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Registration Services' Regulatory Roundup - May 2017

24 May 2017

We review the latest news, legislation and corporate practices governing UK businesses

Central Securities Depositories Regulation (CSDR)

European Union publication of the Official Journal

The much anticipated European Union publication of the Official Journal took place in mid-March which sets out the standards expected of CSDs; in the coming weeks Euroclear UK & Ireland (EUI) will be issuing a consultation paper on the impacts of this in relation to their rules and functional change requirements. Equiniti continue to work with the official bodies and EUI to ensure the benefits for the industry are fully exploited, whilst ensuring our corporate clients best interests are fully factored in.

EUI will be fully assessing the implications of this latest update and focusing on how they will comply; the next stages of development will include:

  • Stock Issuance additional control function (Article 37).
  • More detail around account ownership (Article 38).

Other associated elements and actions:

  • Legal Entity Identifier (LEI) – EQ continues to collate and submit the LEI’s of our corporate clients; if you have not yet responded to our requests, please contact your Relationship Manager accordingly.
  • We are currently assessing the London Stock Exchange’s recent notification on the Level 2 Data requirements for your LEI and will be communicating our findings in due course.
  • EUI will be looking to make a licence application to the Bank of England (BofE), as the National Competent Authority, anticipated to be in September this year; thereafter, the BofE have six months to validate the application, undertake any relevant reviews or challenges with EUI before approving. 

The Department for Business, Energy & Industrial Strategy (BEIS)

Governance failings bring call for changes from BEIS Select Committee

The BEIS Commons Select Committee has published its report into corporate governance.  The committee has focused on the failings at BHS and Sports Direct to establish and put forward future recommendations. Whilst separate from the BEIS enquiry into corporate governance reform started in September 2016, the report is likely to influence the White Paper on corporate governance reform currently being developed.

The conclusion of the report broadly supports the current comply or explain approach of the UK Corporate Governance Code (the Code) and recognises the high governance standards that generally exist in the UK.  However, it sets out a series of reforms “designed to require directors to take more seriously their duties to comply with the law and the Code in relation to corporate governance”.

Some of the recommendations of the report include:

  • The UK Corporate Governance Code (the Code) to require informative narrative reporting on the fulfilment of directors’ duties under s172 of the Companies Act.
  • The Financial Reporting Council (FRC) to work with organisations to develop metrics to inform an annual rating exercise to publicise examples of good and bad practice using red, yellow and green assessment. Companies to be obliged to include reference to this rating in their annual reports.
  • Non-executive directors to be required to demonstrate more convincingly that they are able to devote sufficient time to each company they serve.
  • An appropriate governance code should be developed for largest privately-held companies.
  • Simpler structure for executive pay and LTIPs should be phased out as soon as possible. 
  • Simpler structure for executive pay with following features: 
    • Employee representation on remuneration committees should be a Code requirement.
    • Publication of pay ratios between CEO and senior executives and all UK employees.
  • Target should be set from May 2020 that at least half of all new appointments to senior and executive management level positions in listed companies should be women or explain in annual report why this is not the case.
  • FRC should embed the promotion of ethnic diversity of boards in the Code. FTSE 100 companies to publish workforce data broken down by ethnicity and pay band.

The BEIS report is available here

The UK could lead the way in transparency over property ownership

The government has published a call for evidence seeking views on the proposals for a register of beneficial ownership information for overseas companies or other legal entities that own or buy UK property or participate in UK central government procurement. 

The government has stated that it believes in the benefits of transparency of ownership. If established the register would be the first of its kind in the world. 

Details of the call for evidence are available here

The Financial Conduct Authority (FCA)

The latest Primary Market Bulletin from the Financial Conduct Authority

The Financial Conduct Authority (FCA) have published their latest Primary Market Bulletin number 17.  The edition focuses on Sponsor Conflicts.  It also includes:

  • Details of a new TR-1 form which will come into force on 30 June 2017. The new form will be located on the FCA’s website ( in the same location as the current form and will also have updated notes. The FCA encourages companies to send the TR-1 form in Word rather than PDF format.
  • Legal Entity Identifiers (LEI) – the FCA continues to encourage early use of LEI by companies on regulated information prior to their mandatory use later this year as this will mean information filed with an LEI will be readily searchable.
  • Details of updated Knowledge Base articles and Technical Notes.

Primary Market Bulletin 17 is available here.  

The Financial Conduct Authority (FCA)

Publishes amendments to DTR 6 in light of EU requirements on electronic access to regulatory information

The amendments to DTR 6 have been delayed by six months in order to give companies time to prepare.  DTR 6 has been updated in light of the EU requirements on electronic access to regulatory information.  The rules come into force on 1 October 2017 and require all companies to include a Legal Entity Identifier on announcements containing regulated information.  Companies will also need to include the relevant classification for the regulated information using the European electronic access point (EEAP) categories which will be included in DTR 6.

Further information is available here


Financial Reporting Council

Investors are updated on developments in corporate reporting so that they can hold companies to account

The Financial Reporting Council (FRC) is seeking to encourage investors to engage with companies about the information that they would like to see in company reports and to challenge where reporting is not up to standard. 

The FRC letter covers four main areas:

  • Strategic Report: considers the treatment of the business model, use of alternative performance measures, risk reporting and viability statements and Brexit.
  • Governance reporting: companies should be providing full and clear explanations if they choose to ‘explain’ rather than to ‘comply’ with the Corporate Governance Code.
  • Audit committee report: expectations on reporting on audit quality.
  • Financial Statements disclosures: tax reporting, dividends, impact of low interest rates, accounting policies, significant accounting judgements, and estimates and developments in IFRS.

A copy of the FRC’s letter is available here.

Institute of Chartered Secretaries and Administrators (ICSA)

Revised Guidance on Audit Committees

The ICSA have revised their guidance note on Audit Committees.  The ICSA’s model terms of reference for the audit committee seek to ensure full compliance with the requirements of the UK Corporate Governance Code.

The guidance note has been updated to reflect the Code as revised in April 2016 and the updated FRC Guidance on Audit Committees (the ‘FRC Guidance’), also published in April 2016. The Code is applicable for financial periods beginning on or after 17 June 2016. Copies of the Code and the FRC Guidance are available at

The ICSA Guidance is available from 

Pensions & Investment Research Consultants (PIRC)

Shareholder Voting Guidelines for 2017

The guidelines set out PIRC’s views on issues such as board structure, remuneration policy and management of social and environmental issues.

Changes to the 2016 guidelines include:

  • PIRC will oppose the re-election of an executive chairman except in exceptional circumstances.
  • PIRC supports the Hampton-Alexander Review and Davies Review recommendations of 33% of board positions in FTSE 350 companies to be held by women by 2020 and will not support the re-election of a nomination committee of a FTSE 350 company where current female representation on its board falls below these expectations with no clear and credible proposals for reaching these objectives.
  • Previous statements concerning company secretaries, including PIRC’s view that the secretary should not also be a director and that the role and responsibilities of the secretary should be described formally in contracts and outlined in annual reports, have not been included in the 2017 guidelines.
  • The statement that PIRC does not consider the appointment of alternate directors to be acceptable owing to the lack of accountability to shareholders has not been included in the 2017 guidelines.
  • In respect of remuneration consultants, PIRC now calls on companies to disclose the consultants used and remuneration consultant fees on an annual basis.

The guidelines are available from PIRC’s website

For further information about any of the topics in this roundup, please contact your Equiniti relationship manager. 




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