Latest updates

Directors' remuneration – new draft regulations
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 20 May 2019

The draft Companies (Directors' Remuneration Policy and Directors' Remuneration Report) Regulations 2019 were recently published as part of the drive to encourage long-term shareholder engagement and to strengthen the governance and performance of traded companies. Most of the directors' remuneration reporting requirements inserted by the EU Shareholder Rights Directive II already apply under UK law and the draft regulations will implement most of the requirements that do not currently apply.

PLSA Corporate Governance Policy and Voting Guidelines 2019
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 11 February 2019

The Pensions and Lifetime Savings Association recently published guidance on market best practice to assist its members when exercising their vote at annual general meetings in 2019. The revised version of its Corporate Governance Policy and Voting Guidelines reflects the introduction of the 2018 UK Corporate Governance Code, which applies to financial years beginning on or after 1 January 2019.

When is a decision to declare an interim dividend a decision?
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 28 January 2019

Small businesses often structure payments to directors who are also shareholders using a combination of dividend payments and salaries. At a time when corporate governance and director and shareholder accountability are under review, a recent Court of Appeal decision gives more reason for directors to ensure that they understand not only their obligations and duties as directors under the Companies Act 2006, but also the implications of relying solely on advice without evaluating it first.

2019 AGM season – Investment Association sets the bar
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 21 January 2019

The Investment Association recently published its annual letter to remuneration committee chairs and updated its principles of remuneration for the next annual general meeting season. The key changes to the principles mostly reflect the new UK Corporate Governance Code and specifically address malus and clawback provisions, shareholding requirements and post-employment holding periods, pensions and restricted shares.

Directors' duties: guidance from GC100
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 19 November 2018

The Association of General Counsel and Company Secretaries working in UK FTSE 100 companies (GC100) has issued guidance on the practical interpretation of Section 172 of the Companies Act 2006. The GC100 guidance aims to provide directors with practical help in interpreting their Section 172 duties rather than offer legal advice, and sets out five specific things to help directors embed Section 172 into their decision making.

Prohibitions on assignment of receivables outlawed
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 29 October 2018

In 2014 the government recognised the benefit of outlawing prohibitions on the assignment of receivables and set about establishing the legal framework. The Asset Based Finance Association formulated the provisions for a new law to allow regulations to be made to invalidate certain restrictive terms of business contracts. These regulations have now been drafted in the form of the Business Contract (Assignment of Receivables) Regulations 2018, which await parliamentary approval.

Revised UK corporate governance coming
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 25 June 2018

The United Kingdom will be getting a revised Corporate Governance Code, most likely effective as of January 2019. The House of Commons Library recently published a briefing paper on corporate governance reform, which provides an overview of the corporate governance framework, including the history of the UK corporate governance code and its interaction with directors' duties under the Companies Act 2006.

Court of Appeal decides that electronic supply of software does not amount to sale of goods
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 30 April 2018

The Court of Appeal has allowed an appeal of the judgment of a High Court case which concerned the question of whether a licence to use electronically supplied software amounts to the sale of goods under the Commercial Agents (Council Directive) Regulations 1993. This question is important, given the significant protections and post-termination payouts afforded to agents who qualify under the regulations.

Public register of shareholder dissent
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 26 February 2018

At the request of the Department for Business, Energy and Industrial Strategy, the Investment Association has launched a public register of Financial Times Stock Exchange All-Share companies, showing occasions where these companies have experienced substantial shareholder dissent. The purpose of the register is to identify companies which receive a high vote against or withdraw a resolution and to understand the process used by those companies to identify and address their shareholders' concerns.

Carillion and the 'failure' of clawback
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 05 February 2018

A press release by the Institute of Directors suggesting that in 2016 Carillion relaxed the clawback conditions that applied to bonuses has raised questions over remuneration governance. The change seems to have removed 'corporate failure' as a clawback or malus event, substituting conditions so that pay could be clawed back only in the event of a misstatement of financial results or gross misconduct of an individual.

Contracts via email – potential pitfalls
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 29 January 2018

A recent High Court decision has provided a useful reminder of the care that must be taken when administrators enter into pre-contract negotiations and the risk of inadvertently entering into a binding contract before terms are finalised. It also deals with the risks of disposing of assets, even those that are difficult to value, without due process.

Happy new year – or economic meltdown?
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 22 January 2018

While some economists have predicted a bleak outlook for the UK economy in 2018, with Brexit negotiations likely to affect the prospects of any improvement, others are less pessimistic and expect that the fall in the pound following the EU referendum will lead to stronger export growth. The government is advised to broker a deal with the European Union on key issues as soon as possible in order to minimise damage to the economy and avoid handing the advantage to overseas competitors.

Audit watchdog increases size of enforcement unit
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 15 January 2018

The Financial Reporting Council (FRC) has more than tripled the size of its enforcement team over the past five years in response to public criticism over its failure to prosecute auditors for giving clean audits to financial institutions in the months before they were engulfed by the financial crisis. The increased headcount and specialist nature of the team now in place should enable the FRC to move more quickly in instigating and resolving investigations.

FRC puts Corporate Governance Code on diet
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 08 January 2018

The Financial Reporting Council (FRC) has published for consultation its review of the Corporate Governance Code. This follows a fundamental review, with the proposed revised code being a slim shadow of its former self. The FRC has described the result as "shortened and sharpened", but the outcome is not radical. However, there are a number of interesting changes.

ISS 2018 Proxy Voting Guidelines updates
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 27 November 2017

The Institutional Shareholder Services recently published its updated 2018 Proxy Voting Guidelines, effective for meetings on or after February 1 2018. As expected, the guidelines support hybrid shareholder meetings and reject virtual-only meetings. Other updates involve overboarding, audit and remuneration committee compositions, threshold vesting levels for long-term incentive plans and share issuances without pre-emption rights.

Investment Association sets bar for 2018 AGM season
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 20 November 2017

The Investment Association recently published its annual letter to remuneration committee chairs and updated its Principles of Remuneration. The association has encouraged voluntary disclosure of chief executive officer pay ratios in 2018 directors' remuneration reports, introduced a new requirement to defer bonuses in excess of 100% of salary and kept up the pressure on overall levels of pay. Many companies must take action before their 2018 annual general meeting.

Teething trouble – poor levels of compliance with reporting requirement under UK Modern Slavery Act need to be addressed
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 02 October 2017

According to research published by the Chartered Institute of Procurement and Supply, more than one-third of organisations required to complete a statement in compliance with the UK Modern Slavery Act 2015 have failed to do so. One of the knock-on effects arising from the lack of engagement with the statement requirement has been that the majority of businesses surveyed have few or no policies in place to tackle modern slavery.

Government's new corporate governance proposals – necessary measure or naked politicking?
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 18 September 2017

Everyone agrees that 'fat-cat pay' needs reining in, even Theresa May's new-look caring Conservatives. Therefore, the recent announcement of the government's latest corporate governance proposals does not come as much of a surprise. However, thus far, there appears to be little by way of evidence of real necessity for the measures proposed, and caution should be taken with regard to seemingly unsupported assertions of this sort as a basis for actual law making.

Strategic report changes ahead
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 28 August 2017

The Financial Reporting Council recently published a consultation paper setting out draft amendments to its Guidance on the Strategic Report. The consultation paper reflects the United Kingdom's recent implementation of the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016. The amendments do not constitute a fundamental review of the guidance, but reflect recent legislative changes.

Upper Tribunal upholds Charles Palmer ban and fine
Squire Patton Boggs
  • Company & Commercial
  • United Kingdom
  • 21 August 2017

The Upper Tribunal recently upheld the Financial Conduct Authority's decision to fine and ban Charles Palmer, CEO and majority shareholder of Standard Financial Group Limited, for failing to ensure that appropriate controls and mitigating measures were in place to prevent material risks to underlying customers. The tribunal agreed that Palmer had breached Principle 6 of the Statement of Principles and Code of Practice for Approved Persons and held that his failings were sufficient to justify the financial penalty.