The march towards mandatory dematerialisation of share certificates continues apace. As discussed in our last issue, this must be seen now as a case of when, not if. But the when is still not entirely clear. The draft guidance says only that it will happen some time between now and 2025, but there is general agreement that 11 years is too long to wait and it remains to be seen what end-date for dematerialisation is in the final text. The likelihood now seems that the Government will make the final decision on timing in the UK subject to the EU’s mandatory date. The trilogue began late in 2013 with the intention of finishing it by the end of the year, and until we know what comes out of that, any new UK model cannot be fixed in stone. Concerns have been expressed about the implications for company mailings and communication with shareholders.
On 2 December Euroclear UK & Ireland announced the move of standard settlement from T+3 to T+2 with effect from 6 October 2014. Currently there remains a carve-out allowing extended settlement and as a consequence T+2 settlement will not require dematerialisation of all shares. For issuers the only change will be to the standard dividend timetable where the record date will remain as Fridays but the ex-dividend date will now move to Thursdays.
The results of the Government’s consultation on ‘Transparency and Trust’ should be made available soon. There has been discussion about Companies House having a register of beneficial ownership and whether or not this should be made public in the interests of transparency. This would have little impact on public listed companies as details of ownership are already known and shareholders already have to disclose interests of over 3%. But, for the smaller unlisted companies it could be quite onerous, particularly for those set up with structures to keep ownership secret where they have nominee shareholders. We may also see proposals on employment agencies and whistleblowing.
The Government is planning changes proposed to annual returns, simplifying company filings, particularly for companies where there haven’t been any changes. There are also to be changes to the statement of capital to tidy up a long-standing problem which means some companies can’t properly complete if they have bought back shares issued at different amounts over the years and can’t be sure of the price they were issued at.
There are a number of EU initiatives which could re-surface, including a roadmap on share ownership, amendment to the Shareholder Rights Directive, proposals on gender and other diversity, changes to the Securities Law Directive and guidance on legal certainty relating to investor cooperation, but with no draft proposals ready yet it is unlikely the impact of any of these will be felt in 2014.
The year will kick off for many with the new requirements in narrative and remuneration reporting (for more on this, see page 28). We know what the content has to be but it is the style and the level of detail that are in question and everyone is eagerly anticipating the first half dozen that file and publicise what they have done. The best advice to those filing later in the year is to go through all the guidance from the GC100, the ICSA and the Department for Business, Innovation and Skills and to act as early as you can. From next year everyone will have a year’s experience behind them and a consensus will start to form around the best style of report.