow? • Electronic delivery means
– email attachment – fax – USB/memory stick– other electronic apparatus that makes the “thing” readable
Electronic delivery distinct from counterparts
Key Messages
• Counterparts are beneficial• Delivery is now a fundamental concept of Scots law• Completion mechanics need to be agreed carefully in advance• Don’t simply follow English law of counterparts
Q AQ A
Lindsay WallaceDirector of Knowledge and Risk Management+44 131 473 [email protected]
Gender Pay Gap Reporting
Presentation by: Morag Moffett, DirectorTo: ICSA Scottish Conference
16 June 2016
AberdeenEdinburghGlasgow
What is the “gender pay gap”?
The difference between the average hourly earnings of men and women in the UK
What is the UK’s overall gender pay gap?
A: 13.9%
B: 19.2%
C: 26.4%
D: 3.1%
What is the “gender pay gap”?
Average overall
pay gap = 19.2%
Average full time pay gap = 9.4%
What is the “gender pay gap”?
What is the gender pay gap?
Why?
Unconscious bias
Why?
• Equal pay laws having limited impact outside public sector
• Voluntary gender equality reporting initiative (Think, Act, Report) has not worked
• Section 78 of the Equality Act confers power to pass regulations requiring mandatory reporting
• Government proposing to exercise that power in order to “end the gender pay gap in a generation”
“What gets measured, gets managed. What gets publicly reported, gets managed even
better.”
Who do the rules apply to?
• Any private or voluntary sector employer with more than 250 employees
• Public sector employers excludes• Includes companies, LLPs, partnerships• Employees ordinarily working in the UK • ‘Employees’ –vs.- casual workers• Contract governed by UK employment law
When?
•Regulations come into forceOct 2016
•Duty to report arises 30 April 2017
•Duty to publish report 29 April 2018
What does an employer need to report?
1. Difference in mean pay
2. Difference in median pay
3. Difference in bonuses
4. Proportion of men and women who receive bonuses
5. Gender pay split breakdown
1. Difference in mean pay
• Snapshot on 30 April each year
• Average gross hourly rate of pay
• % difference in mean pay: (A-B)
A x 100
Definition of “pay”
Includes:• basic pay• paid leave• maternity pay• sick pay• shift premium pay• bonus pay
• on call allowances• standby payments• area allowances• first aider or fire warden
allowances• car allowances
Definition of “pay”
Does not include:• pay for a different pay period• overtime• expenses• value of salary sacrifice schemes
• benefits in kind• redundancy pay• arrears of pay• tax credits
2. Difference in median pay
• Snapshot on 30 April• % difference median gross hourly rate of pay
Lowest paid Median Highest paid
3. Difference in bonuses
• Calculated over 12 months before 30 April• % difference in mean bonus• Bonus pay includes:
- commission- long term incentive plans - cash equivalent value of shares
4. Proportion of men & women who receive bonuses
• 12 months before 30 April
• Must be expressed as a percentage
• Anti-avoidance
5. Gender pay split breakdown
• Quartile pay bands for overall pay range
• Lowest paid to highest paid
• Based on gross hourly rate of pay
• Report number of male and female employees in each
pay band
Publishing pay gap information
• Annually from 29 April 2018
• No obligation to include explanatory commentary
• Accuracy statement
• Employer’s website for 3 years
• Must be ‘searchable’ by public and employees
• Upload to Government’s website
What happens if you don’t comply?
Oct 2016No penalties
for non-compliance
No mechanism for checking
accuracy
Next steps...
Next steps...
InvestigateReview average male and female salaries by job type and full and part time status
EvaluateEvaluate the reasons for the pay gap and any justification
for this
ActionImplement an action plan to
address the pay gap and consider how to report that
Will you be?...
Defensive In fear of equal pay claims and/or reputational damage?
Positive Already have a good story to tell?
Honest
Recognise the gap, give reasons for it, explain what you are doing to improve it and continue to report on
progress?
Risks
Equal pay claims?
Sex discrimin-ation claim
sReputatio
nal damage
Impact on employee relations
Q AQ A
Practical considerations for the implementation of the Register of People with Significant ControlPeter Swabey, FCIS, Policy & Research Director, ICSA
The PSC Register – where does it come from?
The Small Business, Enterprise and Employment Act 2015
‘SBEE Act’
A product of the Red Tape Challenge ………
The Small Business, Enterprise and Employment Act 2015A revised timetable ………….. AGAIN (18)
Full details of the latest timetable can be found on the Companies House website at :
https://www.gov.uk/government/news/the-small-business-enterprise-and-employment-bill-is-coming
The Small Business, Enterprise and Employment Act 201526 May 2015
Bearer shares were abolished. There is now a legislative timetable in place and any existing bearer shares must be surrendered by 26 February 2016.
If your company has bearer shares in issue there is a statutory process on which you should already have embarked – notices to holders were due to go out by 26 June 2015. If you do not have this in hand, you need immediate legal advice.
The Small Business, Enterprise and Employment Act 201510 October 2015
The day element of the date of birth of directors was hidden from the public register
The accelerated strike-off process was introduced – down to two months from three – same with objections. Companies House no longer re-advertises a Gazette notice once a valid objection has expired
The requirement to give consent to act as a director or secretary has changed. The company confirms that consent has been given and Companies House will write to all newly appointed directors.
The Small Business, Enterprise and Employment Act 2015April 2016 (was December 2015)
The process to rectify the register in the event of director disputes or registered office disputes will be simplified.
If the director disputes the fact, the company must provide evidence of consent.
If a registered office address is disputed, Companies House will investigate and will have power to change the ROA to a default address
The Small Business, Enterprise and Employment Act 20156 April 2016
Companies will be required to keep a register of people with significant control (a PSC Register)
Implementing regulations for companies and LLPs were laid before Parliament on 25 January, and that these can now be found:
Companies - http://www.legislation.gov.uk/ukdsi/2016/9780111143018
LLPs - http://www.legislation.gov.uk/ukdsi/2016/9780111143025
PSC Register: policyThere are five core elements to new Part 21A of the Companies Act 2006 (CA06):
1.The definition of a ‘person with significant control’
2.The legal entities in scope of requirements
3.Obtaining the information
4.The register
5.Disclosure of and access to the information
BIS have replicated or extended existing company law criminal offences to deal with those who fail to provide information or provide false information.
PSC Register: definitionBIS have used the existing definition of ‘beneficial owner’ in the EU anti-money laundering context as the basis.
New Schedule 1A to the CA06 sets out five ‘specified conditions’. An individual meeting one or more of these conditions is a Person with Significant Control (‘PSC’):
1. Ownership of more than 25% shares2. Ownership of more than 25% voting rights3. Ownership of right to appoint or remove a majority of the board of directors4. Right to exercise significant influence or control5. Right to exercise significant influence or control over a trust or firm which trust or firm would be a PSC, were it an individual)
In certain circumstances a legal entity must be noted in the register (‘relevant legal entities’ or ‘RLEs’).
PSC Register: scopeAll UK companies, except companies listed on UK regulated or prescribed markets, and Limited Liability Partnerships will have to keep a PSC register.
PSC Register: obtaining informationCompanies must take reasonable steps to find out if they have any PSCs or RLEs and identify them.
In some cases the company will already have this information.
In others the company will need to serve notice on individuals and others. A person in receipt of such a notice is required to reply. Failure to do so is a criminal offence. Shares may also be subject to restrictions by the company.
PSCs and RLEs are also required to disclose their interest in the company to the company in certain circumstances.
PSC Register: the company’s registerCompanies must hold and keep available for public inspection a PSC register. This will contain information on the PSCs’:
•Full name•Service address•Country or state of usual residence•Nationality •Full date of birth•Usual residential address (not publicly available)•Date on which PSC obtained control•The nature of his or her control over the company
Register must be kept up to date as information changesPeople may access the register on request.
PSC Register: the central registerCompanies must provide all the information in their PSC register to Companies House on incorporation and then at least once every 12 months as part of the new confirmation statement.
All information will be made available on the public register except:
• The full date of birth (only the month and year will be shown on the public register, except where the company elects to keep its PSC information solely on the register at Companies House)
• The usual residential address
PSC Register: the protection regimeIndividuals at serious risk of harm will be able to apply to the registrar of companies to prevent their information being publicly disclosed on the company’s register and the central register.
Specified public authorities will have access to protected data on request.
BIS have recently consulted on this regime - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/437974/bis-15-315-register-of-people-with-significant-control-consultation.pdf
Covers the scope, nature and extent of control, fees, the protection regime and warning and restrictions notices
PSC Register: guidanceTwo types of guidance:
•Statutory
•Non-statutory
The legislation requires the Secretary of State to publish statutory guidance, which means that it has legal effect, on the meaning of ‘significance influence or control’ in the context of the PSC register.
PSC Register: guidanceNon-statutory guidance has been produced by a working group on behalf of BIS. This addresses such issues as:
•What is a PSC or an RLE and what do they need to do
•What information is being collected and why
•Who can access it and how
•Which companies are affected and what they need to do
•What ‘reasonable steps’ means
•What to do if you don’t receive the required information
•How to manage your PSC Register
PSC Register: guidance
Both sets of guidance can be found :
https://www.gov.uk/government/publications/guidance-to-the-people-with-significant-control-requirements-for-companies-and-limited-liability-partnerships
- and on the ICSA website
BIS have also published guidance for PSCs.
PSC Register: ACTIONThis became law on 6th April – you must have a PSC Register
From 30th June you will be required to submit it to Companies House when next you file your annual confirmation statement
NB - Although DTR5 companies (which have to comply with the Listing Rules) and some others are exempt, the new requirements do apply to the subsidiaries of such companies.
The Small Business, Enterprise and Employment Act 201530 June 2016
The new ‘check and confirm’ annual confirmation statement will replace the annual return. Companies will be required to begin filing their PSC Register information at Companies House. Private companies will also be able to choose to keep some of their registers at Companies House on their check and confirm date. The process for disqualifying directors will be ‘updated and strengthened’ and the statement of capital will be simplified.
The Small Business, Enterprise and Employment Act 20151 October 2016
With specified exceptions, companies will no longer be able to appoint corporate directors; they will have 12 months to remove any existing corporate directors that are no longer allowed under the exceptions.
BIS have been consulting on the exceptions to the prohibition of corporate directors. The implication is that companies will still be able to use corporate directors for administrative purposes, provided that all the directors of the corporate director are real people. It would be prudent to identify situations where your company use corporate directors and consider how you will comply with the new rules.
The Small Business, Enterprise and Employment Act 2015Late 2016 / early 2017
Some additional information will be able to be filed at Companies House – no doubt we will hear more closer to the time.
The UK implementation of the EU’s 4th Money Laundering Directive, expected in 2017, will have an impact on the filing of PSC Register information – we await information about the impact of this change.
Thought leadership from ICSA
Aberdeen Asset Management Governance ResearchScott Massie, Group Company Secretary, Aberdeen Asset Management PLC
For investment professional use only – Not for public distribution
Corporate Governance – actions and behaviours
Aberdeen Asset Management PLCScott MassieGroup Company Secretary
70
2015 research survey by Aberdeen Asset Managers
Effective governance is a critical driver of investment performance
89%
Focus on risk management will increase81%
Want asset managers to engage with companies in which they invest client funds, both at pre-investment and at regular intervals
85%
The importance of governance in investment decision making
The Research surveyed a total of 239 investors, trustees, managers and consultants, globally, across the financial services sector.
71
Aberdeen’s approach to governanceGood corporate governance is at the heart of Aberdeen’s business. It is the first quality we look for in the countries and companies in which we invest, and we are committed to effective and transparent corporate governance in running our business
72
If the company does not meet criteria = no investment
Review process
1Quality first, price second
2Global
research, local knowledge
3Team
approach
4Fundamental
research
Relative value is important, but an investment has to pass a quality test. We will not invest in any asset where we do not believe the fundamentals are strong, regardless of price
Our investment teams are located in the markets where they invest
Collaboration improves decision making. Teams make investment decisions and take collective responsibility
Detailed and fundamental due diligence. No investments made without significant well documented research
73
Fundamental research • Clear idea of quality – evidenced by management, balance sheet and business model
• First hand research, no substitute for company visits, no ‘must-have’ stocks, ignore benchmarks
• Coverage: visit holdings at least twice a year, analyse results quarterly, review news flow weekly
Disciplined investors• Take time to build positions, investing with a 5 - 10 year business cycle in mind
• Use unrelated sell-offs to buy or add to companies
• Top slice positions on the way up
• Average holding period of a stock is eight years (longer than the average FTSE CEO)
Active shareholders• Engagement seen as a normal part of relationship with companies
• Our fund managers vote at AGM’s, supported by governance specialists, genuinely integrated thinking
• Where we have discretion we will always vote and attend AGM’s
How we make a differenceFundamental, disciplined and active investors
We behave as owners, not just investors
74
4,305 monitoring and engagement meetings with investee companies, both at executive and non-executive level. Full meeting notes prepared on each and discussed internally
Example: Standard Chartered BankWe met 35 times over past two years in discussions on board composition and performance
Engagement
Year to 30 Sep 2015
75
Long termism
Ownership Structure
Business Strategy Financials Corporate
GovernanceManagementQuality
Invest for the long term – only in companies we understand and we can agree value
Look at it as though it was our own business
If we don’t understand a company we will not invest.
76
Comply or explain. Recent voting:•Number of independents on the Board•Remuneration Report
How Aberdeen Asset Management PLC fits the criteria
• Publicly listed, quality names on the share register• 10 shareholders own 58%• 20 shareholders own 71%
Ownership Structure
• Global asset manager across all asset classes • Seek organic growth plus selected acquisitionsBusiness
Strategy
• Steady, consistent, longevity • Non-Executives – regular refreshingManagement
• Consistent basis of presentation• Strong Balance Sheet Financials
Corporate Governance
The Board retains discretion to run the company for the benefit stakeholders, shareholders, clients and staff
77
• Governance and oversight
• 5 committees chaired by and comprising Non Executive Directors
• Audit, Innovation, Nominations, Remuneration, Risk
• Risk established in 2010, Innovation in 2014
Aberdeen Asset Management PLC
Quality Ambition Teamwork Integrity Challenge
Good governance is embedded within our culture and expressed in our corporate values
78
• Simon Troughton, Chairman of Remuneration Committee
• Annual meetings with significant majority of the shareholding and all corporate governance?
• Up to 30 meetings each year
• Translated into voting at AGM
Approve Directors Remuneration Report:
Does Aberdeen get it right? Not necessarily!
2012 84%
2013 89%
2014 89% / 86% (policy vote)
2015 92%
2016 66%
January AGM
Remuneration
Tea and Coffee
Career development for company secretariesValerie Teller, Independent Career Coach with Tina Hankin, Head of Company Secretariat, Insurance, Lloyds Banking Group
Outline for this session
1. What are your long-term career aspirations?
2. How do you raise your profile?
1 | What are your long-term career aspirations?
• What do you really want?
• What is important to you?
• When you are 95, what will you want to say about your life?
2 | How to raise your profile?
How do you view yourself?
2 | How to raise your profile?
“Too many people overvalue what they are not and undervalue what they are.”
– Malcolm S. Forbes
2 | How do you raise your profile?Saboteur (n.): The Saboteur is a concept that embodies a group of thought processes and feelings that maintains the status quo in our lives.
Often operating as a structure that would seem to protect us, it in fact keeps us from moving forward and getting what we truly want in life. Like our minds, the Saboteur will always be with us. It is neither good nor bad; it just is.
The Saboteur loses its power over us when we can identify it for what it is, notice our options in the situation and then consciously choose what it is we do really want at that time.
warning
2 | How do you raise your profile?Know your value to others…• What do you do in your role
that supports the success of your company?
• How can/do you help your colleagues do their jobs more easily/better?
• What is important about what you do?
Know your own value…• Name 3 things you do in your
job that make you feel useful OR satisfied OR excited?
• What are your 3 greatest achievements? What is it that you are proud of for each?
• Without being modest, what do you value about yourself?
2 | How do you raise your profile?
How could the Company Secretarial function add more value to your organisation?
2 | How do you raise your profile?
• Be curious
• “What would you do if you weren’t afraid?”
Valerie and Tina’s top tips!
2 | How do you raise your profile?
So practically, what can you do to raise your profile?• Create opportunities by creating connections – network!
• Get support – mentoring, coaching…
Career development for company secretaries
What will you commit to doing right now?• By when?
• Find yourself an accountability ‘buddy’
Thank you
Supply chain transparencyPaul Marshall, Partner, Brodies LLP
ABERDEEN • EDINBURGH • GLASGOW • BRUSSELS www.brodies.com
Modern Slavery: supply chain transparencyPaul Marshall, Partner, Brodies LLP16 June 2016
Modern Slavery – the challenge
• Brutal form of organised crime in which people are treated as commodities and exploited for criminal gain. The true extent of modern slavery in the United Kingdom is unknown.
“…while it may be unlikely that large companies are
directly employing trafficked people, contractors and sub
contractors (or the agencies supplying labour) could find
themselves targeted by unscrupulous gangmasters who
may be offering a ready supply of labour at knocked down
rates.”
• Key risk: supply chain
UK solution: Modern Slavery Act 2015
Place responsibility on large businesses to:-
• put their own house in order and • police their supply chain
And show the public that you are doing that…
Companies with turnover of £36 million or more must publish a slavery and human trafficking statement for each financial year ending 31 March 2016 onwards.
Statement signed by director and published on company website.
Commercial solution: publish and be damned
Business must prepare a slavery and human trafficking statement for each financial year.
• Statement of the steps taken to ensure that slavery and human trafficking is not taking place
• any part of its own business; and
• in any of its supply chains
OR
• Make a statement that you are doing nothing….
What to state?
Slavery and human trafficking statement should include information about:
• organisation structure, business and supply chains;• slavery and human trafficking policies; • due diligence processes in the organisation and its
supply chains; • where is the risk of slavery and human trafficking
taking place and the steps taken to assess and manage that risk;
• Organisation’s effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains;
• the training about slavery and human trafficking available to its staff.
Statement is the story of what you have done and will do, so you need some material…!
No statement…?
UK government’s position:-
• May raise a court action to force compliance
• Failure to comply with court order is contempt of court
• Unlimited fine
Starting point….
…naming and shaming…?
Have we met before?
UK Ministry of Justice guidance on Bribery Act recommends :-
Top level management are committed
Identifying a team to lead on efforts
Effective communication of zero tolerance policy – internal and external
Due diligence of third parties before engaging
Consequences for third parties who breach your anti-bribery provisions
Ministry of Justice Guidance: The Bribery Act 2010, Section 9 Guidance
Supply chain risk
Company is guilty of an offence if an associated person bribes on its behalf…
Guilty unless …had in place adequate procedures designed to prevent bribery.
Associated person – someone who performs services for or on behalf of an organisation.
Includes suppliers and contractors
Making the statement – good medicine
Your statement tells your story for that year of:-
• People – with responsibility for delivery• Policies – what has been updated or drafted as new• Mapping risk – where the risks lie in your supply chain• Managing risk – steps to update supplier/contractor
procedures/contracts • Communication – internal and external messages delivered• Review – room for improvement next year?
Across ABC and now MSA you can be held responsible for the conduct of your supply chain so this is good medicine…!
Any questions now?
ABERDEEN • EDINBURGH • GLASGOW • BRUSSELS www.brodies.com
Modern Slavery: supply chain transparencyPaul Marshall, Partner, Brodies LLP16 June 2016
Reflections on governanceProfessor Paolo Quattrone, Dean of Special Projects, College of Humanities & Social Sciences and Chair in Accounting Governance & Social Innovation, University of Edinburgh Business School
Governing ‘socie-ties’
Paolo Quattrone
Socie-ties
Vs.
Governing ‘socie-ties’
The less one knows, the more one suspects
(source: www.Treccani.it)
Networking lunch
Market Abuse RegulationViviane Joynes, Head of Industry, Capita Asset Services
Market Abuse Regulation (‘MAR’)
Viviane Joynes, Head of Industry, Capita Asset Services
www.capitaassetservices.com
• Capita Asset Services is a division of Capita plc
• Leading provider of financial outsourcing services, work with more than 40% of listed companies
• Providing a range of services to assist companies in preparing for MAR– Company secretarial services– Insider list compliance.
Introduction
113
www.capitaassetservices.com
Agenda
114
• What is MAR?
• Inside Information
• Market Soundings
• Insider lists
• Dealings by PDMRs
• Interactive session
• MAR source materials
• Questions and answers
www.capitaassetservices.com
What is MAR?
115
• Replaces the Market Abuse Directive (MAD)
• Expands the scope of the regime• Aim: Enhance market integrity and
investor protection• Applicable from 3 July 2016
Overview
• Amendments to primary and secondary legislation
• Changes to the FCA handbookUK implementation
• Inside information – definition and disclosure
• Market soundings• Insider lists• Persons discharging managerial
responsibility – rules for dealing and disclosure
Main areas covered
www.capitaassetservices.com
• Definition and requirement to disclose remains largely unchanged
• AIM companies – need to comply with MAR article 17 and AIM Rule 11
• DTRs renamed Disclosure Guidance and Transparency Rules sourcebook.
116
Inside Information
www.capitaassetservices.com
Delaying disclosure • Issuers can delay disclosure if:
– Their “legitimate interests” are protected– Confidentiality can be maintained– Public is not misled
• ESMA’s level 3 guidelines specify when inside information disclosure can and can’t be delayed
• Following disclosure:– Notify the FCA – FCA can request information on reason for the delay.
117
Inside Information (continued)
www.capitaassetservices.com 118
Delaying disclosure – credit and financial institutions
• To preserve the stability of financial markets, disclosure can be delayed if:
– Disclosure would risk the stability of the issuer and the financial system– It is in the public interest to delay– Confidentiality of information can be ensured– FCA has consented to the delay
• Must be at least weekly evaluations.
Inside Information (continued)
www.capitaassetservices.com
Key actions
119
Inside information (continued)
Review and update the disclosure policy to include a process to determine and record:– Whether information is inside information – Whether disclosure needs to be delayed – for how long– Who is/are responsible for making the decision – Conditions for the delay are fulfilled – When to end the delay and disclose
Keep written records – when disclosure was delayed, why and by who
Disclosure committee?
Inside information disclosures must be kept on website for at least 5 years
www.capitaassetservices.com 120
Market soundings
• Inside information “safe harbour”
• New rules on “market soundings”
• Communications by issuers (or a third party acting on their behalf, e.g. a director or adviser) to gauge interest in possible transaction or takeover bid.
www.capitaassetservices.com 121
Market soundings (continued)
Subject to detailed procedures and record-keeping requirements, including:
• assessing whether the disclosure includes inside information• pre-determining a standard set of information to be provided • obtaining the prior consent of the recipient • informing the recipient when the market sounding ceases to be inside information• informing the recipient that they are prohibited from using the information to make investment decisions
and they must keep it confidential• keeping detailed records of information given, to who and the date and time.
www.capitaassetservices.com
Key actions
122
Market soundings (continued)
Put in place procedures to ensure compliance with the new requirements on market soundingsEncourage market soundings to be made on a recorded telephone line (for which the receiver must consent to being recorded), to avoid the need to agree a set of minutes with the recipient afterwards
All records must be kept by the disclosing party for 5 years
www.capitaassetservices.com
• Listed companies and their advisors required to maintain insider lists
• New requirement for AIM listed companies
• Insider lists must now include:– Date and time each insider gained access to inside information– Reason the person is on the list– Additional information on each insider: professional and personal
telephone numbers, home address, former surnames, DOB, national ID number
• ESMA technical standards provide an insider list template.
Insider lists
123
www.capitaassetservices.com
• Insiders must acknowledge in writing the legal and regulatory duties and sanctions applicable
• Issuers must be able to provide the lists in electronic format upon request by the FCA
• Difference between permanent and deal/project-specific lists.
Insider lists (continued)
124
www.capitaassetservices.com
Insider lists (continued)Review and update policy on maintaining insider lists
Review existing insider lists
Check whether additional information is available from existing records
Are there data protection issues in obtaining the information?
Draft communications to insiders and advisors – ensure records will be kept for an audit trail.
125
Key actions
www.capitaassetservices.com 126
Dealings by PDMRs
• Model Code has been deleted from the Listing Rules• FCA is supportive of industry-led development of share dealing codes or
best practice
MAR sets out new rules on dealings by PDMRs and persons closely associated (PCAs).
www.capitaassetservices.com 127
Dealings by PDMRs (continued)
Closed period
• 30 calendar days before the announcement of the company's interim or year-end financial report
• FCA has clarified that where an issuer announces preliminary results, the closed period is 30 day period before the announcement – no “second” closed period
• Helpful for share awards made after announcement of preliminary results.
Timing of notifications:• PDMRs must notify
the company and the FCA within three business days of the transaction (previously four days)
• The company must make the information public within the same period.
www.capitaassetservices.com 128
Dealings by PDMRs (continued)Permitted dealings
• The list of circumstances in which dealing is permitted during a closed period has been narrowed to:
– Existence of exceptional circumstances e.g. severe financial difficulty; or
– Transactions under an employee share scheme; or
– Transactions where the beneficial interest does not change.
Content requirements
• FCA Market Bulletin released 26 May 2016
• Online link to FCA for issuers.
Threshold for notifications
• Only need to be reported once threshold of €5,000 has been reached
• Unlikely that companies will utilise this exception for dealings by PDMRs.
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Dealings by PDMRs – AIM companies
AIM Rule 17 (directors' dealings) Will be deleted and replaced with a signpost to the relevant MAR provision.
AIM Rule 21 (restrictions on dealings) Will be deleted and replaced with a new rule which:
• Requires the AIM company to have a dealing policy • Sets out the minimum provisions which it should include.
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Key actions
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Dealings by PDMRsPrepare a new share dealing code that is MAR-compliant and, in the case of an AIM company, compliant with AIM Rule 21
Or update the company's existing share dealing code
Consider whether the minimum threshold for notifications will be imposed or all transactions will be notified
Should PDMRs notify the company within 1 or 2 business days of the transaction to give the company enough time to make its announcement within three business days of the transaction
Compile a list of the company's PDMRs and PCAs, and send them a memo reminding them of their obligations and highlighting the changes (PDMRs should in turn send this memo to their PCAs)
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Inside information• Who will be responsible for managing the inside information process?• Are you changing your disclosure policy and if so, in what way?• Do you have a disclosure committee? If not, will you be creating one?
Market soundings• Do you have a market sounding policy? • If not, will you be creating one?
Insider lists• Have you changed the way you are organising insider lists?• Where will you be keeping your insider lists? Spreadsheet vs online
solution• Will you have a permanent insider list? Who will permanent insiders be?
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Break-out session questions
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PDMRs• Given 3-day notification period, what deadline will you be giving your PDMRs?
• Are you planning to use the €5,000 threshold or notify all transactions?
• Are you planning to disclose to the FCA on behalf of your PDMRs?
• Are you planning on adopting similar PDMR dealing clearance procedures as set out in the Model code?
Dealing codes• Will you have separate PDMR and non-PDMR codes?
• Will your non-PDMR code apply to all employees or just ‘insiders’?
Closed periods• What closed periods are you planning on implementing?
• Will you adopt the 30 day shorter period before preliminary results?
• Do you need to make any changes to awards to comply with MAR?
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Break-out session questions
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What needs to be done before 03 July 2016?
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MAR Compliance
Insider list set up
Share dealing codes
Board updates and training
Communications (to employees /
insiders / advisers)
Disclosure processes
Related policies e.g. market sounding
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MAR source materialsIssue Reference Status
Market Abuse Regulation EU No 596/2014 Final
Disclosure and delay ESMA Final Report, Sept 2015, Annex XII
Draft
PDMR transactions – notification template
Commission Implementing Regs (EU 2016/523)
Final
PDMR transactions – restrictions, clearance and disclosure
Commission Delegated Regs (EU 2016/522)
Final
Insider lists Commission Implementing Regs (EU 2016/347)
Final
Market soundings ESMA Final Report, Sept 2015, Annex VIII and IX
Draft
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Time for Questions
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Viviane Joynes, CFind out more
Capita offers a range of services and free online resources about MAR:
www.capitaassetservices.com/MAR
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Viviane Joynes, CContact us
Viviane JoynesHead of IndustryT: +44 (0)207 954 9525M: +44 (0)7753 437 965E: [email protected]
Thank you
