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Company Law Reform Bill [HL] (595-601)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 43 — Transparency obligations and related matters

595

 

(6)   

In relation to an issuer whose home state is a member state other than

the United Kingdom, any reference to an applicable transparency

obligation must be read subject to section 100A(2).

89J     

Power to suspend or prohibit trading of securities

(1)   

This section applies to securities admitted to trading on a regulated

5

market situated or operating in the United Kingdom.

(2)   

If the competent authority has reasonable grounds for suspecting that

an applicable transparency obligation has been infringed by the issuer,

it may require the market operator to suspend trading in the securities

for a period not exceeding 10 days.

10

(3)   

If the competent authority has reasonable grounds for suspecting that

an applicable transparency obligation has been infringed—

(a)   

by an issuer whose home state is not the United Kingdom, or

(b)   

by voteholders of an issuer whose home state is the United

Kingdom,

15

   

it may require the market operator to prohibit trading in the securities.

(4)   

If the competent authority finds that an applicable transparency

obligation has been infringed, it may require the market operator to

prohibit trading in the securities.

(5)   

In this section “transparency obligation” means an obligation under—

20

(a)   

a provision contained in transparency rules, or

(b)   

any other provision made in accordance with the transparency

obligations directive.

(6)   

In relation to an issuer whose home state is a member state other than

the United Kingdom, any reference to an applicable transparency

25

obligation must be read subject to section 100A(2).

89K     

Procedure under section 89J

(1)   

A requirement under section 89J takes effect—

(a)   

immediately, if the notice under subsection (2) states that that is

the case;

30

(b)   

in any other case, on such date as may be specified in the notice.

(2)   

If the competent authority—

(a)   

proposes to exercise the powers in section 89J in relation to a

person, or

(b)   

exercises any of those powers in relation to a person with

35

immediate effect,

   

it must give that person written notice.

(3)   

The notice must—

(a)   

give details of the competent authority’s action or proposed

action;

40

(b)   

state the competent authority’s reasons for taking the action in

question and choosing the date on which it took effect or takes

effect;

(c)   

inform the recipient that he may make representations to the

competent authority within such period as may be specified by

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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 43 — Transparency obligations and related matters

596

 

the notice (whether or not he had referred the matter to the

Tribunal);

(d)   

inform him of the date on which the action took effect or takes

effect;

(e)   

inform him of his right to refer the matter to the Tribunal (see

5

section 89L) and give an indication of the procedure on such a

reference.

(4)   

The competent authority may extend the period within which

representations may be made to it.

(5)   

If, having considered any representations made to it, the competent

10

authority decides to maintain, vary or revoke its earlier decision, it

must give written notice to that effect to the person mentioned in

subsection (2).

89L     

Right to refer matters to the Tribunal

A person—

15

(a)   

to whom a decision notice is given under section 89I (public

censure), or

(b)   

to whom a notice is given under section 89K (procedure in

connection with suspension or prohibition of trading),

may refer the matter to the Tribunal.”.

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Other matters

1233    

Corporate governance rules

In Part 6 of the Financial Services and Markets Act 2000 (c. 8), after the sections

inserted by section 1232 above insert—

“Corporate governance

25

89M     

Corporate governance rules

(1)   

The competent authority may make rules (“corporate governance

rules”)—

(a)   

for the purpose of implementing, enabling the implementation

of or dealing with matters arising out of or related to, any

30

Community obligation relating to the corporate governance of

issuers who have requested or approved admission of their

securities to trading on a regulated market;

(b)   

about corporate governance in relation to such issuers for the

purpose of implementing, or dealing with matters arising out of

35

or related to, any Community obligation.

(2)   

“Corporate governance”, in relation to an issuer, includes—

(a)   

the nature, constitution or functions of the organs of the issuer;

(b)   

the manner in which organs of the issuer conduct themselves;

(c)   

the requirements imposed on organs of the issuer;

40

(d)   

the relationship between the different organs of the issuer;

(e)   

the relationship between the organs of the issuer and the

members of the issuer or holders of the issuer’s securities.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 43 — Transparency obligations and related matters

597

 

(3)   

The burdens and restrictions imposed by rules under this section on

foreign-traded issuers must not be greater than the burdens and

restrictions imposed on UK-traded issuers by—

(a)   

rules under this section, and

(b)   

listing rules.

5

(4)   

For this purpose—

“foreign-traded issuer” means an issuer who has requested or

approved admission of the issuer’s securities to trading on a

regulated market situated or operating outside the United

Kingdom;

10

“UK-traded issuer” means an issuer who has requested or

approved admission of the issuer’s securities to trading on a

regulated market situated or operating in the United Kingdom.

(5)   

This section is without prejudice to any other power conferred by this

Part to make Part 6 rules.”.

15

1234    

Liability for false or misleading statements in certain publications

In Part 6 of the Financial Services and Markets Act 2000 (c. 8), after section 90

insert—

“90A    

Compensation for statements in certain publications

(1)   

The publications to which this section applies are any reports and

20

statements published in response to a requirement imposed by a

provision implementing Article 4, 5 or 6 of the transparency obligations

directive.

(2)   

The issuer of securities traded on a regulated UK market is liable to pay

compensation to a person who has—

25

(a)   

acquired such securities issued by it, and

(b)   

suffered loss in respect of them as a result of—

(i)   

any untrue or misleading statement in a publication to

which this section applies, or

(ii)   

the omission from any such publication of any matter

30

required to be included in it.

(3)   

The issuer is so liable only if a person discharging managerial

responsibilities within the issuer in relation to the publication—

(a)   

knew the statement to be untrue or misleading or was reckless

as to whether it was untrue or misleading, or

35

(b)   

knew the omission to be dishonest concealment of a material

fact.

(4)   

A loss is not regarded as suffered as a result of the statement or

omission in the publication unless the person suffering it acquired the

relevant securities—

40

(a)   

in reliance on the information in the publication, and

(b)   

at a time when, and in circumstances in which, it was

reasonable for him to rely on that information.

(5)   

Except as mentioned in subsection (7)—

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 43 — Transparency obligations and related matters

598

 

(a)   

the issuer is not subject to any other liability than that provided

for by this section in respect of loss suffered as a result of

reliance by any person on—

(i)   

an untrue or misleading statement in a publication to

which this section applies, or

5

(ii)   

the omission from any such publication of any matter

required to be included in it, and

(b)   

a person other than the issuer is not subject to any liability, other

than to the issuer, in respect of any such loss.

(6)   

Any reference in subsection (5) to a person being subject to a liability

10

includes a reference to another person being entitled as against him to

be granted any civil remedy or to rescind or repudiate an agreement.

(7)   

This section does not affect—

(a)   

the powers conferred by section 382 and 384 (powers of the

court to make a restitution order and of the Authority to require

15

restitution);

(b)   

liability for a civil penalty;

(c)   

liability for a criminal offence.

(8)   

For the purposes of this section—

(a)   

the following are persons “discharging managerial

20

responsibilities” in relation to a publication—

(i)   

any director of the issuer (or person occupying the

position of director, by whatever name called),

(ii)   

in the case of an issuer whose affairs are managed by its

members, any member of the issuer,

25

(iii)   

any senior executive of the issuer having responsibilities

in relation to the publication;

(b)   

“regulated UK market” means a regulated market situated or

operating in the United Kingdom;

(c)   

references to the acquisition by a person of securities include his

30

contracting to acquire them or any interest in them.”.

1235    

Exercise of powers where UK is host member state

In Part 6 of the Financial Services and Markets Act 2000 (c. 8), after section 100

insert—

“100A   

   Exercise of powers where UK is host member state

35

(1)   

This section applies to the exercise by the competent authority of any

power under this Part exercisable in case of infringement of—

(a)   

a provision of prospectus rules or any other provision made in

accordance with the prospectus directive, or

(b)   

a provision of transparency rules or any other provision made

40

in accordance with the transparency obligations directive,

   

in relation to an issuer whose home state is a member state other than

the United Kingdom.

(2)   

The competent authority may act in such a case only in respect of the

infringement of a provision required by the relevant directive.

45

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 43 — Transparency obligations and related matters

599

 

   

Any reference to an applicable provision or applicable transparency

obligation shall be read accordingly.

(3)   

If the authority finds that there has been such an infringement, it must

give a notice to that effect to the competent authority of the person’s

home state requesting it—

5

(a)   

to take all appropriate measures for the purpose of ensuring

that the person remedies the situation that has given rise to the

notice, and

(b)   

to inform the authority of the measures it proposes to take or

has taken or the reasons for not taking such measures.

10

(4)   

The authority may not act further unless satisfied—

(a)   

that the competent authority of the person’s home state has

failed or refused to take measures for the purpose mentioned in

subsection (3)(a), or

(b)   

that the measures taken by that authority have proved

15

inadequate for that purpose.

   

This does not affect exercise of the powers under section 87K(2), 87L(2)

or (3) or 89J(2) or (3) (powers to protect market).

(5)   

If the authority is so satisfied, it must, after informing the competent

authority of the person’s home state, take all appropriate measures to

20

protect investors.

(6)   

In such a case the authority must inform the Commission informed of

the measures at the earliest opportunity.”.

1236    

Transparency obligations and related matters: minor and consequential

amendments

25

(1)   

Schedule 15 to this Act makes minor and consequential amendments in

connection with the provision made by this Part.

(2)   

In that Schedule-

Part 1 contains amendments of the Financial Services and Markets Act

2000 (c. 8);

30

Part 2 contains amendments of the Companies (Audit, Investigations and

Community Enterprise) Act 2004 (c. 27).

1237    

Corporate governance regulations

(1)   

The Secretary of State may make regulations—

(a)   

for the purpose of implementing, enabling the implementation of or

35

dealing with matters arising out of or related to, any Community

obligation relating to the corporate governance of issuers who have

requested or approved admission of their securities to trading on a

regulated market;

(b)   

about corporate governance in relation to such issuers for the purpose

40

of implementing, or dealing with matters arising out of or related to,

any Community obligation.

(2)   

“Corporate governance”, in relation to an issuer, includes—

(a)   

the nature, constitution or functions of the organs of the issuer;

(b)   

the manner in which organs of the issuer conduct themselves;

45

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 44 — Miscellaneous provisions

600

 

(c)   

the requirements imposed on organs of the issuer;

(d)   

the relationship between different organs of the issuer;

(e)   

the relationship between the organs of the issuer and the members of

the issuer or holders of the issuer’s securities.

(3)   

The regulations may—

5

(a)   

make provision by reference to any specified code on corporate

governance that may be issued from time to time by a specified body;

(b)   

create new criminal offences (subject to subsection (4));

(c)   

make provision excluding liability in damages in respect of things done

or omitted for the purposes of, or in connection with, the carrying on,

10

or purported carrying on, of any specified activities.

   

“Specified” here means specified in the regulations.

(4)   

The regulations may not create a criminal offence punishable by a greater

penalty than—

(a)   

on indictment, a fine;

15

(b)   

on summary conviction, a fine not exceeding the statutory maximum or

(if calculated on a daily basis) £100 a day.

(5)   

Regulations under this section are subject to negative resolution procedure.

(6)   

In this section “issuer”, “securities” and “regulated market” have the same

meaning as in Part 6 of the Financial Services and Markets Act 2000 (c. 8).

20

Part 44

Miscellaneous provisions

Regulation of actuaries etc

1238    

Grants to bodies concerned with actuarial standards etc

(1)   

Section 16 of the Companies (Audit, Investigations and Community

25

Enterprise) Act 2004 (c. 27) (grants to bodies concerned with accounting

standards etc) is amended as follows.

(2)   

In subsection (2) (matters carried on by bodies eligible for grants) for

paragraph (l) substitute—

“(l)   

issuing standards to be applied in actuarial work;

30

(m)   

issuing standards in respect of matters to be contained in

reports or other communications required to be produced or

made by actuaries or in accordance with standards within

paragraph (l);

(n)   

investigating departures from standards within paragraph (l)

35

or (m);

(o)   

taking steps to secure compliance with standards within

paragraph (l) or (m);

(p)   

carrying out investigations into public interest cases arising in

connection with the performance of actuarial functions by

40

members of professional actuarial bodies;

(q)   

holding disciplinary hearings relating to members of

professional actuarial bodies following the conclusion of

investigations within paragraph (p);

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 44 — Miscellaneous provisions

601

 

(r)   

deciding whether (and, if so, what) disciplinary action should

be taken against members of professional actuarial bodies to

whom hearings within paragraph (q) related;

(s)   

supervising the exercise by professional actuarial bodies of

regulatory functions in relation to their members;

5

(t)   

overseeing or directing any of the matters mentioned above.”.

(3)   

In subsection (5) (definitions) at the appropriate places insert—

““professional actuarial body” means—

(a)   

the Institute of Actuaries, or

(b)   

the Faculty of Actuaries in Scotland,

10

and the “members” of a professional actuarial body include

persons who, although not members of the body, are subject to

its rules in performing actuarial functions;”

““regulatory functions”, in relation to professional actuarial

bodies, means any of the following—

15

(a)   

investigatory or disciplinary functions exercised by

such bodies in relation to the performance by their

members of actuarial functions,

(b)   

the setting by such bodies of standards in relation to the

performance by their members of actuarial functions,

20

and

(c)   

the determining by such bodies of requirements in

relation to the education and training of their

members;”.

1239    

Levy to pay expenses of bodies concerned with actuarial standards etc

25

(1)   

Section 17 of the Companies (Audit, Investigations and Community

Enterprise) Act 2004 (c. 27) (levy to pay expenses of bodies concerned with

accounting standards etc) is amended in accordance with subsections (2) to (5).

(2)   

In subsection (3)(a) after “to which” insert “, or persons within subsection (3A)

to whom,”.

30

(3)   

After subsection (3) insert—

“(3A)   

The following persons are within this subsection—

(a)   

the administrators of a public service pension scheme (within

the meaning of section 1 of the Pension Schemes Act 1993);

(b)   

the trustees or managers of an occupational or personal pension

35

scheme (within the meaning of that section).”.

(4)   

After subsection (4)(b) insert—

“(c)   

make different provision for different cases.”.

(5)   

After subsection (12) insert—

“(13)   

If a draft of any regulations to which subsection (10) applies would,

40

apart from this subsection, be treated for the purposes of the standing

orders of either House of Parliament as a hybrid instrument, it is to

proceed in that House as if it were not such an instrument.”.

(6)   

The above amendments have effect in relation to any exercise of the power to

make regulations under section 17 of the Companies (Audit, Investigations

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