The Financial Reporting Council’s ambitious UK Stewardship Code 2020, effective 1 January 2020, required a new mandatory annual Stewardship Report to be published. This is challenging for investors as it requires reporting on stewardship activities actually undertaken and the outcomes actually achieved, not just stating intent or policy.
The Financial Conduct Authority’s consultation paper (CP 20/3) on climate-related disclosures proposes that a new listing rule will take effect for financial accounting periods beginning on or after 1 January 2021.
There is a growing ground-swell around disclosure of all environmental, social and governance (“ESG”) related matters as issuers and investors become increasingly engaged with these issues. The FCA is not proposing to mandate disclosure at this point given that issuers’ reporting practices are still evolving, however this is an area of disclosure that will predictably only expand over time. Indeed, the FCA anticipates that all listed issuers will be disclosing in accordance with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations by 2022.
Deal volumes over the past 18 months
Looking back at IPO volumes in 2019 compared to 2018, we saw a 51% decrease in the aggregate number of IPOs across both the Main Market and AIM which is perhaps unsurprising given the uncertainty surrounding Brexit and concern stemming from global trade tensions.
The Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020 (“Regulations”) have been published and are due to come into force on 3 September 2020. The Regulations complete the UK’s transposition of Chapter 1a of EU Directive 2017/828 (amending Directive 2007/36/EC), or more commonly known as the Shareholder Rights Directive.
Company directors will deal regularly with questions and issues that require some legal input, whether that comes internally or from private practice. Most will be aware that some legal communications attract privilege but less well-understood are the myriad pitfalls that can cause an inadvertent waiver of that legal protection. The post COVID-19 environment sees an ever-increasing volume of work, including board meetings, being carried out remotely by email and telephone or video conference, regulators aggressively policing company conduct and boards needing to justify corporate actions in dealings with suppliers, customers and employees. In times like these it is more important than ever that appropriate steps are taken to ensure that legal privilege is obtained and maintained where possible and appropriate to do so.
On 23 April 2020, the International Corporate Governance Network (ICGN) published an open letter, setting out governance priorities aimed at executive management, board directors and investors, which aims to help companies maintain viability during the COVID-19 outbreak and its aftermath.
The ICGN letter advocates that board directors and investors have a “shared interest” and therefore a “shared responsibility” to promote the success of companies in a way that “preserves and enhances long-term value, contributing to strong economies and healthy societies”.
The Investment Association (IA) has written to the chairs of FTSE 350 companies setting out the position of the IA in relation to certain issues which have arisen due to the COVID-19 pandemic. The letter emphasises the IA’s position as a representative of long-term investors and clarifies the views of its members as regards the need to support businesses which, although impacted by the current situation, remain fundamentally capable of delivering “sustainable long-term value for savers and investors”.
We would like to share with you a post drafted by our colleagues on their Restructuring GlobalView blog. It takes a good look at directors’ duties in these unprecedented times.
The 2020 AGM season is upon us at a time of the fast escalating coronavirus pandemic. This briefing looks at the implications of coronavirus on AGMs.
Public companies must hold an AGM within six months of their financial year end. By their very nature, AGMs entail people travelling to gather in one place. This raises questions over possible government bans on travel and limits on the number of people who may gather in any one place. Also, the venue for the AGM may have to close at short notice for deep cleansing. This all presents companies with significant uncertainty around planning the AGM and deciding what contingency plans are available.
Climate change is clearly something which is at the forefront of the minds of communities and governments. Increasingly, climate change and its impacts are being considered by companies and investors alike, as they become more aware of the potential impact – both directly and indirectly – that climate change may have on the value of assets and prospective profits. In the US for instance, the Sustainability Accounting Standards Board has assessed that climate change is material for companies in 72 out of 79 industries, which equals 93% of the US equity market.
