Thursday 20 February 2020

UK: FRC launches review of the reporting (and auditing) of the impacts of climate change

The Financial Reporting Council has launched a review to consider how companies and their auditors assess and report on the impact of climate change: see here. As part of the review, the FRC will consider the extent to which companies are reporting in accordance with the Task Force on Climate-related Financial Disclosures framework.

Thursday 13 February 2020

UK: Audit, accounting and corporate reporting during the transition period

The Department for Business, Energy and Industrial Strategy and Financial Reporting Council have published a couple of joint letters for auditors and accountants with information concerning auditing, accounting and corporate reporting standards during the transition/implementation period following the UK's departure from the European Union: explaining: see here (pdf) and here (pdf).

Wednesday 12 February 2020

IOSCO report: crypto-asset trading platforms

The IOSCO has published a report, as part of its work programme on crypto-assets and for the benefit of assisting regulatory authorities, titled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms: see here (pdf).

Saturday 8 February 2020

UK: FTSE100 boards - third of board positions held by women

It has been announced today by the Department for Business, Energy and Industrial Strategy that a third of FTSE100 board positions are now held by women, meeting one of the Hampton-Alexander review targets a year early: see here.

Thursday 6 February 2020

UK: England and Wales: undisclosed wealth orders

Mrs Zamira Hajiyeva is the subject of the first unexplained wealth order to be made under section 362A(1) of the Proceeds of Crime Act 2002 (and introduced by the Criminal Finances Act 2017). In 2018 she applied, unsuccessfully, to the High Court for the order to be discharged: see [2018] EWHC 2534 (Admin). Her subsequent appeal to the Court of Appeal was also unsuccessful: see, from yesterday, Hajiyeva v National Crime Agency [2020] EWCA Civ 108.

One of the issues before the court was the definition of 'politically exposed person'. Section 362B(7) provides the following definition (as recently amended, but not in a way material to the appeal, by the Law Enforcement and Security (Amendment) (EU Exit) Regulations 2019): "(a) an individual who is, or has been, entrusted with prominent public functions by an international organisation or by a State other than (i) the United Kingdom, or (ii) an EEA State, (b) a family member of a person within paragraph (a), (c) known to be a close associate of a person within that paragraph, or (d) otherwise connected with a person within that paragraph".

The Court of Appeal held that this definition did not require the individual to be specifically entrusted either by an international organisation or by a State: the focus should be on the status of the entrusted person and not how they came to be entrusted with prominent public functions. As such, it rejected the argument that Mrs Hajiyeva's husband - the former chairman of the International Bank of Azerbaijan, controlled by the Azerbaijan Democratic Republic (the State) - had to be specifically appointed by the State to be regarded as a politically exposed person.

Wednesday 5 February 2020

UK: The ownership of quoted company shares

The Office for National Statistics has published updated analysis on the ownership of UK quoted company shares: see here. The report notes that the proportion of shares (in terms of value) held by those outside of the UK has reached a record high: 54.9%. The following chart, from the ONS report, indicates the other ownership categories:

The "rest of the world" category is comprised as follows:

UK: The Parker Review - an update on the ethnic diversity of boards

The Parker Review today published a report with up to date analysis of the ethnicity of FTSE350 company directors: see here (pdf). This follows the publication of the original report, in 2017, in which two targets were set: that, by the end of 2021, all FTSE100 boards would have at least on director of colour; FTSE250 companies were to meet this target by 2024.

The update reports that in the FTSE350, amongst directors where ethnicity is known, there are 7.5% directors of colour. In the FTSE100, there are 98 directors of colour. The report was based on information from 256 companies and over half of these - 150 (31 from FTSE100; 119 from the FTSE250) - did not have at least one director of colour on their boards. The report also contains research commissioned by the Financial Reporting Council on the reporting of board diversity policy in annual reports. This research reveals that most FTSE350 companies do not set measurable objectives for board ethnic diversity. The FRC has commented on these findings: see here.

Tuesday 4 February 2020

UK: England and Wales: shareholder agreements and restraints of trade

Judgment was given today in Guest Services Worldwide Ltd v Shelmerdine [2020] EWCA Civ 85. The decision is an important one on the operation of restraints of trade contained within shareholder agreements. At issue was whether a restriction in such an agreement continued to apply to an employee shareholder - defined as "any shareholder who is also an employee, agent or director" - if they remained a shareholder but were no longer an employee, agent or director.

At first instance, the trial judge held that the restriction did not apply. The Court of Appeal unanimously disagreed, Lady Justice Asplin observing that "it makes no commercial sense at all (nor would it at the time the Shareholders' Agreement was executed) if the restrictions ... can be avoided altogether and with immediate effect, by terminating one's employment, agency or directorships" (para. [33]).

UK: The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020

The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2020 were laid before Parliament yesterday: see here. The accompanying explanatory memorandum is available here (pdf) and it explains the purpose of the Regulations - in general terms - as follows: "This instrument continues the process of addressing failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom (UK) from the European Union (EU). This is intended to ensure that the frameworks for regulatory oversight and professional recognition of statutory auditors and third country auditors in the UK work effectively following the UK’s withdrawal from the EU".

Italy: OECD capital market review

The OECD has recently published, as part of its capital market series, a capital market review for Italy: see here (pdf).