Squire Patton Boggs

Manchester

Hammond Suddards is one of the UK's leading commercial law firms with offices in Leeds, London, Manchester and Bradford, as well as a specialist EU practice in Brussels. With a total strength of over 1,150, Hammond Suddards offers a substantial resource with access to the experience and expertise of more than 500 lawyers.Our client base comprises listed companies, subsidiaries or divisions of UK and overseas multinationals, banks, building societies, insurance companies and other institutional clients.Our resources and expertise in corporate and commercial areas are considerable and the firm has developed a strong reputation in specialist areas such as EU law, corporate finance, tax, commercial contracts, intellectual property, information technology, employment, pensions, planning and commercial dispute resolution.

Updates

Company & Commercial

Directors' duties: guidance from GC100
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
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
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
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
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
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
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?
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
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
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
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
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
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?
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
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
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.

Changes to PSC regime: AIM companies take note
United Kingdom | 17 July 2017

Recent guidance issued by the Department for Business, Energy and Industrial Strategy confirms that alternative investment market companies are now required to create and maintain a people with significant control (PSC) register and file PSC information with the central public register at Companies House. This is a result of the Information about PSC (Amendment) Regulations 2017.

Compare and contrast effectiveness of risk allocation clauses
United Kingdom | 19 June 2017

No party really wants to subject itself to unknown liability. Contracts are intended to reflect appropriate risk allocation between the parties and to delineate potential liability clearly in the various scenarios that can arise. However, contracts often fail to do this adequately and the courts are full of cases dealing with situations that were either not envisaged or where the parties disagreed on the meaning of clauses which they have agreed.

Changes to persons with significant control regime
United Kingdom | 12 June 2017

The Fourth Money Laundering Directive requires, among other things, corporate and other legal entities to disclose their beneficial owners. In many respects, this is being done at present under the persons with significant control (PSC) regime. However, the directive goes further in two important regards and, as a consequence, changes will need to be made to the PSC regime.

UK regulator growth duty – a new era in decision making?
United Kingdom | 08 May 2017

The economic growth duty came into force recently under the Deregulation Act 2015. It requires many regulators in England and Wales to have regard to the "desirability of promoting economic growth", alongside the delivery of protections set out in relevant legislation. In particular, regulators should consider the importance of ensuring that any regulatory action that they take is necessary and proportionate.

Corporate governance changes ahead?
United Kingdom | 24 April 2017

The Business, Energy and Industrial Strategy Committee's recent report on its inquiry into corporate governance suggests significant changes may be ahead. The report makes a number of noteworthy recommendations, including introducing a rating system publicising examples of good and bad corporate governance practice by companies and simplifying the structure of executive pay.

Ctrl+Alt+Delete: Companies House reporting framework reset – trustee companies take note!
United Kingdom | 10 April 2017

Confirmation statements are normally due one year after a company files its last annual return and must be filed within 14 days of that date. Trustee companies with confirmation statement due dates between now and the end of June 2017 should act now to identify their persons with significant control and put plans in place to ensure that this filing requirement is complied with.

Reporting on Payment Practices and Performance Regulations 2017
United Kingdom | 03 April 2017

The government recently published the Reporting on Payment Practices and Performance Regulations 2017. The regulations require qualifying companies to report on relevant contracts – broadly, those that are for goods, services or intangible assets that are not a contract for financial services and that have a significant connection with the United Kingdom. Further, qualifying companies will need to report on their standard payment terms.

Smelting the assets (directors' duties/transactions at undervalue and to defraud creditors)
United Kingdom | 06 March 2017

A recent case is a useful example of how directors' duties are looked at following a formal insolvency and ways in which an office holder can challenge transactions if there is evidence of wrongdoing or a concerted strategy to frustrate creditors' recourse to a company's asset base which would ordinarily be available to them in an insolvency. Interestingly, the court found that a director did not have to give priority to creditor interests under the general duties of a company director.

And so it begins… the 2017 shareholder spring
United Kingdom | 27 February 2017

In 2017 most FTSE100 companies will be putting their new remuneration policies to a shareholders' binding vote, against an increasingly hostile background of criticism of the size and complexity of directors' pay packages. There seem to be a lot of potentially conflicting issues, suggesting that there might be another interesting annual general meeting season ahead.

PLSA revises corporate governance guidelines
United Kingdom | 30 January 2017

The Pensions and Lifetime Savings Association recently published a revised version of its Corporate Governance Policy and Voting Guidelines. The main changes pertain to leadership, accountability and remuneration. The guidelines also contain new material regarding voting at annual general meetings, including in relation to annual reports and accounts, the approval of remuneration policies and reports and the re-election of directors.