Welcome to your May round-up, where we bring you key dates and the latest industry highlights from the world of registry along with a market update provided by Georgeson.

This month we cover:


Industry update

As originally discussed in our November newsletter, the Financial Services Act 2021 will amend a number of requirements for persons discharging managerial responsibilities (PDMRs) and the requirements in relation to insider lists in relation the UK Market Abuse Regulation (UK MAR).

Under the Act the following areas will be amended:

  • PDMR Dealings
    The deadline for a disclosure by a PDMR will be extended to be in line with the recent changes to the EU MAR which took effect on 1 January 2021. An issuer will have two working days to make a disclosure from the date of being notified, whereas currently a disclosure to the market has to be made within three days of the market transaction.

  • Insider Lists
    UK MAR to be updated to make clear that both issuers and any person acting on their behalf will be required to maintain an insider list.

  • Insider Dealing & Market Manipulation
    The maximum sentence for such offences under the Criminal Justice Act 1993 and the Financial Services Act 2012 will be increased from seven to ten years.

The Financial Reporting Council (FRC) have published the results exploring remuneration reporting in relation to the requirements of the 2018 Corporate Governance Code. The FRC have noted improvements in the quantity of related disclosures (it did not assess disclosure quality). It was also observed that many of the disclosures contained repetitive wording from the Code. Other findings included:

  • There is now more disclosure regarding information on shareholder and to a lesser extent workforce engagement;

  • More information on alignment with long-term shareholder interests;

  • Most companies failed to explain how they would mitigate the risks associated with excessive awards; and

  • Non-financial KPIs were used in executive pay formulas, but often there was no explanation at to why they were chosen.

The Parker Review Committee have recently published the results of the latest survey of FTSE 100 companies. As of the 2 November 2020 and with a year to go before the deadline for the original recommendations, 74 of the FTSE 100 companies had met the ‘one by 21’ target of having a single director of colour on their board.

This had gone up from 52 in January 2020 and by the end of March 2021 a further seven companies had appointed a director of colour. Only five ethnic minority directors hold a CEO position and even fewer hold CFO or Chair positions.


The Financial Conduct Authority (FCA) have published a consultation paper (CP21/10) which is seeking views on the proposed amendments to the listing rules in relation to SPACs.

These proposals intend to permit a listing of a SPAC to continue, subject to appropriate protection to continue where an acquisition is identified. This change was one of those recommended by the recent Hill Review. The FCA is still considering whether a separate listing category should be established for a SPAC.


Glass Lewis have published a paper which sets out their views on the Say on Climate votes.

The paper recognises that where such votes are being offered to shareholders, they are becoming an important part of the 2021 shareholder meeting. Glass Lewis have seen that such proposals are being put forward by both shareholders and boards.

While there are many positive aspects of such resolutions, there are also challenges for investors and companies alike, particularly where said resolution relates to the strategy or plans of a company.

Glass Lewis strongly supports those proposals that involve additional disclosures and those that shareholders a vote on the company’s climate plan or strategy. It will recommend against management and shareholder proposals which request that policy includes an annual vote on a climate related plan or strategy.

Given the broad spectrum of other related proposals and the lack of standard guidance on who shareholders should evaluate them, each resolution will be reviewed on a case-by-case basis. It is idented that for the 2022 AGM season Glass Lewis will codify their approach following engagement with investors, companies, and stakeholders.


Proxy Advice Transparency

The Australian Treasury have published a consultation paper looking for views on various reforms including those designed to ensure independence, facilitate engagement between companies and proxy advisors and provide for an adequate licensing regime.

 

Corporate Governance Guidance for Unlisted European Companies

The European Confederation of Directors Association (ecoDa) the group who proports to represent the voice of European Directors have published an updated version of their corporate governance guidance and principles for unlisted companies in Europe.

This revision comes 11 years after the original guidance was published, ecoDa has retained a phased approach to governance which has been tailored to the expected development phases of companies.


Georgeson market update

Georgeson is a leading Corporate Governance advisory and Shareholder Engagement company, and part of the Computershare group

This memo provides an overview of FTSE 350 remuneration report votes that received more than 20% opposition during the first quarter of 2021. We note that during the period January-March 2021 38 FTSE 350 companies held their AGM. Five of these issuers received more than 20% shareholder opposition to the approval of their remuneration reports.

If you would like to receive a copy of the memo please reach out to your usual contact within Georgeson or your Client Manager.


Georgeson and Allen & Overy have published their “Strategic planning of takeover bids: a practical guide for the design of takeover bids and their analysis in the Spanish market 2017-2020”.

Since 2017, a total of 24 takeover bids have been formulated in Spain, which means that in recent years a third of the takeover bids carried out since 2007 have been concentrated, the year in which the current regulations governing these bidding processes came into force. corporate acquisition. And it is possible to anticipate that it is a trend that is going to consolidate. Spanish listed companies are very attractive targets for an acquisition, also considering volatility and the impact on prices as a result of the current market situation.


Annual Outlook Report on Climate & Voting Priorities

ISS released its Annual Outlook Report on Climate & Voting – 2020 Review & Global Trends.

“Over the past five years, proposals requesting companies undertake climate risk analyses have been trending down over time as requests for climate transition plans have been trending up, reflecting the desire by many shareholders and other stakeholders to move beyond disclosure to see changes in a company’s strategy in response to the climate change threat.”

 

Tougher Climate Targets

Reuters reports that Investor group calls for banks to set tougher climate targets.

“A group of investors managing $11 trillion in assets has called on banks to set tougher emissions targets ahead of a meeting of world leaders aimed at accelerating efforts to fight climate change. The group, which includes Pimco, the world's biggest bond investor, and Britain's biggest asset manager, Legal & General Investment Management, said they wanted lenders to set 'enhanced' pledges to decarbonise their lending books. While a number of the world's biggest banks have already said they have an 'ambition' to reach net zero greenhouse gas emissions by 2050, many have yet to specify how they plan to do so and continue to fund heavy emitting activities.”