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Registration Services' Regulatory Roundup - July 2015

Mon 27 Jul 2015

Your monthly roundup of what is happening in the share registration and company secretarial worlds

This month's news items:

  • Shareholder Voting Working Group reports
  • Dematerialisation consultation
  • Abolition of the dividend tax credit
  • Companies House launches public beta search services
  • Prohibition on corporate directors
  • Top boardrooms hit diversity target

Shareholder Voting Working Group reports

The Shareholder Voting Working Group (SVWG) published its latest report on 1 July. 

The report, produced under the chairmanship of David Jackson, Company Secretary of BP, identifies best practice and makes a series of recommendations.

The SVWG was established more than 10 years ago as a forum for discussions between issuers, custodians, investment managers, registrars (including Equiniti), proxy voting agencies and others in the proxy voting chain or with an interest in corporate governance. At that time there were perceived to be significant obstacles preventing institutional investors from influencing companies through proxy voting on resolutions at general meetings. Subsequently Lord Myners took up the SVWG chairmanship; he noted that improvements had been made and the Group produced a number of recommendations.

Many of these have been implemented and the level of investor engagement in the UK is the envy of other parts of the world, but it was considered that further improvements could be made and the new report seeks to address these aspects of the process. It makes a number of recommendations, and asks for comments from interested parties by 30 September. Equiniti is currently analysing the report and a dedicated Bulletin will be sent to clients when that has been completed.

There is a crossover with the content of the Shareholder Rights Directive (SRD) and the recommendations in the SVWG report must be considered in that context and will also need to reflect the decision by the Department for Business, Innovation and Skills (BIS) on how to reflect any consequential changes in UK law.

A decision in the EU Parliament on changes to the Parliamentary text was delayed from 10 June until 7 July but, although changes were made to some of the more divisive clauses, it has still not been finalised. This needs to happen before proceeding to three-way talks with the EU Commission and Council (the Trialogue) where further negotiation will be required. The SRD is not believed to be a priority of the new Luxembourg presidency, so it may be some time before the likely impact of the SVWG proposals can be assessed in full.

Dematerialisation consultation

BIS still hopes for an early autumn consultation on dematerialisation will proceed, subject to the decision of new ministers. This will include the Model, updated to deal with as many outstanding points as possible, but also asking specific questions about the remaining issues.

The Dematerialisation Steering Group (DSG) met recently and is looking at some of the legal issues and identifying what needs to be resolved now and what can be deferred. A meeting has been scheduled for 28 July with HMT/HMRC to discuss SDRT/Stamp Duty in the context of Non-Market Transfers. It has not been decided whether a further meeting will be required before the consultation is issued, nor whether any of the proposed sub-groups, particularly one looking at legal questions, will meet during the summer. A number of issuers have expressed an interest in becoming involved and the DSG will consider representation when the meeting schedule is being agreed.

Abolition of the dividend tax credit

In a surprise move, the Chancellor announced in the Summer Budget that the dividend tax credit is to be abolished. It will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Tax rates on dividend income will be increased.

This simpler system will mean that only those with significant dividend income will pay more tax. Investors with modest income from shares will see either a tax cut or no change in the amount of tax they owe. The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

The scrapping of the dividend tax credit will result in changes to dividend stationery and we will communicate these details when they are known.

Companies House launches public beta search services In line with the government's commitment to free data, Companies House has launched its new public beta search service providing free access to all public digital data held on the UK register of companies.

The service provides access to more than 170 million digital company records. Access to the data is available both through a web service and an application program interface, enabling both consumers and technology providers to access real time updates on companies.

Prohibition on corporate directors

On 23 June BIS updated its consultation document on the implementation of the register of people of significant control - the PSC Register. The consultation document was originally issued on 19 June to notify that implementation of the prohibition on the appointment of corporate directors originally timetabled for October 2015 has been delayed until 2016. BIS will announce the revised timing for implementation shortly.

Top boardrooms hit diversity target FTSE 100 companies have hit their 2015 target to have 25% female representation in boardrooms. Secretary of State for Education, and Minister for Women and Equalities, Nicky Morgan reported on July 14 that the target, set in the Davies Report, had been met as part of a wider announcement on plans to close the gender pay gap and a proposal for companies employing more than 250 staff to publicise the gap in average pay between male and female employees.

She said: "I am delighted that we have hit the target so that women now make up 25% of all FTSE 100 company boards. But while I am proud of the progress made, there can be no room for complacency when it comes to securing equality for women. That is why today, we are committing to eliminating the gender pay gap in a generation."


Updated provided by Stuart Ellen, Managing Director, Registration Services