Publication
Nature Positive Summit 2024
The world’s first Global Nature Positive Summit was held in Sydney, Australia from 8 to 10 October 2024.
Global | Publication | October 2, 2015
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
On September 29, 2015 the Financial Reporting Council (FRC) published a consultation paper providing and requesting responses to proposed amendments to the UK Corporate Governance Code (the Code), the FRC’s Guidance on Audit Committees, Auditing Standards and Ethical Standards for Auditors. The consultation was prepared in response to Regulation EU/537/2014 (the Statutory Audit Regulation) which covers specific requirements regarding statutory audits of public interest entities, and Directive 2014/56/EU (the Statutory Audit Directive) which covers the statutory audit of annual accounts and consolidated accounts. Both will apply with effect from June 17, 2016.
The UK Corporate Governance Code
The FRC proposes minimal changes to the Code to align it with the Statutory Audit Directive and to limit the regulatory burden. The proposed changes are as follows:
Guidance on Audit Committees
The FRC proposes several changes to its Guidance on Audit Committees to take account of proposed amendments to the Code. The principal changes relate to:
Ethical Standards for Auditors
The FRC proposes to replace existing Ethical Standards for Auditors (other than the Standard for small entities) with a single consolidated standard that includes changes to reflect the FRC's approach to member state options, as set out in the Statutory Audit Regulation and the Statutory Audit Directive.
In particular, the FRC suggests neither extending the EU's blacklist of prohibited non-audit services for public interest entities nor creating a white list of permitted non-audit services. The FRC does not wish to impose a lower cap for non-audit fees than is set out in the Statutory Audit Regulation, although it would seek to make changes relating to the calculation of that cap.
The FRC recommends a maximum period of five years for an audit partner engagement, but would retain flexibility to extend that period in exceptional circumstances. It would also retain its existing definition of a 'listed entity', despite it being wider than the EU definition.
Auditing Standards
The FRC intends to reverse its position on auditing standards on the form and content of the auditor's report by adopting ISA 700 and ISA 701, making additions specific to UK audits.
Furthermore, the FRC suggests amendments to the Auditing Standards including an obligation for auditors to keep audit working papers for a period of six years from the date of the auditor's report, changes reflecting the UK's implementation of the Accounting Directive and, especially, an option for small companies to file abridged accounts that do not require the filing of a special auditor's report.
The consultation closes on December 11, 2015.
On September 28, 2015 the European Securities and Markets Authority (ESMA) published its final Technical Standards in relation to the Market Abuse Regulation which came into force on July 2, 2014. The final Technical Standards follow a consultation paper published by ESMA in July 2014 and the Technical Standards have now been sent to the European Commission for endorsement. The European Commission has three months to consider the Technical Standards.
The final report is divided into nine sections dealing with each of the topics on which mandates were given to ESMA to develop Technical Standards and cover the following:
(ESMA, Draft technical standards on the Market Abuse Regulation, 28.09.15)
On September 25, 2015 the European Securities and Markets Authority (ESMA) launched a public consultation on draft Regulatory Technical Standards on the European Single Electronic Format (ESEF). The Transparency Directive as amended requires issuers listed on regulated markets to prepare their annual financial reports in an ESEF from January 1, 2020 with the aim of making submission easier for issuers and facilitating accessibility, analysis and comparability for investors and regulators. This consultation paper includes an assessment of current electronic reporting and explores the way forward with regard to the establishment of an ESEF.
One of ESMA’s proposals is that initially the entire annual financial report should be provided in PDF format, but that certain financial statements should be provided in a structured data format, comprising machine-readable data with embedded coding, as follows:
The consultation closes on December 24, 2015. ESMA is required to submit the draft Regulatory Technical Standards to the European Commission by December 31, 2016.
On September 28, 2015 the European Securities and Markets Authority (ESMA) published its final report on draft Regulatory Technical Standards on the European Electronic Access Point (EEAP) as required by the directive amending the Transparency Directive. The EEAP is to be a web portal operated by ESMA and it will provide a single point of access at EU level to regulated information (including annual reports and major shareholding notifications) stored by officially appointed mechanisms in each member state.
ESMA consulted on the Regulatory Technical Standards in a consultation paper published in December 2014 and the final report notes that feedback to the consultation generally showed support for the functioning modalities of the EEAP, especially the search criteria and the technical infrastructure chosen by ESMA to ensure an easy access of end users to regulated information. ESMA has considered the responses received in order to improve the design system and ensure its compliance with the objectives set in the Transparency Directive. It has been decided that the EEAP will not replace existing officially appointed mechanisms in storing regulated information, but rather provide an additional way of access to the information that is already stored and enabled to end users by officially appointed mechanisms.
Since ESMA recognises that issuers and officially appointed mechanisms need sufficient time to adapt to legislative and technological changes in relation to the new classification of regulated information as set out in the Regulatory Technical Standards, ESMA proposes that these apply only to regulated information made available to officially appointed mechanisms by issuers after December 31, 2016 in order to enable the correct functioning of the EEAP on January 1, 2018.
The final report has been submitted to the European Commission which has three months to decide whether to endorse the draft Regulatory Technical Standards.
(ESMA, Draft Regulatory Technical Standards on European Electronic Access Point (EEAP), 28.09.15)
On September 28, 2015 the European Securities and Markets Authority (ESMA) published final draft Technical Standards on the Markets and Financial Instruments Directive II (MiFID II) and the Markets and Financial Instruments Regulation (MiFIR).
MiFID II and MiFIR require ESMA to develop a multitude of Regulatory Technical Standards and Implementing Technical Standards. These were consulted on in a discussion paper published in May 2014 and two consultation papers published in December 2014 and February 2015.
ESMA’s final report covers proposals for 28 final draft Technical Standards in the following areas: Transparency (Technical Standards 1-5), market microstructure (Technical Standards 6-12), data publication and access (Technical Standards 13-16), requirements applying on and to trading venues (Technical Standards 17-19), commodity derivatives (Technical Standards 20-21), market data reporting (Technical Standards 22-25), post-trading (Technical Standard 26) and investor protection (Technical Standards 27-28). The final report also discusses the feedback received to the previous consultations and the rationale behind ESMA’s final proposals.
Annex 1 to the final report sets out the final draft Technical Standards (Annex 1). All of these Technical Standards are Regulatory Technical Standards except for one Implementing Technical Standard that relates to trading venues (covering the description of the functioning of multilateral trading facilities and organised trading facilities). A costs benefit analysis on the final draft Technical Standards is at Annex 2.
The European Commission has three months to approve the Regulatory Technical Standards. Once endorsed, both the European Parliament and the European Council have an objection period.
(ESMA, Draft Regulatory and Implementing Technical Standards MiFID II/MiFIR, 28.09.15)
On September 30, 2015 the European Commission (Commission) published an action plan on building a Capital Markets Union following its February 2015 Green Paper and consultation. The Commission believes that a Capital Markets Union will strengthen the markets, provide new sources of funding for business, help to increase options for savers and make the economy more resilient while supporting Europe’s ability to fund growth.
The Commission intends to focus on a number of key areas, specifically:
(European Commission, Action Plan on Building a Capital Markets Union, 30.09.15)
Publication
The world’s first Global Nature Positive Summit was held in Sydney, Australia from 8 to 10 October 2024.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023