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Registration Services' Regulatory Roundup - March 2017

Monday, 20 March 2017

Welcome to your latest round up of what is happening in the share registration and company secretarial worlds



Steering Group update

The Department for Business, Energy, and Industrial Strategy (BEIS) hosted a meeting of the UK Dematerialisation Steering Group on 1 March 2017.  The purpose of the meeting was to bring the group up to speed with the latest position following months of work by BEIS, The Institute of Chartered Secretaries and Administrators (ICSA) registrars Group and a number of other securities market participants.  At the meeting, BEIS laid out the position that despite BREXIT, dematerialisation was still very much in focus and the vast majority of members were in favour of an earlier implementation than the mandated timetable of 2023/25.  The format and date of issue of the planned government consultation was also discussed, it is now being considered as to whether it is a Green or a White paper, the difference being that the White paper would contain the draft legislation.  A decision on this is expected in the coming weeks and we will issue updates as and when we receive them.  We will also be hosting forums and focus groups over the next few months to debate and establish what can be factored in to the legislation to ensure maximum benefit from such a sea change to the industry.

The Financial Conduct Authority 

Ensuring Listing Rules meet the needs of companies and investors.

The Financial Conduct Authority (FCA) is proposing changes to the Listing Rules and has published a consultation paper called ‘Review of the Effectiveness of Primary Markets: Enhancements to the Listing Regime’.  The aim of the FCA is to ensure that the Listing Rules continue to meet the needs of companies and investors.  

The consultation paper sets out proposed changes in three areas: eligibility for premium listing; class transactions and the calculation of the class tests; and reverse takeovers.  The FCA has also published a discussion paper that considers the broader market landscape. The discussion paper covers topics such as whether the current boundary between the standard and premium listing categories is appropriate, how effective UK primary equity markets are in providing capital and whether different structures and regulation may improve this.  Responses to both the consultation paper and discussion paper are sought by 14 May 2017. 

The consultation and discussion papers are available from the FCA website.

Central Securities Depositories Regulation

CREST Reconciliation Solution

As part of the Central Securities Depositories Regulation (CSDR) project, Equiniti was required to develop, test and deploy a new Crest reconciliation solution on a rolling 14 day cycle.  This involves us having to reconcile hundreds of thousands more accounts than we did before.  Our new solution uses the full power of our proprietary database ‘SIRIUS’ to extract the reconciliation data and configure it to the required EUI format prior to submission. We are pleased to be able to say that we delivered our solution 2 months ahead of schedule making us the first UK registrar to do so.  There is still lots to do on CSDR, however this is a great milestone achievement and a great credit to everyone involved in the project.

Budget news

Changes to the Dividend Tax-Free allowance

The Latest budget announced by Chancellor Philip Hammond included a reduction in the tax-free allowance on dividends from the current £5,000 to £2,000 from April 2018.  It means a basic rate tax payer who receives £5,000 in dividends will have to pay an extra £225 tax from April 2018 whilst a higher rate tax payer will pay an extra £975.  This also means that Equiniti will be updating their systems to ensure that the correct tax rates are applied for payments made after the change comes into effect.

Corporate Governance under the spotlight 

Financial Reporting Council (FRC) announce a review of the UK Corporate Governance Code 

The vision of the Prime Minister to have an economy that ‘works for everyone’ and the Government’s Green Paper on Corporate Governance Reform has led the Financial Reporting Council (FRC) to announce a review of the UK Corporate Governance Code.

The review will look at the issues raised by the Green paper, the BEIS Select Committee Inquiry and the FRC’s own work on corporate culture and succession planning. The FRC has highlighted the importance of helping boards take better account of stakeholder views, linking executive remuneration with performance and extending the FRC’s enforcement powers to ensure that action can be taken against directors where there have been financial reporting breaches.  The FRC stress the need to maintain the ‘comply or explain’ approach to governance. Input from a wide range of stakeholders will be sought with a view to commence a consultation on its proposals later in 2017.  

The FRC’s announcement may be found from the FRC website

The Institute of Chartered Secretaries & Administrators (ICSA) send Letter to the Prime Minster on corporate governance 

The ICSA, the International Corporate Governance Network, the Institute of Directors and the Trades Union Congress have sent a letter to the Prime Minister highlighting their view of the importance of the directors’ duty to promote the success of the company which is enshrined in section 172 of the Companies Act 2006.  This is in response to the publication by the Department of Business, Energy and Industrial Strategy of the Green Paper on Corporate Governance.  The ICSA also support the discussions around applying the principles of independence and transparency to larger private companies, finding ways to simplify executive remuneration and having a mechanism allowing those whose interests should be protected by law to make a complaint and find some measure of redress if appropriate.

The letter is available from the ICSA website

The European Securities and Markets Authority (ESMA)

Publishes updated Q&A’s on the Market Abuse Regulation (MAR) and guidance on a number of topics 

ESMA has published an updated version of its Q&As on MAR.  This includes confirmation that the value of options granted for free to managers or employees needs to be taken into account when calculating the EUR5,000 threshold for notifying PDMR transactions to the market and how this value should be determined. 

ESMA has also published a new Q&A document on the implementation of its Guidelines on Alternative Performance Measures (APMs).  APMs are financial measures which are not defined or specified in a financial reporting framework. They are often used by companies in publically available documents such as the annual report.

ESMA has created a guide to European Economic Area national rules on major holdings notifications required under the Transparency Directive.  The guide includes a factsheet for each country summarising national requirements and information in tabular form on rules and practices so that comparisons can be made across different jurisdictions. 

More information can be found from the ESMA website

Guidance produced on gender pay and payment practices regulations

Advisory, Conciliation and Arbitration Service (Acas) publishes guidance on gender pay reporting legislation

The legislation requires employers with 250 or more employees to publish certain statistics measuring the pay gap between male and female employees.

Data must first be captured by companies on 5 April 2017 with information to be published by 4 April 2018.  The results must be published on the company’s website and a government website.  The Acas guidance sets out the types of data to be disclosed and how to calculate them, providing worked examples. It also clarifies which employers and employees are covered, as well as discussing the benefits and possible means of taking action to address have any pay gap revealed.

Acas publications on gender pay reporting include:

•Managing gender pay reporting in the private and voluntary sectors

•Gender pay reporting: obligations for employers

•The top ten myths about gender pay reporting

•Gender pay reporting notification template


These are all available from the Acas website

The Department for Business, Energy and Industrial Strategy (BEIS) publishes guidance to help large companies report on their payment practices to suppliers

Large companies will have to publically report twice a year on their payment practices and performance including the average time taken to pay suppliers.  The guidance covers:

  • Who needs to report including size criteria?
  • What must be reported?  Information required includes the company’s standard payment terms, dispute resolution, various statistics and statements.
  • Where the information needs to be reported which is on a government web service that will be available from April 2017?
  • When does information need to be reported and what period it should cover?  

The legislation comes into effect on 6 April 2017 and applies to financial years beginning on or after 6 April 2107.

The guidance is available from

The Financial Reporting Council (FRC) and Investment Association (IA) 

Provide help for companies to manage their audit tender process in best practice guides

The FRC has updated its notes on audit tenders best practice.  The FRC states that the notes include more emphasis on involving the whole Audit committee, and engaging with firms before the process begins to ensure that the right teams are considered.  The guidelines also consider the timing of a tender, engagement with investors, responsibility for the process, structure of the tender process, the proposal document and decision making.

The Audit Tenders Best Practice document is available from FRC website.

The IA has published a set of guidelines on audit tenders which considers expectations of IA members and institutional investors when companies put their audit contract out to tender.  The guidelines are centred on four areas: planning the tender, candidates, the tender process and decision.  

The IA guidelines are available here from

FCA ScamSmart campaign

Raising awareness of investment fraud

In our February edition of Roundup we mentioned that the FCA had been looking to reinvigorate their ScamSmart campaign.  This was driven by 3,186 reported investment frauds in 2015/6, although with over 30,000 checks on the FCA warning list it is believed that the true unreported figure of fraud is far higher.  Through the analysis undertaken trends in fraud target campaigns have been identified and details as to how to identify, prevent and report the fraud has been detailed in a Q&A document.  The FCA website has also been updated (meaning that corporate websites can be also updated to reflect the changes) and new flyers and info graphics have been produced that can be incorporated into stationery or included as standalone inserts into corporate mailings.  For further information go to the FCA website

Office of Tax simplification (OTS) 

Simplifying Stamp Duty

In our February edition we mentioned that the OTS had initiated a project with an aim to simplify and digitise Stamp Duty. Following input from the project team the first report that makes a number of suggestions and recommendations has now been released and is available here from  The OTS welcome feedback on their paper.

Competition Law

Avoiding disqualification advice for directors

The Competition and Markets Authority (CMA) have produced a short set of guidance points to help directors to avoid breaking competition law.  These include how directors can test their company's compliance and encourage self-reporting.

The summary points are available here from