1. Art and Diseño

timeline - a guide to the
legal milestones ahead
CALENDAR OF
KEY ISSUES
(UK PERSPECTIVE)
LEGAL GUIDE
OCTOBER 2014
ABOUT HERBERT SMITH
FREEHILLS
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Welcome
This is a guide to key legal developments in the
coming months and years ahead (UK perspective).
The developments include changes in employment law, information on the new arbitration
rules, banking reform plans, pensions law changes and details of developments in corporate
and competition law and regulation.
For more information, or for a hard copy of the Timeline, please contact the relevant
Herbert Smith Freehills partner referred to in the contact list or Simone Pearlman,
head of legal knowledge on +44 (0) 20 7466 2021 or email at [email protected].
Contents
page
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
02
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2014
1 October 2014
Corporate
Consumer protection: The Consumer Protection (Amendment) Regulations 2014 (SI 2014/870) came into force on
1 October 2014 and apply to contracts entered into on or after that date. They amend existing Regulations dealing with
unfair business to consumer commercial practices and introduce private rights of redress for consumers who have
been victims of misleading or aggressive practices, including standard remedies and an entitlement to seek damages.
1 October 2014
Corporate
Corporate Governance Code: The Financial Reporting Council (FRC) has issued a revised edition of the Governance
Code which applies to accounting periods beginning on or after 1 October 2014. The changes from the 2012 edition of
the Code focus on directors' remuneration and risk management, internal controls and going concern which the FRC
consulted on in July 2013, November 2013 and April 2014. In order to assist companies in complying with the new
requirements, the FRC has also issued new "Guidance on Risk Management and Internal Control and Related Financial
and Business Reporting", which is an amalgamation of the previous 2005 Turnbull guidance on internal control and its
2009 guidance on going concern.
1 October 2014
Disputes
New LCIA Arbitration Rules in force: The London Court of International Arbitration (LCIA) Court's new rules came
into force on 1 October 2014 and apply to any arbitration commenced after that date. The LCIA has retained the
distinctive character of the institution and rules, whilst modernising its provisions to meet user demand. The most
substantial changes are those intended to make the LCIA arbitration process less costly and more efficient, for
example including an emergency arbitrator provision, whilst other revisions are designed to improve the handling of
complex multi-party disputes. A key innovation is an annex of general guidelines on the conduct of party
representatives and a power for the arbitral tribunal to impose sanctions for breach of those guidelines.
1 October 2014
Employment
Antenatal appointments: Fathers and partners will be entitled to unpaid time off to attend two antenatal
appointments from 1 October 2014.
1 October 2014
Employment
Equal pay: Tribunals are given the power to order an employer that has breached equal pay law to carry out an equal
pay audit.
6 October 2014
Corporate
Introduction of T+2 standard settlement on the London Stock Exchange: The standard securities trading settlement
period of T+3 (trade date plus three business days) was reduced to T+2 (trade date plus two business days)
effective from 6 October 2014. The standard settlement period has been reduced in accordance with the European
Commission's Central Securities Depositaries Regulation (see below) which aims to harmonise EU securities
settlement cycles to T+2. As a result of the move to T+2 settlement, ex dividend dates will move to Thursdays, with
dividend record dates remaining as Fridays.
15 October 2014
Corporate
European Securities and Markets Authority (ESMA) Market Abuse consultation: ESMA has published two
consultation papers setting out its current thinking on draft secondary measures under the Market Abuse Regulation
(see entry below entitled EU Market Abuse Regulation). The papers cover important areas for listed companies,
including the content and format of insider lists, the definitions of PDMR dealings and closed periods, and the
circumstances in which disclosure of inside information may be delayed by a company. The consultation closes on
15 October 2014.
October 2014
Competition, regulation
and trade
October 2014
Energy and environment
Private enforcement of competition law in the EU: In June 2013 the European Commission published a long-awaited
draft Directive designed to facilitate competition law private actions in the EU. The draft Directive proposed various
claimant-friendly measures on disclosure and limitation periods, as well as a presumption of loss in cartel cases. The
draft Directive also contained measures to protect cartel whistle-blowers, including a prohibition on the disclosure of
leniency corporate statements in damages actions and an exception from the joint and several liability rule for
immunity recipients. The proposed Directive was subsequently debated between the EU Member States (through the
European Council) and the European Parliament, and was amended in a number of respects. In April 2014 the revised
Directive was approved by the European Parliament, and in May 2014 the revised text was endorsed by the Council of
Ministers (political agreement). The Directive is expected to be finally adopted in the second half of October and
Member States will then be required to implement its provisions into national law within two years.
Energy Efficiency Directive: The EU has generated further targets for the reduction of greenhouse gases in the 2030
draft framework for climate and energy policy. On 21 March 2014, EU leaders decided in the European Council to take
a final decision on the framework in October 2014 at the latest.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
03
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
October 2014
ENERGY AND ENVIRONMENT
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
Electricity market reform: On 18 December 2013 the Energy Act 2013 was granted Royal Assent. The Act provides the
statutory basis for the reform of the electricity market both to attract investment to the energy sector and to meet the
decarbonisation targets set by the European Union. To achieve these goals the Act introduces, amongst other provisions,
new support schemes for generators in the form of Contracts for Difference (CfD) and a Capacity Market.
The Contracts for Difference are to replace the existing Renewables Obligation (RO) for new projects and operate by fixing
a guaranteed, technology-specific price for energy. The latest draft of the generic Contract for Difference was released in
August 2014.The first allocation round for Contracts for Difference is expected to be held on 14 October 2014.
While the CfD scheme is effectively to replace the RO, the two schemes will run in parallel until 31 March 2017 (save in the
case of solar), when the RO will close to new capacity. The Department for Energy and Climate Change (DECC) and the
Scottish Government are introducing grace periods to enable generators to apply for accreditation under the RO after the
closure date, in order to avoid an "investment hiatus" during the transition period from the RO to CfDs.
The Capacity Market is aimed at ensuring that there is sufficient generating capacity in the UK energy market during the
transition towards increasingly low carbon generation and to allow intermittent generation (such as wind and solar) to play
a significant and on-going role in the UK's energy mix. The arrangement has received State aid approval and the
Government has confirmed its intention that the first capacity auction will be run in December 2014 for delivery of capacity
for the year from 1 October 2018. The Government also intends to introduce transitional arrangements for demand side
response capacity with the first auction planned for 2015.
Other topics within the Act will be consulted on throughout 2014/15.
October/November 2014
Energy and environment
Changes to shale drilling regulation: Draft legislation is expected to be put before Parliament following consultation
during summer 2014 regarding the right of shale operators holding a relevant petroleum licence to drill under
neighbouring land without the need for landowner approval. Planning permission and environmental permits will still
be required.
Autumn 2014
Real Estate and Planning
Conservation Covenants: A conservation covenant is a voluntary agreement between a land owner and a responsible
body (such as a charity or local/central Government) to do or not to do something on land for a conservation purpose
eg, to maintain a woodland. These covenants do not currently exist in the law of England and Wales but are used in
many other jurisdictions to enable landowners to contribute to the nation's conservation efforts. Such covenants are
long lasting and continue after the landowner has parted with the land. Following a consultation, the Law Commission
published its final report in June 2014 recommending the introduction of a new statutory scheme of conservation
covenants for England and Wales and providing a draft Conservation Covenants Bill to facilitate this. The Government's
response is awaited.
Autumn 2014
Real Estate and Planning
Proposed Minimum Energy Performance Standards: In the last Timeline we reported on provisions in The Energy Act
2011 which require the Government to bring regulations into force which could prohibit the letting or sub-letting of the
least energy efficient commercial and residential properties until measures to improve their energy efficiency have
been performed. The regulations must be brought into force no later than 1 April 2018. The consultation on these
regulations, promised for February 2014, was finally published in July and the consultation closed on 2 September.
For non-domestic properties, the consultation indicates that, when first implemented, the regulations will apply to
buildings rated F or G on their Energy Performance Certificates (EPCs). Owner-occupied buildings and those which do
not require an EPC are likely to be exempt.
It had been feared that failure to comply with these regulations might invalidate a lease, but landlords will be relieved to
learn that this is not likely to be the case. Non-compliance will result in a civil fine, the levels of which have not yet been
set. The consultation sought views on three methods of introducing the regulations: a "soft" start meaning the
regulations would apply only to new leases granted to new tenants on or after 1 April 2018; a "hard" start meaning that
the regulations would apply to all leased properties from 1 April regardless of whether the property is occupied on that
date or; a phased introduction whereby the regulations would apply to new leases to new tenants from 1 April 2018 but
with a "hard" backstop date of 1 April 2023 when the regulations would apply to all leases. This phased introduction is
the Government's preferred option. Organisations with F and G rated properties in their portfolio need to be alert to
the Government's response to this consultation, which is expected this autumn.
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CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2014
Autumn 2014
TAX
ENERGY AND ENVIRONMENT
The Wood Review: In February 2014, Sir Ian Wood published his report on how best to maximise the return from the
UK continental shelf (UKCS). The report focuses on the development of a strong new independent regulator that will
ensure that both the UK Government and industry get the maximum financial benefit from the estimated remaining
12 to 24 billion barrels of oil in the UKCS.
After the report was published the Prime Minister issued a statement in support of all the findings and made a
commitment to fast tracking the recommendations, this was backed up by announcements in the Budget 2014.
In July 2014 the Government published its response strongly in support of the Wood Review in which it noted that it
intends to establish the principles of Maximising Economic Recovery of the UKCS (MER UK) recommended in the
Wood Report via the Infrastructure Bill currently passing through Parliament.
DECC has since set out a proposed time frame for the plans. This has involved a number of steps being undertaken:
The regulatory body proposed in the review has been announced as the Oil and Gas Authority (OGA) which will
be based in Aberdeen. The search for the Chief Executive began in June with plans to announce the
appointment in autumn 2014.
The Government has recently committed £3 million a year for the next five years to the OGA, with the plan that
it will ultimately be industry funded.
DECC is aiming for the OGA to operate as a shadow Executive Agency in autumn 2014 with accelerated
additions to capacity and capability during 2015.
Subject to progress in Parliament, MER UK principles will be in force by May 2015.
The overall aim is that the OGA will be set up as a Government Company in 2016, subject to the legislative
programme for the next Parliament.
In addition, at the Budget 2014, it was announced that the Treasury will review the UK's oil and gas fiscal regime to
ensure it continues to incentivise economic recovery as the UKCS basin matures, working with the new regulatory
body described above. Initial conclusions will be set out at the Autumn Statement 2014, and a consultation with
industry will follow.
3 December 2014
Tax
31 December 2014
Real Estate and Planning
The Chancellor of the Exchequer is due to hand down the Autumn Statement: The Autumn Statement is frequently
used as a mechanism for more tax related announcements. Following the outcome of the Scottish referendum and
commitments to further Scottish devolution, the Autumn Statement may contain a further indication of the impact of
devolution on the UK tax system.
New Energy Savings Opportunity Scheme (ESOS) requires large undertakings to conduct an energy
consumption audit every four years: Large undertakings (and their corporate groups) have until 31 December 2014
(the qualification date) to determine whether they are in scope for the first phase of ESOS. If so, they have until
5 December 2015 to conduct an ESOS Assessment and report compliance to the Environment Agency, the scheme
administrator. The scheme applies across the UK and operates in four-yearly phases.
DECC estimates that 9,400 organisations are likely to be within scope for the first phase. Many affected organisations
will not have previously carried out energy audits and even those which already measure their energy consumption (to
comply with other schemes) are likely to find that ESOS introduces a considerable additional administrative burden as
well as further compliance costs.
Large undertakings are defined as those which, on the qualification date, have more than 250 employees in the UK, or
those which have fewer than 250 employees but have an annual turnover exceeding €50 million and a balance sheet
exceeding €43 million. Deadlines are tight for both registration and compliance so organisations within scope should
take action at the earliest opportunity.
December 2014
Energy and environment
Ofwat's price control determinations: Ofwat's final price control determinations for the statutory water and sewerage
undertakers are scheduled to be published on 12 December 2014. The companies will then have two months to decide
whether to accept the final determination or, alternatively, trigger a price control reference to the Competition and
Markets Authority (CMA).
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
05
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
December 2014
Tax
Finance Bill 2015: The first draft of the 2015 Finance Bill is expected to be published.
December 2014
TMT
Cyber Security Law: In February 2013, the European Commission published a Cyber Security Strategy and draft
Directive setting out measures to establish a unified approach to network and information security across
Member States.
The proposals are now going through the European legislative process and in March 2014, the European Parliament
voted to adopt its draft report on the Directive. This will now need to be negotiated with the European Council to agree
a final form of the Directive.
The expected timeline for adoption of the Directive is December 2014 and, once adopted, Member States are likely to
have 18 months in order to implement the Directive into national legislation (ie, until mid-2016).
December 2014
TMT
Reform of the EU telecoms regulatory framework: In September 2013, the European Commission published its
"Connected Continent" Regulation to reform the EU telecommunications regulatory framework.
Amongst other things, the Regulation included proposals for: (i) a single EU notification and authorisation regime for
telecommunications operators; (ii) the coordination of spectrum allocation; (iii) net neutrality rights; and (iv) the end
of roaming charges across the EU.
On 3 April 2014, the European Parliament voted to approve the draft Regulation (as amended in a report by the
European Parliament Industry, Research and Energy Committee) but on 17 May 2014, the Body of European
Regulators for Electronic Communications published its views on the Parliament's position, criticising a number of the
compromise proposals.
Political agreement on the European Council position has now been reached and a common position should be
reached at a subsequent session, with the European Commission hoping to get final agreement on the Regulation by
the end of 2014. As a Regulation rather than a Directive, it would then be directly applicable in Member States.
Late 2014
Competition, regulation
and trade
Late 2014
Competition, regulation
and trade
Late 2014
Corporate
Private enforcement of competition law in the UK: In January 2013 the UK Government published its planned reforms
to the competition law private enforcement regime. The legislative provisions to implement the proposals were
introduced to Parliament in January 2014 as part of the Consumer Rights Bill, which is currently working its way
through the legislative process. The reform plans are far-reaching, and include most controversially the creation of an
"opt-out" collective action for competition law claims in the Competition Appeal Tribunal (CAT), together with the
introduction of an opt-out collective settlement regime in the CAT. Subject to Parliamentary schedules and approval,
adoption of the legislation is expected in late 2014 (although it is not yet clear when the reforms, if adopted, will come
into force).
EU rules on public procurement: Three new EU Directives on public procurement were adopted by the EU in February
2014 and published in the EU Official Journal in March 2014. The reforms are intended to modernise and simplify the
rules regulating the award of contracts and concessions by public bodies and utilities. The new Directives formally
entered into force on 17 April 2014, but EU Member States have two years to implement them into national law. The
UK Government welcomes the changes and so will implement the new Directives more rapidly, possibly before the
end of 2014.
Guidelines on Alternative Performance Measures: In February 2014, the European Securities and Markets Authority
(ESMA) published a consultation paper proposing guidelines for the use of Alternative Performance Measures
(APMs) by listed companies. APMs are information that is not part of the applicable financial reporting framework,
but which are presented voluntarily by issuers as an aid to understanding the performance of their business (for
example, earnings per share and EBITDA). The range of information proposed to be covered by the guidelines includes
all documents containing regulatory information that is made publicly available by an issuer, such as annual and
interim financial statements. The proposed guidelines require issuers to publish information about APMs including
reconciling APMs to amounts presented in the financial statements and providing explanations of APMs and the
information they seek to present.
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CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2014
Late 2014
Corporate
Reform of company and business names: The Department for Business, Innovation & Skills (BIS) is expected to
publish draft legislation to reform the company and business names regime. In its February 2013 consultation paper
BIS sought views on whether the Regulations relating to company and business names should be significantly reduced
or even repealed completely. Following a review of the responses to the consultation, BIS has confirmed that it
proposes to reduce the list of "sensitive" words requiring the prior approval of the Secretary of State before they can be
used in a company name and that the list of words on the "same as" list be reduced.
Late 2014
Corporate
Consumer rights legislation: In January 2014 the Consumer Rights Bill was introduced to the House of Commons. The
Bill intends to clarify and simplify consumer law by providing simple, standardised remedies in relation to the supply of
goods, services and digital content by businesses to consumers. The Bill also includes provisions permitting private
actions in competition law. If Parliamentary proceedings on the Bill have not been completed by the end of the
2014-2015 session, the Bill will be carried over into the next Parliamentary session.
Late 2014
Corporate
Abolition of interim management statements: The Financial Conduct Authority (FCA) consulted on the proposed
abolition of the requirement in the Disclosure and Transparency Rules to produce interim management statements
(IMSs). The consultation closed on 4 September 2014. The rule changes are designed to give effect to the changes
made to the Transparency Directive (see entry below entitled Transparency Directive) which include the deletion of
the requirement to publish interim management statements or quarterly reports. While Member States have until
25 November 2015 to implement the changes, the UK Government has previously announced its intention to
implement this aspect early and the FCA has said that it will provide feedback later in 2014, so it is expected that the
change will be in force by the end of 2014.
Late 2014
Real Estate and Planning
Late 2014
Real Estate and Planning
Late 2014
Real Estate and Planning
End of 2014
Energy and environment
Termination of tenancies for tenant default: The current law governing the termination of commercial and residential
tenancies on the ground of tenant default is, in the Law Commission's opinion, "littered with pitfalls". In 2006 the Law
Commission recommended that forfeiture should be abolished and replaced by a modern statutory scheme for the
termination of tenancies that would balance the interests of all parties and promote proportionate outcomes. In its
Annual Report published on 14 July 2014 the Law Commission stated that the Government's consideration of this
project has been delayed by other priorities but that the Government intends to reach a final decision on
implementation in 2014.
Rights to light: A right to light is an easement that gives land owners the right to receive light through defined
apertures in buildings on their land. Rights to light are valuable and, if interfered with, may enable a landowner to claim
damages or even prevent construction of a building on other land. In 2013 the Law Commission published a
consultation paper on reform of the law relating to rights to light which investigated whether the existing law provides a
fair balance between the important interests of land owners and the need to facilitate development. It also considered
whether the remedies available to the courts are reasonable and sufficient. The consultation proposed that in future it
should no longer be possible to acquire rights to light by long use (known as prescription). The Law Commission is
currently formulating its final policy in the light of responses to this consultation and the February 2014 Supreme Court
decision in Coventry v Lawrence. It expects to publish its final report and recommendations before the end of 2014.
Easements, covenants and profits à prendre: These three interests in land are, in the Law Commission's opinion,
"essential for the effective and efficient use of land". However, the law relating to these interests is complicated and in
need of modernisation. The Law Commission conducted a project on these interests and in 2011 submitted its final
report to the Government together with a draft Law of Property Bill to make the law relating to these interests fit for the
21st century. The Government's response is expected before the end of 2014.
Market coupling: On 4 February 2014 the EU commenced a pilot scheme for day-ahead market coupling. It consists of
14 EU Member States (Belgium, Poland, Sweden, Denmark, Estonia, Finland, France, Germany, Austria, Latvia,
Lithuania, Luxembourg, the Netherlands and the UK). This marks the first steps in the creation of an internal market for
gas and electricity. There are plans to expand the pilot across Europe by the end of 2014 and it is likely that the
Commission will be preparing a Regulation to be issued in the third or fourth quarter of 2014 that will make coupling
binding across the EU with further steps being taken in the coming year.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
07
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
December 2014/Early 2015
Tax
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
The proposed European Financial Transactions Tax (FTT) may come into force: Under the enhanced co-operation
procedure, 11 Member States (including France and Germany and others, comprising the so called FTT zone) agreed
to introduce an FTT. The proposal was that the tax will be applied to "financial transactions" which involve "financial
instruments" (including shares, derivatives, swaps etc, but not plain "vanilla" loans) that are entered into where at least
one party is "established" within the FTT zone and where at least one party to the transaction is a "financial institution"
(whether acting as principal or agent) which is "established" in the FTT zone. The exact form of the tax is still to be
agreed but is likely to apply widely and have significant extra territorial impact. "Financial institution" is likely to be
widely defined and may catch parent companies and treasury companies of non-financial services sector groups.
There will be joint and several liability and as drafted there is no intra-group exemption. FTT will be payable at a
minimum rate of 0.1% for shares/securities and 0.01% for derivatives. Negotiations have continued within the
European Council. On 6 May 2014, ten of the 11 participating Member States announced that FTT will be phased in by
1 January 2014. It is thought that the current plan is that FTT will initially apply to shares and derivatives only, although
this has not been confirmed. A resolution on the matter is expected by the end of 2014 however, protracted
negotiations are still affecting deadlines.
End 2014/Early 2015
Regulatory
Money Laundering Directive (MLD): A new money laundering directive (MLD IV) is expected to be formally
adopted in Europe. MLD IV will take effect 24 months after entry into force (not currently clear, but likely to be late
2014/early 2015).
2014
Corporate
European contract law: The European Commission published a draft Regulation containing an optional Common
European Sales Law in October 2011 and had initially hoped that the proposal would be adopted in 2012, which was the
20th anniversary year of the Single Market. It was accepted that the EU Member States needed further time to
consider the proposals and discussions have continued in 2013 and in 2014.
The proposed Regulation contains a comprehensive set of uniform contract law rules for cross-border contracts which
would exist alongside current national regimes as a 28th contract law regime. The Common European Sales Law
would apply to cross-border contracts for the sale of goods, including digital content contracts where both parties
voluntarily and expressly agree to it and one of the parties is established in one of the EU Member States. The regime
will be available for both business-to-consumer and business-to-business transactions where one of the businesses is
a small or medium-sized enterprise (SME). However, Member States have the option of making it available for all
business-to-business contracts, not just those involving SMEs. Member States can also provide that it should apply to
domestic contracts as well as cross-border contracts.
2014
Pensions
The Pensions Act 2014: The Pensions Act 2014 received Royal Assent in May 2014. The Act contains provisions
relating to (among other things) the following:
Reforms to the State Pension so as to create a single-tier State Pension from April 2016.
Power for the Secretary of State to issue statutory guidance on statutory provisions relating to Guaranteed
Minimum Pensions (GMP) conversion. The GMP conversion process allows schemes to convert guaranteed
minimum pensions into ordinary scheme benefits (subject to various safeguards) but due to the difficulty with
some of the legislative requirements, has not been used by schemes to date.
Regulations to be made for the automatic transfer of small pots (initially £10,000 but subject to review every
three years) in defined contribution (DC) schemes.
Many of the provisions of the Act are not in force and are awaiting commencement orders; key regulations are
also awaited.
08
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2015
1 January 2015
Corporate
1 January 2015
Corporate
1 January 2015
Corporate
Accounting Directive, Transparency Directive and project-by-project reporting of Government payments: The new
Accounting Directive which repeals and replaces both the Fourth Company Law Directive (Directive 78/660/EEC)
and the Seventh Company Law Directive (Directive 83/349/EEC) (together often referred to as the Accounting
Directives) was published in July 2013, and must be implemented by Member States by 20 July 2015. The Directive
makes it mandatory for large and listed companies in the extractive or logging industries to report publicly on all
payments they make to Governments on a project-by-project basis. In the UK, the requirements will be implemented
early and all affected companies will have to produce reports for financial years beginning on or after 1 January 2015.
The Transparency Directive (see also the entry entitled "Transparency Directive" below) extends the same project-byproject reporting requirement to all companies listed on an EU regulated market operating in the affected
industry sectors.
New financial reporting requirements in UK and Republic of Ireland: The Financial Reporting Council has issued
three new accounting standards which will replace existing UK Generally Accepted Accounting Principles (UK GAAP)
from 1 January 2015. These are: (i) FRS 100 (Application of Financial Reporting Requirements) – lays out the overall
framework for UK financial reporting and gives companies a choice of accounting requirements depending on factors
such as size and whether or not they are part of a listed group; (ii) FRS 101 (Application of Financial Reporting
Requirements) – provides a reduced disclosure regime based on IFRS accounting standards that will be most useful for
individual subsidiary and parent company accounts where the group's financial statements are prepared under full
IFRS; and (iii) FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland) – provides
accounting and reporting requirements for unlisted entities, again including a reduced disclosure regime for individual
companies within a group. The three new FRSs will be effective from 1 January 2015, but may be adopted early for
accounting periods ending on or after 31 December 2012. All existing UK standards (other than the insurance standard
FRS 27) and related documents will be withdrawn from 2015.
Competition and Markets Authority measures in relation to the UK audit market: The Competition and Markets
Authority (CMA) has issued its final form Order in relation to the statutory audit of FTSE 350 companies. The
publication of the final Order follows the issue of the draft order for consultation in July 2014. It is the culmination of
the enquiry by the CMA's predecessor, the Competition Commission, into the statutory audit market, which was
followed by the publication of proposed remedies in October 2013. The Order covers two of the remedies
recommended by the Competition Commission: (i) a requirement for FTSE 350 companies to use a competitive
tender process in relation to the re-appointment of their auditors at least once every 10 years; and (ii) a requirement
for the audit committee of FTSE 350 companies to carry out specific functions in relation to audit. The Order comes
into force on 1 January 2015 and applies to financial years beginning on or after 1 January 2015.
The Order overlaps with the EU Audit Regulation, which comes into force in June 2016 (see entry below entitled
Audit Regulation), although a key difference is that the Audit Regulation requires auditor rotation rather than just
audit tendering.
1 January 2015
Employment
1 January 2015
Finance, insolvency and
derivatives
Regulatory
Bonus clawback: PRA-authorised firms must ensure that variable remuneration awarded on or after 1 January 2015 is
subject to clawback for a period of at least seven years from the date on which it is awarded; SYSC 19A Remuneration
Code is amended to bring this into force.
EC Bank Recovery and Resolution Directive (BRRD): Following the financial crisis, the European Commission has
been looking at various ways to address risks posed by the banking system. The BRRD is one such measure and
creates a new framework for the recovery and resolution of credit institutions and certain investment firms. In many
respects the BRRD follows similar lines to the UK Banking Act 2009, but that UK law will require adaptation to
implement the BRRD fully and correctly. The consultation on the proposed implementing legislation closed on
28 September and the legislation has to be passed by 31 December 2014 to meet the EU timetable. An important
element of the legislation provides for losses of a failing bank to be absorbed by shareholders and creditors through the
process of "bail-in" whereby ownership of any continuing bank will pass to creditors who, subject to protections for
secured creditors and some depositors, will receive a debt/equity swap. The UK had been developing its own plans on
bail-in but now intends to adopt the BRRD model and bring these provisions into force straight away, although the
EU timetable allows until 1 January 2016.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
09
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
10 January 2015
Dispute resolution
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
Reforms to Brussels Regulation on jurisdiction and enforcement of judgments within the EU: Significant reforms to
the Brussels Regulation (Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters) will take effect on 10 January 2015. The key changes are:
strengthening jurisdiction agreements by requiring Member State courts to stay proceedings where there is an
exclusive jurisdiction agreement in favour of another Member State's court and that court has also been seised
of proceedings, thereby defusing "torpedo" actions;
clarifying that there is an absolute exclusion of arbitration from the ambit of the Regulation, and that exclusion
also extends to court proceedings surrounding or in support of arbitration;
making Member State judgments immediately enforceable across the EU without the need for an intermediate
registration process in the enforcing State;
extending the rules relating to jurisdiction agreements to apply where neither party is EU-domiciled; and
extending the rules relating to consumers and employees to apply to non-EU domiciled traders and employers.
Early 2015
Real Estate and Planning
Criminal Justice and Courts Bill expected to receive Royal Assent: Following the establishment of the new Planning
Court in April 2014, the new Criminal Justice and Courts Bill is on its way through Parliament and is expected to receive
Royal Assent early in 2015. Amongst other general court provisions, the Bill provides for streamlining different types of
planning challenge so that standing, time limits and procedure are consistent for each. This should reduce costs and
delays and enable the new Planning Court to function efficiently. The Bill also proposes further changes to general
judicial review provisions.
Early 2015
Real Estate and Planning
Infrastructure Bill expected to receive Royal Assent: The Infrastructure Bill is currently on its way through
Parliament, and contains provisions which would make it quicker to gain approval of planning permission conditions
and speed up starting work on construction sites, as well as provisions improving and streamlining the process of
obtaining Development Consent Orders under the regime for Nationally Significant Infrastructure Projects, amongst
other matters.
30 March 2015
Insurance
Insurance contract law reform: The new Insurance Bill was introduced to Parliament on 17 July 2014 and it has now
been referred to a special public bill committee for review. It is currently expected that the Bill will be passed before the
parliamentary session ends on 30 March 2015, followed by an 18-month lead-in period before the Bill comes into
force. The Bill reforms the Marine Insurance Act 1906 and underlying common law in the following areas: (i) disclosure
and misrepresentation in business and other non-consumer insurance contracts; (ii) insurance warranties; and
(iii) insurers' remedies for fraudulent acts. The Bill also amends the Third Parties (Rights Against Insurers) Act 2010 so
that the Act can finally be brought into force. Certain provisions included in earlier iterations of the Bill have been
dropped due to a lack of consensual support across the insurance market (in particular, clauses providing for damages
for late payment of claims and addressing warranties relating to particular types of loss).
March 2015
Energy and environment
March 2015
Tax
DEFRA review of environmental guidance: The Department for Environment, Food and Rural Affairs (DEFRA) is
expected to conclude its review and reform of environmental guidance, which aims to produce simpler and clearer
guidance across a range of topics. DEFRA is also reviewing environmental data reporting requirements and expects to
implement a number of simplification reforms by March 2016.
Budget 2015: The Chancellor of the Exchequer is due to hand down the 2015 Budget.
10
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2015
1 April 2015
Employment
Shared parental leave: A new system of shared parental leave will be available to parents of children due to be born or
placed for adoption on or after 5 April 2015. This will implement provisions of the Children and Families Act 2014
enabling parents to divide leave between them during the first year of a child's life. Parents may opt into the shared
parental leave system and share 50 out of 52 weeks of statutory maternity leave, and 37 out of 39 weeks of statutory
maternity pay. Shared parental leave can either be taken by each parent consecutively, or by both parents concurrently,
as long as the combined amount of leave does not exceed the amount which is jointly available to the couple. The
pattern of leave must be agreed with the respective employers. If agreement cannot be reached, employees will be
entitled to take their flexible parental leave in a single block commencing on a date of their choice. Additional paternity
leave and additional paternity pay will be abolished.
Adoption: Adopters will be entitled to take advantage of the new shared parental leave rules, as will the intended
parents in a surrogacy arrangement. Statutory adoption pay will also be brought into line with statutory maternity pay,
by the introduction of a six-week period at 90% of earnings. There are also a few changes to adoption leave: the
requirement for 26 weeks' service will be removed. Single and joint adopters will have a new right to attend adoption
appointments together, and there will be protection against suffering a detriment or dismissal in connection with
exercising that right.
1 April 2015
Tax
6 April 2015
Real Estate and Planning
Corporation tax: The main rate of UK corporation tax is reduced to 20% on 1 April 2015.
Use of planning obligations to be limited, encouraging authorities to charge Community Infrastructure Levy (CIL):
Local authorities have until 6 April 2015 to get their CIL charging schedules up and running before the pooling of
planning obligations is limited. After this date, no more than five planning obligations may be used to fund the same
piece of infrastructure, whether or not a local authority has adopted a CIL charging schedule.
The CIL regime is due a full review in 2015, and all the main political parties have stated that they will pursue this if
they win the General Election. Local authorities throughout England and Wales continue to bring in CIL charging
schedules on an on-going basis and property developers should be aware that the levy can add very significant
costs to new development.
6 April 2015
Pensions
April 2015
Competition, regulation
and trade
Public sector pension schemes: Under the Public Service Pensions Act 2013, public sector schemes (other than the
Local Government Pension Scheme which closed to future accrual in April 2014), such as the NHS, Teachers and
Civil Service pension schemes, will be closed to future accrual. Replacement schemes will come into effect from
then onwards.
Financial Conduct Authority (FCA) to obtain concurrent competition law powers: The Financial Services (Banking
Reform) Act 2013 (which received Royal Assent in December 2013) contained provisions giving the FCA "concurrent"
competition law powers in relation to financial services markets. This will allow the FCA (concurrently with the
Competition and Markets Authority) to enforce the competition law prohibitions under the Competition Act 1998 and
to make market investigation references under the Enterprise Act 2002. These new powers are in addition to the FCA's
current competition law objective. The relevant provisions are expected to come into force in April 2015.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
11
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
April 2015
Construction
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
CDM regulations – consultation on revision: The Health and Safety Executive consulted in April 2014 on replacement
of the Construction (Design and Management) (CDM) Regulations 2007. The consultation was open for responses
until 6 June 2014. The consultation documentation consisted of an exploratory paper together with a draft of the new
Regulations and an assessment of the impact of the proposed revisions. The impetus for the proposed changes has
been concern that the 2007 Regulations may not provide an effective regulatory framework in the light of
developments in the industry since that date. In particular, a trend is identified whereby site safety is better managed
on large sites than small sites. Two thirds or more fatalities now occur on small sites, defined as sites where fewer than
15 people work. This is a reverse of the historical picture.
The main proposed changes to the Regulations were as follows:
The replacement of the Approved Code of Practice (ACOP) with targeted guidance.
Replacing the CDM co-ordinator role with a principal designer embedded into the pre-construction project
team. This represents a move away from the current CDM co-ordinator role which is external to the
project team.
In a review of responses of August 2014 the HSE noted that most of their proposals were generally approved except for
the replacement of the ACOP. They will now work towards developing a shorter ACOP.
The revised Regulations and ACOP are now awaited and are expected to come into force in April 2015.
April 2015
Pensions
DC flexibility – the more radical measures announced in the Budget 2014: These will come into effect from April
2015 under the Taxation of Pension Scheme Bill when the Bill receives Royal Assent. They include the following:
A change in the tax rules so that individuals with a defined contribution (DC) pension will be able to draw down
some or all of it after the age of 55 from April 2015 as cash – 25% of the lump sum drawn will be tax free and the
rest will be subject to their marginal rate of income tax (whatever the size of the pot or the member's
circumstances). Currently, a lump sum taken in excess of 25% of the value of the member's DC pot would
attract an unauthorised payment charge of, broadly, 55% of the value of the member's DC pot.
A new income drawdown regime under which members will be able to drawdown how much they like, when
they like.
Measures will also be put in place so that all individuals with DC pots are offered free and impartial guidance, face to
face, electronically or by telephone at the point of retirement. This guidance will be provided by the Pensions Advisory
and the Money Advisory service and schemes will have an obligation to inform their members about its availability.
April 2015
Pensions
Change in relation to defined contribution (DC) arrangements, including a cap on charges, quality and
disclosure requirements: Following a Command Paper issued in March 2014, the Department for Work and
Pensions has issued various proposals in relation to DC schemes which are intended to apply from April 2015.
These include:
The imposition of a flat charge cap of 0.75% on default funds in DC schemes being used for auto-enrolment
purposes. The cap will apply to all management charges, but will initially exclude "transaction costs".
The current ban on consultancy charges in auto-enrolment schemes (which effectively applies to new
auto-enrolment schemes set up after 14 September 2013) will be extended to cover all qualifying schemes.
Minimum quality standards in workplace pensions will also apply from April 2015 to ensure that those running
schemes consider the key components of scheme quality, keeping members' interests as their priority. The
quality standards will consider the different strengths and weaknesses of trust and contract-based structures.
There will be requirements for providers of contract-based schemes to operate Independent Governance
Committees (IGCs) to assess the value for money delivered and report on how the quality standards are met.
Duties in relation to enhanced transparency will also be introduced, with the introduction of IGCs and
strengthened trustee boards.
12
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2015
April 2015
Regulatory
Payment systems: The Payment Systems Regulator, established under the Financial Services (Banking Reform) Act
2013 and which will oversee the UK payment systems market, becomes fully operational.
Spring 2015
Regulatory
Banking reform: Secondary legislation required under the Financial Services (Banking Reform) Act 2013 is expected to
be passed by the end of the current Parliament in May 2015. Banking groups are expected to organise themselves in
line with ring-fencing requirements under the Financial Services (Banking Reform) Act 2013 by 2019 at the latest.
7 May 2015
Tax
General Election: While it is not possible to predict with any certainty the impact of a new Government on UK tax
legislation, the Labour Party has given some indication of potential changes, including:
A "mansion tax" on properties over the value of £2 million.
A 50% top rate of income tax.
The countering of withholding tax avoidance through the quoted Eurobond exemption.
May 2015
Finance, insolvency and
derivatives
may 2015
TMT
EU regulation of over-the-counter (OTC) derivatives: The EU Regulation on OTC Derivatives, Central Counterparties
and Trade Repositories (commonly known as EMIR) entered into force on 16 August 2012. The obligations started to
take effect in 2013 and continue to be rolled out in a phased implementation. EMIR is introducing significant changes
to the OTC derivatives market by mandating central clearing for standardised contracts and imposing risk mitigation
standards for non-centrally cleared contracts. EMIR applies to both financial counterparties and non-financial
counterparties who exceed certain thresholds, and will apply broadly to OTC derivatives contracts, including interest
rate, credit, equity, foreign exchange and commodity derivatives.
Data Protection Regulation: In January 2012, the European Commission published its proposals for a comprehensive
reform of the 1995 EU Data Protection Directive. The main aim of the reform was to remove inconsistencies created by
the 27 Member States having implemented the Directive in different ways, and to reflect rapid advances in technology
since the Directive first came into effect.
The proposals are now going through the European legislative process and in March 2014, the European Parliament
approved a revised compromise form of the Regulation. This will now need to be negotiated with the European Council
to agree a final form of the Regulation.
Whilst the European Commission hoped to get final agreement by the end of 2014, the general consensus amongst
commentators is that the timing is now more likely to be May 2015 for adoption, meaning that the Regulation would
therefore not apply for a further transitional period of two years (ie, until 2017).
By 9 July 2015
Dispute resolution
July 2015
Energy and environment
Implementation of Directive on consumer alternative dispute resolution (ADR): On 8 July 2013, two key
European legislative measures regarding ADR in respect of consumer disputes entered into force – a Directive on
ADR for consumer/trader disputes (Directive 2013/11/EU) and a Regulation on online dispute resolution (ODR)
(Regulation (EU) 524/2013). The ADR Directive seeks to promote ADR in the consumer sphere in the EU by
encouraging the use of approved ADR entities, including requiring EU Member States to ensure that their
approved ADR entities meet certain minimum standards. Member States are required to put in place the
necessary measures to comply with the ADR Directive by 9 July 2015 at the latest. The ODR Regulation will
support the Directive by providing for the establishment of a free EU-wide online platform accessible
electronically in all languages of the EU to assist in resolving consumer/trader disputes online. The bulk of the
Regulation's provisions will take effect from 9 January 2016.
Regulation of offshore oil and gas operations: Deadline for the implementation of the EU Offshore Safety Directive,
which establishes a new regulatory framework applying to the safety of offshore oil and gas operations in the EU. The
UK Government is currently considering what amendments will be needed to existing UK offshore safety and
environmental regulation in order to comply with the Directive; but once enacted operators of offshore installations
will need to amend, and re-apply within a short window for approval of, extended "safety and environmental
management systems" documents in accordance with the new regime, or cease operating.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
13
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
Mid-2015
Competition, regulation
and trade
Extension of EU merger control rules to non-controlling minority stakes: In June 2013 the European Commission
consulted on extending the EU merger control regime to cover certain non-controlling minority stakes. The
Commission considers that there is an enforcement "gap" caused by its inability to review such stakes, and proposed
various options for reform of the EU Merger Regulation (EUMR) to plug this gap, ranging from mandatory notification
(as is currently the case for transactions involving a change of control which meet the EUMR jurisdictional thresholds)
to a selective system in which the Commission identifies and investigates only specific cases raising substantive
concerns. In July 2014 the Commission published a White Paper and a Commission Staff Working Document setting
out its proposals and inviting further comments from stakeholders by 3 October 2014. In its latest proposals the
Commission favours a "targeted transparency system" under which an information notice must be filed for the
acquisition of minority shareholdings that create a "competitively significant link" and meet the EUMR turnover
thresholds, but much of the detail of the proposed new regime is still not available. It will now be up to the new
Competition Commissioner, Margrethe Vestager, to put the proposals to the College of Commissioners before
legislative proposals are forwarded to the European Parliament and the Council of Ministers for adoption.
Summer 2015
Real Estate and Planning
Further reforms to permitted development rights expected: In the technical planning consultation published in
autumn 2014, the Government outlined proposals to further reform the system of permitted development rights,
allowing deemed planning permission for certain changes of use of property. Works to buildings which benefit from
permitted development rights do not require express planning permission, easing the administrative burden on
property developers and local authorities. The Government wishes to expand permitted development rights to make
permanent the (currently temporary) right to change from office to residential use, and to expand other types of use
which can be changed into residential use without express permission, to encourage the provision of homes. Other
proposals include making permanent the (currently temporary) rights to extend residential homes, widening the
classes of retail uses to increase flexibilities of high street uses and allowing larger solar panels to be installed on
commercial buildings without express permission.
4 September 2015
TMT
Cyber Crime Law: In August 2013, the European Commission adopted Directive 2013/40/EU on attacks against
information systems.
The Directive aims to tackle large-scale cyber-attacks by requiring Member States to strengthen national cyber-crime
laws and introduce tougher criminal sanctions. It was initially proposed in 2010 as a replacement to the EU Council
Framework Decision 2005/222/JHA (the Framework Decision), which criminalised various activities in relation to
attacks on information systems. Since the time of the Framework Decision, there have been a number of increasingly
sophisticated and high-profile cyber-attacks and the EU Council considered that further regulation was needed.
Member States have until 4 September 2015 to implement the provisions of the Directive into national law, although in
the UK such implementation is more likely to require "supplementing" and "enhancing" amendments to existing
legislation, rather than fundamental changes.
Autumn 2015
Employment
Discrimination: Section 97 of the Enterprise and Regulatory Reform Act 2013 obliges the Government to make an
order outlawing caste discrimination but subject to no fixed timetable. A draft order is expected in autumn 2015.
November 2015
Corporate
Transparency Directive: The revised EU Transparency Directive was published in November 2013. The key
amendments to the Directive (which have not been implemented early in the UK – see above on abolition of interim
management statements and project-by-project reporting) relate to the extension of the notification of the major
holdings regime to include holdings of financial instruments which have a similar economic effect to entitlements to
acquire shares. Member States have until November 2015 to make these changes to their national laws.
5 December 2015
Real Estate and Planning
Energy Savings Opportunity Scheme (ESOS) deadline for compliance: Large organisations in scope of this new
energy audit regime have until 5 December 2015 to report compliance to the Environment Agency, the scheme
administrator. Essentially participants will need to have done four things by this date: measured their total energy
consumption across a 12 month period; conducted an energy audit to identify cost-effective energy efficiency
recommendations; obtained Board level director approval of the ESOS Assessment and approval by a Lead Assessor;
and finally have notified the Environment Agency of compliance.
14
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2015
December 2015
Energy and environment
Paris International Climate Change Agreement: At the Conference of the Parties to the United Nations Framework
Convention on Climate Change, held in Durban in 2011, the international community agreed to finalise a text for a
successor agreement to the Kyoto Protocol to combat climate change by the end of 2015, to apply from 2020.
Late 2015
Dispute resolution
New electronic filing system planned for Rolls Building courts: A new electronic filing system is expected to be
delivered, in a phased approach, by late 2015 for the various Rolls Building jurisdictions (including the Commercial
Court, Technology and Construction Court and Chancery Division). The new system will allow: claimants to submit
claims and associated court papers online and pay for them electronically; court papers to be electronically managed
by court staff; and court papers to be presented electronically to judges and, where appropriate, to the public.
By end of 2015
Intellectual property
Implementation of the Unitary Patent and the Unified Patent Court (UPC): Official estimates which previously
indicated that early 2015 is a realistic target date for the entry into operation of the UPC have now slipped to the end of
2015. Even this appears optimistic to many commentators. The UPC Agreement (UPCA), an international agreement
signed by 25 of the 28 Member States (Spain has both challenged the use of the enhanced co-operation procedure
establishing the unitary patent and refused to sign the UPC Agreement; Italy has dropped its challenge to the unitary
patent but failed to sign the Agreement, Croatia has yet to sign), aims to establish a single court system to decide
patent disputes on a pan-European basis. Currently, patent disputes have to be brought on a national basis. For full
implementation, 13 signatory states must ratify the UPCA including the UK, France and Germany (so far France and
four other states have done so). The Brussels Regulation amendments must also be in force (these are in place and will
come into force on 10 January 2015) and then the whole system will come into effect on the first day of the fourth
month after all these criteria are met. Thus mid-2015 looks the earliest possible date.
Once the new system enters into force, there will be a period of uncertainty for companies who will be waiting to see
how well it operates in practice, and this will depend on the speed, quality and consistency of the UPC's decisions. The
new, single patent right across all participating states – the Unitary Patent – will be tried in the UPC, along with current
European (national designation) patents which have not been opted-out by their proprietors and future European
patents (although there is a seven year opt-out right). London will be the seat of part of the central division of the UPC,
dealing with pharmaceutical patents in particular.
End of 2015
Tax
The OECD Action Plan: The Organisation for Economic Co-operation and Development (OECD) published its Action
Plan in July 2013, which sets out broad proposals to ensure that multinational companies (in particular) pay their "fair
share of tax" and are not able to manipulate international tax rules to artificially reduce or even avoid their tax liabilities.
Proposals focus on ensuring existing rules are less vulnerable to abuse, equipping Governments and tax authorities
with the mechanisms to share information about taxpayers, and introducing enhanced tax transparency which may
result in country by country reporting (presumably to tax authorities although this is not clear). On 16 September 2014
the OECD released the first seven elements of its Action Plan which were then considered by G20 finance ministers.
These proposals, which focused on the coherence of corporate income tax at international level; improving
transparency for tax administrations and countering harmful tax practices, may be impacted by the remaining
elements of the Action Plan. The full Action Plan will be presented to G20 Governments for final approval in 2015.
2015
Corporate
Proposals for Directive to amend the Shareholder Rights Directive: The European Commission has published its
proposals for a Directive to amend the Shareholder Rights Directive (2007/36/EC). The key aspects of the proposed
amending Directive include: proposals on directors' remuneration reporting and voting requirements; a more onerous
regime for related party transactions; obligations on intermediaries to disclose underlying shareholders; enhanced
disclosure requirements of institutional investors and asset managers' investment policies and strategies; and obligations
on proxy advisers to ensure that their voting recommendations are accurate and reliable. The proposed Directive will be
passed to the Council of Ministers and the European Parliament for their consideration and adoption. The Directive is
expected to be finalised in 2015 and would need to be implemented through national legislation once approved.
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
15
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
2015
Corporate
2015
Finance, insolvency and
derivatives
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
The Small Business, Enterprise and Employment Bill - reform of company ownership and control rules: In July 2013,
the Department for Business, Innovation & Skills published a discussion paper on Transparency & Trust following the
G8 Summit in June, during which it was agreed that reforms to ensure sufficient visibility of the ownership and control
of companies were required. The Government subsequently introduced the Small Business, Enterprise and
Employment Bill into Parliament. The Bill covers a wide range of topics including corporate trust and transparency and
company filing requirements. Under the Bill the main company law changes will be to create a public register of
companies' beneficial owners (referred to as a register of people with significant control), prohibit corporate directors,
subject to certain limited exemptions, and give private companies the option of not keeping certain registers, such as
the register of directors and register of members. The Bill is expected to become law in 2015.
The Small Business, Enterprise and Employment Bill - reform of insolvency law: As referred to in the entry above, the
Small Business, Enterprise and Employment Bill contains various amendments to the Insolvency Act 1986, including
the legislation necessary to make some of the amendments to the IR 1986, which form part of the Government's red
tape challenge (see below the entry entitled Proposed new Insolvency Rules).
The Bill includes:
provisions to enable the Secretary of State to make regulations which prohibit or restrict the disposal, hiring out
or sale of property by an administrator to a connected person in specified circumstances – this is to address
concerns and recommendations made regarding pre-pack administrations in the Graham Review;
powers for an administrator to bring claims for fraudulent or wrongful trading (currently only a liquidator may
bring a claim);
powers for a liquidator or administrator to assign causes of action regarding reviewable transactions (fraudulent
and wrongful trading, transactions at undervalue, preferences and extortionate credit transactions);
the removal of the need for court or creditor sanction for a liquidator to exercise certain powers;
the loosening of requirements to hold physical creditor meetings and the abolition of final creditor meetings;
amendments to extend an administrator's term of office, with the consent of creditors, by up to one year
(an increase from six months);
changes to the directors disqualification regime, including company related convictions regarding overseas
companies being a new ground for disqualification.
Further developments are awaited.
2015
Finance, insolvency and
derivatives
Proposed new Insolvency Rules: Following a consultation in 2013/14 titled Modernisation of the rules relating to
insolvency law, the Insolvency Service plans to replace the current Insolvency Rules 1986 (IR 1986) with a new version,
the Insolvency Rules 2015 (IR 2015). The IR 2015 are intended to simplify and modernise the IR 1986, principally by
cutting back on certain procedural requirements and red tape. Once finalised, the IR 2015 are not expected to be in
force until 2015.
2015
TMT
Computer Misuse: On 6 June 2014, the Government published its draft Serious Crime Bill making proposals to amend
the current UK Computer Misuse Act in a number of ways, including significantly strengthening the sentences for
computer misuse offences.
The first proposed amendment would create a new offence of unauthorised acts in relation to a computer that cause
or create a significant risk of serious damage to: (i) human welfare; (ii) the environment; (iii) the economy; or
(iv) national security. The sentencing for this new offence would be imprisonment for up to 14 years, unless the
unauthorised act causes or creates a significant risk of causing: (i) loss of human life; (ii) human illness or injury; or
(iii) serious damage to national security, in which case the maximum sentence will be life imprisonment.
The Bill has reached the Report Stage in the House of Lords (scheduled for 14 October 2014) and will subsequently need to
pass through the House of Commons before receiving Royal Assent. It is therefore unlikely to become law before 2015.
16
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2016
1 January 2016
Insurance
Solvency II – EU insurance regulation: The Solvency II Directive (Solvency II) establishes an entirely new framework
for prudential supervision of insurance and reinsurance companies across Europe. It replaces existing EU legislation
establishing minimum standards for insurers and reinsurers (commonly referred to as Solvency I) and introduces
economic risk-based capital requirements for all EEA insurers and reinsurers for the first time. The new regime is
scheduled to come into force on 1 January 2016.
1 January 2016
TMT
High Speed Broadband: On 15 May 2014, the European Commission adopted Directive 2014/61/EU on measures to
reduce the cost of deploying high-speed electronic communications networks.
The Directive implements a number of measures to reduce cost barriers to invest in rolling out high-speed
broadband infrastructure, with a particular focus on civil infrastructure works and use of existing infrastructure. In
addition, the Directive requires all newly constructed buildings and any major renovations on existing buildings to be
"high-speed-ready".
Member States have until 1 January 2016 to implement the provisions of the Directive into national law, and must
apply such measures from 1 July 2016.
18 March 2016
Regulatory
April 2016
Competition, regulation
and trade
UCITS V Directive: The UCITS V Directive, which introduces key changes to the UCITS regime relating to the
UCITS depositary function, manager remuneration and sanctions, entered into force on 17 September 2014 and
must be implemented in Member States by 18 March 2016.
EU rules on public procurement – deadline for implementation by Member States: Three new EU Directives on
public procurement were adopted by the EU in February 2014 and published in the EU Official Journal in March 2014.
The reforms are intended to modernise and simplify the rules regulating the award of contracts and concessions by
pubic bodies and utilities. The new Directives formally entered into force on 17 April 2014, but EU Member States had
two years to implement them into national law (ie, until April 2016).
April 2016
Pensions
End of contracting-out on a defined benefit basis: From 6 April 2016, the State Pension will be reformed from the
current two-tier system to a single-tier State Pension. These reforms will mean the end of contracting-out on a final
salary basis. Under the Pensions Act 2014, an employer may make certain amendments to members' benefits to
recoup the increase in its national insurance liability as a result of DB contracting out ending – employers will have to
decide whether or not they wish to introduce such amendments. Many scheme rules interact with the State Pension
(for example the Scale Pension may contain a State Pension deduction) and these rules may need to be amended both
for future and past service given that the State Pension will no longer be calculated or be correct.
17 June 2016
Corporate
Audit regulation: The European Parliament and Council have adopted the European Commission's proposals for a
Directive to amend the Statutory Audit Directive (2006/43/EC) and a Regulation which will apply directly in Member
States. The proposals are targeted at audits of listed companies, banks and other financial undertakings, which are
referred to as public interest entities (PIEs). The key aspects of the Regulation include: (i) limiting the term of office of
an auditor to a maximum of 10 years unless a public tendering process is undertaken, in which case the maximum term
of office can be extended by up to another 10 years following which there will be a mandatory rotation; (ii) audit firms
will be almost entirely banned from providing non-audit services to their PIE audit clients; and (iii) where an auditor
provides non-audit services to a group, the total fees for non-audit services shall be capped at no more than 70% of
the average of the audit fees paid in the last three consecutive financial years, although the drafting is obscure. The
Regulation and the amending Directive come into force two years after publication in the Official Journal, so 17 June
2016. Separately, the UK Competition Commission published its remedies package following its investigation into the
statutory audit market in October 2013 (see entry above entitled Competition and Markets Authority measures in
relation to the UK audit market).
3 July 2016
CORPORATE
Regulatory
Finance, insolvency and
derivatives
EU Market Abuse Regulation: The EU has adopted a new Market Abuse Regulation (MAR) which will replace the
Market Abuse Directive and will be directly applicable in Member States (and so for example will replace the current
Disclosure Rules for UK listed companies). Key changes in MAR include: (i) broadening the definition of market abuse
to capture a wider range of behaviour and to cover all markets rather than just listed markets; (ii) an EU-wide
harmonised format for insider lists; (iii) enhanced disclosure of own account transactions by persons discharging
managerial responsibilities; and (iv) stricter civil and criminal enforcement powers for competent authorities, including
criminal sanctions. MAR will come into force two years after its publication in the EU Official Journal, so 3 July 2016.
ESMA is consulting on secondary measures to implement MAR (please see entry above entitled ESMA
MAR consultation).
HERBERT SMITH FREEHILLS
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
17
Key:
Competition, regulation and trade
Construction
Corporate
Dispute resolution
Employment
Energy and environment
Finance, insolvency and derivatives
Insurance
Intellectual property
Pensions
Real estate and planning
Regulatory
Tax
Technology, media and
telecommunications (TMT)
October 2016
Competition, regulation
and trade
Private enforcement of competition law in the EU – deadline for implementation by Member States: In June 2013 the
European Commission published a long-awaited draft Directive designed to facilitate competition law private actions
in the EU. The draft Directive proposed various claimant-friendly measures on disclosure and limitation periods, as
well as a presumption of loss in cartel cases. The draft Directive also contained measures to protect cartel whistleblowers, including a prohibition on the disclosure of leniency corporate statements in damages actions and an
exception from the joint and several liability rule for immunity recipients. The proposed Directive was subsequently
debated between the EU Member States (through the Council of Ministers) and the European Parliament, and was
amended in a number of respects. In April 2014 the revised Directive was approved by the European Parliament, and in
May 2014 it was formally endorsed by the Council of Ministers. The Directive is expected to be formally adopted in the
second half of October 2014. Member States will then be required to implement its provisions into national law within
two years, ie, by the end of October 2016.
31 December 2016
TMT
BBC Charter renewal: The BBC Royal Charter is the constitutional basis for the BBC. It sets out the public purposes of
the BBC, guarantees its independence, and outlines the duties of the Trust and the Executive Board.
The current Charter expires on 31 December 2016 and negotiations about its renewal and the BBC licence fee funding
agreement are due to begin after the 2015 General Election.
End 2016/ Early 2017
Regulatory
2016/2017
Finance, insolvency and
derivatives
Money Laundering Directive (MLD): MLD IV is expected to apply in Member States.
EC Regulation No 1346/2000 on insolvency proceedings (the Insolvency Regulation): The Insolvency
Regulation seeks to harmonise and simplify the regulation and enforcement of insolvency proceedings among
Member States by providing for the affairs of insolvent companies and individuals to be administered in the
jurisdiction with which they have the closest connection. Since the European Commission's original proposals to
amend the Insolvency Regulation in 2012, the European Parliament and Council have proposed various further
amendments. The proposals currently include:
changes to the definition of a company's centre of main interests (COMI), the concept used to determine the
Member State in which insolvency proceedings should be commenced, including new safeguards against
abusive forum shopping (although controversial proposals to introduce a three month look back test have been
dropped);
extending the scope of the Regulation to cover pre-insolvency proceedings. However, proceedings based on
general company law will be excluded – a significant consequence of this is that overseas companies will
continue to be able to benefit from the scheme of arrangement procedure without the need for their COMI to
be located in England;
the introduction of a set of procedural rules aimed at improving the governance of insolvent members of a
group of companies, including the power for an administrator to request the opening of new group coordination
proceedings; and
new formal co-operation procedures between liquidators and courts in different Member States, assisted by
the creation of a new EU-wide online insolvency register.
Further developments are awaited, but following the EU's normal legislative procedure, the key provisions of the
new Insolvency Regulation are unlikely to be in force before 2017.
18
CALENDAR OF KEY ISSUES – OCTOBER 2014 EDITION
HERBERT SMITH FREEHILLS
2017
3 January 2017
REGULATORY
Finance, insolvency and
derivatives
Markets in Financial Instruments Directive (MiFID): A new MiFID Directive (MiFID II Directive) and Regulation
(MiFIR) (which, together, recast the existing MiFID), will significantly impact both the structure and operation of EU
financial markets and provide increased protection for investors. In relation to markets, there will be increased
regulation of trading venues including organised trading facilities (OTFs), broadening of the scope of systematic
internalisers (SIs), requirements in respect of algorithmic and high frequency trading, change in the scope of
commodity derivatives and an expansion in scope of pre- and post-trade transparency rules. In relation to investor
protection, there are changes for product design and intervention, conflicts of interest, execution-only business and
disclosure of costs. The MiFID II Directive and MiFIR will apply in Member States from 3 January 2017.
January 2017
Dispute resolution
European Account Preservation Order (EAPO) Regulation: A new EU Regulation came into force in July 2014
establishing a procedure to facilitate cross-border debt recovery in civil and commercial matters (Regulation
(EU) 655/2014). The main provisions will not, however, apply until January 2017. Under the new procedure, a
creditor will be able to obtain an EAPO which effectively freezes the debtor's funds in an EU bank account up to a
specified amount. It will apply only in cross-border cases, ie, where the relevant bank account is held in a
different Member State to where the EAPO application is made or the creditor is domiciled. Certain safeguards
have been introduced, including a requirement for the creditor to provide security in certain circumstances, and a
provision that the creditor shall be liable for damage caused to the debtor by the EAPO where the creditor is at
fault. As things stand the Regulation does not apply to the UK and Denmark, which have opted out.
17 June 2017
Finance, insolvency and
derivatives
Ban on "Big four" Auditor clauses: In April 2014, the European Parliament and Council adopted the European
Commission's proposal to amend the Statutory Audit Directive and introduce a new Regulation on audit. Of
significance to banking transactions and loan documentation, is the prohibition on "Big four" terms in any
contract ie, provisions in an agreement between a company and a third party which restrict a company's choice
of auditor to particular lists or categories will be void. There are no grandfathering provisions so the prohibition,
when in force, will apply to agreements being entered into now.
Summer 2017
Real Estate and Planning
Planning and development control in Wales: The Law Commission will conclude its project, commenced in
summer 2014, to consider the merits of a simplified and modernised planning system for the needs of Wales.
The primary focus of the project will be the reform of the process of development control and the project will also
address the relationship between plan-making and development control. The Law Commission believes that a
simplified and modernised planning system has the potential to promote economic growth, housing supply and
protection of the environment, as well as increasing efficiency and reducing transaction costs.
HERBERT SMITH FREEHILLS
Contacts
19
Contacts
Competition, regulation
and trade
Adrian Brown
T+32 2 518 1822
[email protected]
Carol Shutkever
T+44 20 7466 2013
[email protected]
Finance, insolvency and
derivatives
Dina Albagli
T+44 20 7466 2390
[email protected]
Dispute Resolution
Kyriakos Fountoukakos
T+32 2 518 1840
kyriakos.fountoukakos@
hsf.com
Stephen Wisking
T+44 20 7466 2825
[email protected]
Construction
Nicholas Downing
T+44 20 7466 2741
[email protected]
Justin D'Agostino
T+852 2101 4010
[email protected]
Paula Hodges QC
(Arbitration)
T+44 20 7466 2027
[email protected]
Corporate
Nigel Farr
(Investment funds)
T+44 20 7466 2360
[email protected]
James Palmer
T+44 20 7466 2327
[email protected]
Gareth Roberts
T+44 20 7466 2322
[email protected]
Will Nevin
T+44 20 7466 2199
[email protected]
Anna Pertoldi
T+44 20 7466 2399
[email protected]
Employment
Mark Lloyd-Williams
T+44 20 7466 2375
mark.lloyd-williams@hsf.
com
Dorothy Livingston
T+44 20 7466 2061
[email protected]
Kevin Pullen
T+44 20 7466 2976
[email protected]
Insurance
Tim Leaver
T+44 20 7466 2305
[email protected]
Barnaby Hinnigan
T+44 20 7466 2816
[email protected]
Christine Young
T+44 20 7466 2845
[email protected]
Paul Lewis
T+44 20 7466 2138
[email protected]
Energy and environment
Mark Newbery
T+44 20 7466 2225
[email protected]
Julie Vaughan
T+44 20 7466 2745
[email protected]
Geoffrey Maddock
T+44 20 7466 2067
[email protected]
Alexander Oddy
T+44 20 7466 2407
[email protected]
20
Contacts
HERBERT SMITH FREEHILLS
Contacts
Intellectual property
Regulatory
Mark Shillito
T+44 20 7466 2031
[email protected]
Karen Anderson
T+44 20 7466 2404
[email protected]
Susannah Cogman
T+44 20 7466 2580
susannah.cogman@hsf.
com
Pensions
Alison Brown
T+44 20 7466 2427
[email protected]
Clive Cunningham
T+44 20 7466 2278
[email protected]
Daniel Schaffer
T+44 20 7466 2003
[email protected]
Hywel Jenkins
T+44 20 7466 2510
[email protected]
Real Estate and Planning
Shelagh McKibbin
T+44 20 7466 2304
[email protected]
Patrick Robinson
T+44 20 7466 2129
[email protected]
Donald Rowlands
T+44 20 7466 2287
[email protected]
Matthew White
T+44 20 7466 2461
[email protected]
Isaac Zailer
T+44 20 7466 2464
[email protected]
TMT
Nick Elverston
T+44 20 7466 2228
[email protected]
Amanda Hale
T+44 20 7466 2961
[email protected]
Nick Pantlin
T+44 20 7466 2570
[email protected]
Jenny Stainsby
T+44 20 7466 2995
[email protected]
Tax
William Arrenberg
T+44 20 7466 2574
[email protected]
Howard Murray
T+44 20 7466 2124
[email protected]
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This document is not intended to be fully comprehensive, nor to provide US tax advice. Notwithstanding this, to ensure compliance with requirements imposed by the IRS, we inform you that any
US tax information contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under
the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Recipients of this document should seek advice based on
their particular circumstances from an independent, appropriately qualified, tax advisor.
The contents of this publication, current at the date of publication set out in this document, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such.
Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills LLP 2014
© Herbert Smith Freehills LLP 2014 1205E /061014
Timeline - October 2014 edit