5 min read
Corporate Update is our fortnightly bulletin highlighting the latest legal and regulatory developments which we consider to be of relevance to in-house corporate counsel. If you would like to subscribe to this bulletin as a regular email, please click here.
In this issue
News
PLSA publishes 2022 Stewardship Guide and Voting Guidelines
On 23 February 2022, the Pension and Lifetime Savings Association (PLSA) published its 2022 stewardship and voting guidelines. Updates to the 2021 version include the following:
- Virtual AGMs: The PLSA continues to support the use of virtual AGMs to ensure shareholder participation, and no longer specifically advises voting against any motion that would make virtual AGMs permanent. However, there are noted concerns that virtual-only AGMs becoming permanent may reduce opportunities for shareholder engagement with the board, and companies are urged to consider how they can increase investor engagement.
- Board leadership and company purpose: Companies should disclose how they are responding to the challenges posed by COVID on the workforce.
- Board composition and diversity: There should be a clear description of the board's policy on diversity and investors should consider voting against the re-election of the Chair and the Chair of the Nominations Committee if the board has not established a Diversity and Inclusion policy and strategy.
- Remuneration: Given the continued impact of Covid-19, and the substantial increase in the cost of living, companies, particularly those that have received government support over the past two years, should show caution in remuneration packages in 2022. The increased consideration of ESG factors in remuneration is welcome, and the PLSA would like more links to clear targets for performance against achieving a company’s ambitions to meet climate goals.
- Climate change and sustainability: Investors are recommended to consider voting against the company's climate change and sustainability policy if it does not reference the TCFD framework in disclosures.
BEIS publishes guidance on mandatory climate-related financial disclosures
On 21 February 2022, the Department for Business, Energy and Industrial Strategy (BEIS) published its guidance on mandatory climate mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs. These regulations are non-binding and aim to aid companies and LLPs to understand their obligations on under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022, which came into force on 17 January 2022. These regulations introduce a requirement for relevant entities to disclose climate-related financial information in line with the Recommendations of the Taskforce on Climate-related Financial Disclosures, and will enter into force on 6 April 2022.
BEIS publishes first report of the FTSE Women Leaders Review
On 22 February 2022, BEIS published the first report of the FTSE Women Leaders Review. The Review, which builds on the work of the Alexander-Hampton review, was established to monitor and set recommendations in respect of women's representation among the leadership of FTSE 350 companies. Key findings of the Review include that:
- While the percentage of women on boards have increased, with the percentage (as at 10 January 2022) at 39.1% for the FTSE 100 (up from 36.2% in 2020); at 36.8% for the FTSE 250 (up from 33.2% in 2020); and at 37.6% for the FTSE 350 (up from 34.3% in 2020), 15 FTSE 100 companies and 57 FTSE 250 companies have not yet achieved the 33% target.
- Across the FTSE 350, there were only 48 women Chairs, 115 Senior Independent Directors and 18 CEOs.
The Review makes a number of recommendations, including:
- An increase in the voluntary target for FTSE 350 boards and for FTSE 350 leadership team to a minimum of 40% by the end of 2025
- For FTSE 350 companies to have at least one woman in the Chair, Senior Independent Director role and/or one woman in the CEO or Finance Director role by the end of 2025
- An extension of the scope of the Review to include the largest 50 private companies in the UK by sales.
Legislation
Money Laundering and Terrorist Financing (Amendment) Regulations 2022 passed
On 14 February 2022, the Money Laundering and Terrorist Financing (Amendment) Regulations were passed. These regulations will come into force on 9 March 2022 and serve to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to extend the deadlines on trustees for registering and updating information on the register of express trusts in the UK. They also amend the categories of trust that require registration.
Case Law
Re Amicus Finance plc (in administration) [2021] EWHC 3036 (Ch)
The High Court sanctions the first restructuring plan under Part 26A Companies Act 2006 proposed by a company in administration
In this judgement, the High Court has set out its reasons for sanctioning the first restructuring plan under Part 26A of the Companies Act 2006 proposed by a company in administration. The case also involved the exercise of the court's power in s 901G CA 2006 to 'cram down' a dissenting class of creditors.
Amicus Finance plc is an SME that was placed in administration in 2018. The administrators proposed a restructuring plan under Part 26A of the Companies Act 2006, with the aim of allowing the company to return to solvency. The plan was brought to the High Court, and it determined whether it had jurisdiction under Conditions A and B in section 901A CA 2006. Ultimately, the Court was satisfied that the creditors were no worse off under the restructuring plan than they would be under immediate liquidation, confirming that the word ‘satisfied’ in the applicable legislation mean that the court could be satisfied by the plan proponent on the balance on probabilities that the dissenting creditor would be ‘no worse off.’