Information Disclosure and Corporate Governance Requirements

Question 1

Disclosure of Directors interest in shares (PDMRs)

Answer 1

DTR 3 deals with reporting transaction in a companies securities by PDMRs (including directors).

PDMRs must notify the listed company within 4 business days of buying or selling shares

The listed company must then notify the market ASAP (end of following business day)

Question 2

Disclosure of Major Interest in shares

Answer 2

An investor must notifty a company within 2 business days when it acquires 3% or more of that company’s share

Further disclosure is required for every 1% increment

Question 3

What are Concert Parties

Answer 3

Groups of individuals acting in agreement for the purpose of acquiring shares

The Companies Act requires each individual have the interests of other members of the concert party added to their own, if it exceed 3% they must notify.

Each member must also notify they are involved in a concert party.

Question 4

Persons with Significant Control (PSC) in a Company or LLP and Statutory Registers

Answer 4

PSCs must be in a ‘statutory register’, so ultimate beneficial owners are made public

The PSC register is to combat tax evasion, laundering and terrorist financing

Applies to all companies, except those subject to DTR 5 which have more extensive disclosure agreements

Question 5

Renumeration reporting regulations. Annual report in 2 parts:

Answer 5

1. Policy report - sets out renumeration policy. Should be voted at AGM every 3 years
2. Implementation report - sets out actual payments to Directors and link between performance and pay, published annually

Both reports should be put to vote at AGM of the first financial year

Question 6

UK Corporate Governance Code (operated by FRC)

Answer 6

A: Leadership
B: Effectiveness 
C: Accountability
D: Renumeration
E: Relations with Stakeholders

The UK CGC applies to all premium listed companies whether based in the UK or not

Question 7

Proposed January 2019 revisions to UK CG Code

Answer 7

1. Establish values
2. Gather views of workforce
3. Board appointments are merit based and promote gender and diversity

Question 8

UK Stewardship Code (operated by FRC)

Answer 8

Aimed at Institutional Investors with voting rights in UK companies

Same ‘comply or explain’ approach at CGC

Question 9

Information Dissemination and Disclosure of Listed Companies

Answer 9

Listing Authority - approval of meetings

Shareholders - approval of circulars

Market - any information which helps the appraisal of the company

Question 10

Transparency Directive and Approved Firms for Listed companies

Answer 10

When making an announcement to LA/shareholders/market an approved firm (e.g Regulatory News Service of LSE) can be used

If approved firm is not used, must record compliance with Transparency Directive annually

Question 11

Dissemination of Price Sensitive information by Listed Companies

Answer 11

Must follow insider dealing regulations of the CJA 1993, Part V, and Code of Market Conduct

• release info onto market regularly to ‘whole’ market if information is inadvertently released
• correct public forecast if it is wrong, however has no obligation to tell individual analysts their forecast is wrong

Question 12

Companies Act 2006 - calling AGMs

Answer 12

Public companies are required to hold AGM within 6 months of financial year end (1 April 2019 - 30th April 2020)

Intervals between AGM must be <15 months

Directors call the meeting with at least 21 calendar days written notice

Question 13

Calling other meetings (GM)

Answer 13

Directors must call GM when 5% or more shareholders suggest

Directors must call GM in event of serious loss of capital

Must be called with at least 14 days calendar notice to shareholders electronically with notice considered delivered 48 hours after being sent

If Directors do not call within 21 calendar days or request, shareholders can run the meeting themselves within 3 months of the request

Question 14

General Meetings and Polls (accuracy of polls and demanding a poll)

Answer 14

GM run by Chairman of the Board

Resolutions can be decided by show of hands or poll

Poll is more accurate method due to weighting of shareholders and addition of proxy votes

Polls can be suggested by 5 voting members, members having 10% of voting rights or the Chairman

A proxy vote can demand and counts in a poll

Question 15

Resolution at a GM

Answer 15

1. ‘Ordinary’ Resolution - simple majority

2. ‘Special’ Resolution - any important constitutional changes therefore 75% vote in favour

Question 16

Proxy Votes and Types of Proxy

Answer 16

Any member entitled to vote may appoint a proxy to attend and vote on behalf and is sent a proxy form

1. ‘General’ Proxy - votes as they see fit
2. ‘Special’ Proxy - vote for / against a particular resolution (two-way proxy)

If form is returned without indication of vote, it will be considered General Proxy.