United Kingdom | Publication | January 2021
On January 8, 2021, the Association for Financial Markets in Europe (AFME) published updated selling restrictions for equity transactions for use in documentation for offerings or admissions taking place from January 1, 2021 onwards.
The EEA selling restriction wording reflects the application in the EEA of Regulation EU 2017/1129 of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. The UK selling restriction wording reflects the UK version of the Prospectus Regulation as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.
The wording comprises an EEA and a mirror UK public offer equity selling restriction (with separate forms for insertion into transaction contracts, e.g. underwriting agreements and prospectuses, respectively) and a selling restriction addressing additional UK securities law (for insertion into transaction contracts).
(AFME: Selling restrictions for equity (EEA and UK) effective 1 January 2021, 08.01.2021)
On January 9, 2021, HM Treasury published the Government’s response following a consultation in February 2020 on expanding the current UK Dormant Assets Scheme (the Scheme). The Government intends to legislate to include additional assets from the insurance, pensions, investment and wealth management and securities sectors in the Scheme.
The Scheme was established by the Dormant Bank and Building Society Accounts Act 2008 and it is led by industry and backed by the Government, with the aim of reuniting owners with their financial assets (amounts in dormant bank and building society accounts which remain untouched). Where this is not possible, this money supports important social and environmental initiatives across the UK. The Scheme is administered by the Reclaim Fund Limited (RFL). Participation in it is voluntary, owners can reclaim at any time the amount that would have been due to them if there had not been a transfer into the Scheme and participants’ first priority is always to reunite owners with their assets.
As far as the securities sector is concerned, the Government intends to include the following in the Scheme:
Dormancy for these purposes will be defined as 12 years since there has been any contact with the shareholder in the case of dormant shares and 12 years from the date the company received the proceeds of a corporate action which have remained unclaimed. However, the legislation will allow participants the flexibility to consider other indications of shareholder engagement. In broad terms, the reclaim value for shareholders will be aligned to the value of the share or distribution or proceeds from a corporate action were transferred to the RFL.
The Government encourages industry to propose amendments to the current model articles of association under the Companies Act 2006 to establish a common set of terms upon which dormant assets could be forfeited and funds transferred into the Scheme.
The Government intends to legislate to expand the Scheme as set out in the response document when parliamentary time allows. The intention is that participants and other relevant stakeholders (such as those with fiduciary duties) should no longer have any liability to meet owner reclaims once an asset has been transferred to the Scheme (save for any liabilities unconnected with the transfer) and it is intended that the legislation be drafted to reflect that.
(HM Treasury, Government response to consultation on expanding Dormant Assets Scheme, 09.01.2021)
On January 11, 2021, the Investor Forum published a review of its activities in 2020, together with a call for a mandatory non-binding shareholder ‘say on climate’ on TCFD-aligned disclosure obligations.
The Investor Forum was established in 2014 to help investors work collectively to escalate material issues with the Boards of UK-listed companies. In terms of activities, it notes that it recorded its strongest year of collective engagement activity since inception, in terms of both the number of cases considered (11), and breadth of issues pursued.
In relation to a non-binding shareholder vote on climate disclosures, the Investor Forum believes this would provide a powerful investor signal on the effectiveness of any mandated climate disclosures. This would enable the investment community to take a leadership position in helping ensure that UK companies commit to advancing the UK’s net zero commitments and provide investors with a mechanism to signal which companies are making good progress and those that are lagging.
(Investor Forum, Review of activities in 2020)
(Investor Forum, 2020: A watershed year for stewardship, 12.01.2021)
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