'Directors' know how' is a monthly article which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.
The Financial Reporting Council issues its Draft Plan, Budget and Proposed Levies 2015/16
The FRC published their Plan & Budget and Levies 2015/16 on 25 March 2015. Its programme of work for 2015/16 builds on existing initiatives and will focus on the following areas in 2015/16:
- Corporate governance – Focus on company culture and how to promote good practice and on company succession planning.
- Investor stewardship – Support better engagement between boards and shareholders and ensure that Stewardship Code signatories deliver on their commitments.
- Corporate reporting – Promote reports that are fair, balanced and understandable, and also clear and concise; and continue to help smaller listed and AIM companies with the quality of their reporting.
- Actuarial standards and regulation – Finalise the project to identify and respond to public interest actuarial risks and further work on technical actuarial standards.
- Audit – Support the Department for Business, Innovation and Skills (BIS) in implementing the amended EU Audit Directive and Regulation, and continue the programme of work to promote audit that is of a consistently high standard and meets investor needs.
- Conduct – Consider the overall effectiveness of its work to review the quality of corporate reporting and auditing; and continue to enhance the pace and effectiveness of independent disciplinary arrangements.
The FRC has taken on board our comments to its Draft Plan & Budget and Levy Proposals for 2015/16 earlier this year and have reduced the levy increase for the companies with the smallest market capitalisation.
We had pointed out in our response that the planned increase in the levy meant that companies with a market capitalisation of less than £1,000m, including many of our members, would bear a disproportionate share of the increased cost. We welcome that the FRC has taken on board our observations and have reduced the planned rise in the levy for the smallest quoted companies.
Our response also supported the continued initiative by the FRC to improve the quality of reporting amongst smaller listed and AIM companies and welcomed the opportunity to continue working with the FRC and within our membership to achieve this.
The Small Business, Enterprise and Employment Act 2015 receives Royal Assent
The Small Business, Enterprise and Employment Act 2015 received Royal Assent on 26 March 2015. The Act aims at opening up new opportunities for small firms to innovate, grow and create jobs.
BIS plans to implement Parts 7 (Companies: Transparency) and 8 (Company Filing Requirements) of the Act in phases between now and April 2016. The timetable can be found here.
The Act introduces the implementation of a register of people with significant control over a company (the ‘PSC register’). BIS intends to consult on draft regulations for the PSC register this summer, with a view to laying them in the autumn. This will include the regulations setting out:
- The regime for protecting information of individuals at serious risk of harm;
- The way in which a PSC’s control over a company should be recorded on the PSC register;
- Additional matters that must be noted in a company’s PSC register; and
- Exemptions from the requirement to keep a PSC register.
We are working with BIS, as members of the PSC register working group, to develop the statutory and non-statutory guidance that will accompany the PSC register and ensure that the administrative burden impact on small and mid-size quoted companies is reduced.
