List Publication of annual tax strategy

As mentioned in our March 2017 update, the publication of annual tax strategy is required to be made available on company’s website and has effect for financial years beginning on or after 15 September 2016. A strategy must set out the approach and governance arrangements in relation to UK taxation, attitude towards tax planning, the level of risk in relation to UK taxation that the company is ready to accept and the approach of the company to its dealings with HMRC. If the business is part of a multi-national group, the requirement is to publish any strategy, or parts, only relevant to UK tax.

For more details of guidance from HMRC please visit their website.

EU Prospectus Regulation

In 2015 the European Commission conducted a consultation which identified shortcomings in the regime introduced by the prospectus directive. To improve the prospectus regime, in June 2017 the EU adopted a Regulation (EU) 2017/1129 and its provisions will begin applying on a rolling basis, with full application from 21 July 2019. The regulation covers various sizes of the companies and its aim is to make it cost-effective for small and medium companies to access capital market, to introduce flexibility for all type of issuers and improve prospectuses for investors.

Changes implemented on 20 July 2017 concern abolition of the prospectus for the admission to trading of securities representing less than 20% (previously 10%) of the same class of securities already admitted to trading on the same EU market. In addition, no prospectus is required from the conversion or exchange of other securities if they represent 20% or less of the shares of the same class already admitted to trading. Further changes will take effect in July 2018 with final compliance required from July 2019.

More information on EU Prospectus regulation is available here.

MAR – updated ESMA Q&A and notification templates

ESMA published an updated version of its Q&A on Market Abuse Regulation (the “MAR”) in the end of May 2017. The changes relate to the timeframes clarifications of the blanket cancellation of orders policy, disclosures related to Pillar II and closely associated persons under Article 3(1)(26)(d) of MAR.

In relation to the disclosure of inside information under the Pillar II requirements, ESMA’s updates expand on the timeframes and potential permitted delays of the disclosure of inside information provided certain conditions are met and notification is given to the competent authority of its intention to delay under Article 17(5).

ESMA expands on the topic of closely associated persons by giving an example of the scenario where PDMR would not be considered discharging managerial responsibilities within legal entity for the purposes of Article 3(1)(26)(d) of MAR.

Full text of the Q&A could be found here.

“Proper purpose” test – an access to register of members

Under Companies Act 1985, the register of members of the company was open to inspection by any member of the company without any charge and any other person, on payment of a required fee. However, in recognition of the protection of the shareholders of the company, Companies Act 2006 (sections 116-119) (the “Act”) allowed access to a company’s register subject to “proper purpose” test. Under s116 of the Act companies are obliged to respond to an individual requesting the register within five working days with no option to decline such request or, should company decide to apply to the court, notify an individual of such application.

The case Burberry Group PLC v Richard Charles Fox-Davies (2015) clearly sets an example of the decision of the court in relation to the “proper purpose” test. Mr Fox-Davies was not a member of the Company and stated that the purpose for the request was to assist members of the company to reassert ownership and recover the benefit of their holdings through his business practice, which hired “specialist researchers” with whom he would share the lost members’ information. The court held that request was not for a “proper purpose” but rather for Mr Fox-Davies’s own commercial interest and that Burberry Group PLC did not have to comply with the request unless it fully contained all the information required by the s116(4) of the Act.

Since the definition of the “proper test” was not included in the Act, the decision is left with the courts on case by case basis. The ICSA’s guidance issued in January 2014 considers that the request is improper when it is made by or for the purpose of being used by the search agency specialising in recovering unclaimed assets. From the abovementioned case, it is clear that a company will only be required to provide a copy of its register of members where the application satisfies all requirements of the Act and “proper purpose” test is passed, which means that a request from a member will be resolved in his/her favour where the purpose relates to his or her rights only.