Legislation that aims to curb corruption, protect whistle-blowers and introduce a new French deferred prosecution agreement (DPA), has been approved by French legislators.
The Sapin II bill creates a duty for presidents, managing directors, managers and economic board members to actively manage corruption risks for companies with a €100m+ turnover and at least 500 employees (or companies in a group meeting this requirement).
A national agency, charged with identifying and averting corruption, will be created; corruptly influencing a foreign public official will become an offence; and the ability of French authorities to punish bribery committed abroad will be widened.
A new sanction of up to two years in prison and a fine of up to €50,000 for individuals is proposed, with stiffer fines for legal entities convicted of corruption envisaged.
Companies suspected of corruption would be allowed to enter into a DPA and pay a fine, instead of being prosecuted.
Simmons & Simmons partner, Etienne Kowalski, said: “DPAs are reserved for corporate defendants and will not be available for individuals. Therefore, if a company enters into a DPA, criminal sanctions could still be imposed upon individuals, such as the senior executives of the company.”
Changes to money laundering directive proposed
Amendments to the Fourth Money Laundering Directive, which aim to reinforce rules on anti-money laundering and increase transparency on the ownership of companies and trusts, have been proposed by the European Commission.
The proposals include a requirement for member states to implement the directive’s provisions and its proposed amendments by 1 January 2017.
A reduction of the registration threshold for persons with significant control (PSC) from 25% to 10% for “passive non-financial entities” (i.e. holding structures) is also proposed.
The UK is already consulting on changes to its newly introduced PSC regime, as it does not even comply with the existing Fourth Money Laundering Directive provisions, said Denton partner, David Collins. He added: “The directive requires that centrally held beneficial ownership information must be current.
“In contrast, under the UK’s PSC regime, companies and LLPs only have to report once a year to Companies House through the confirmation statement.
“The directive also covers a broader range of entities including unregistered companies, open-ended investment companies, building and friendly societies, and Scottish limited partnerships.”
Prospectus regulation adopted
Amendments to the European Commission’s proposals for a new Prospectus Regulation—which will replace the current Prospectus Directive—have been adopted by the European Parliament.
Under the proposed regulation, no EU prospectus will be needed for capital raisings below €1m (currently €100,000) or those addressed to fewer than 350 (currently 150) persons per member state, and to no more than 4,000 persons in the EU.
Offers of securities to the public can be exempted from the prospectus requirement by member states if the total consideration for the offer in the EU does not exceed €5m, although offers made under this exemption will not benefit from passporting and they will have to state that the public offer is not a cross-border one.
There will be a simplified prospectus for companies already listed on the public market that want to raise more capital by a secondary issuance, and a growth prospectus will be available for offers by SMEs. A new prospectus summary will be introduced, as will a new annual “universal registration document” for use by companies that often access the capital markets.
Denton partner, David Collins, says: “The European Parliament and the EU Council will have to adopt the proposed regulation under the co-decision procedure. Given that the proposed transition period for the regulation is 24 months after it comes into force, implementation remains some way off. From the UK perspective, Brexit may impact on this.”
Remuneration guidance published
Guidance on executive and non-executive director remuneration has been published by the International Corporate Governance Network (ICGN).
The new guidance aims to provide a consistent perspective of remuneration policy and practice designed to help companies better understand long-term shareholders’ views, and serve as a tool for investors engaging with companies.
The executive director guidance provides greater clarity on committee leadership; refers to motivational considerations beyond financial remuneration; provides that base salary is payment for achieving what is expected of the executive, and variable remuneration is payment for out-performance; and includes environmental, social and governance factors in the assessment of performance to help achieve sustainable long-term value creation.
The non-executive director (NED) remuneration guidance outlines how board chairs should be paid and defines the expectations of non-NEDs to attain a significant shareholding.
Guidance on board diversity issued
New best-practice guidance on board diversity has been published by the International Corporate Governance Network (ICGN). The new guidance is designed to recognise that a range of social and economic factors contribute to a fully diverse board beyond gender diversity.
It calls for companies to develop board diversity objectives and for shareholders to hold boards accountable and encourage diversity with their own board nominees.
Nomination committees, the guidance says, should, when identifying candidates to recommend for board appointment/election, consider diversity criteria; engage independent external advisers to search for candidates that meet the board’s skills and diversity criteria; and aim to have at least one-third of the board made up of one gender.
The UK Parker Review Committee, meanwhile, has published a consultation into the ethnic diversity of UK boards, with recommendations to increase the number of BME (black and minority ethnic) representatives on British boards.
It calls for each FTSE 100 board to have at least one BME director by 2021, and each FTSE 250 board to have at least one BME director by 2024.
Bars to geo-blocking mooted
A draft regulation prohibiting geo-blocking—a form of internet censorship based on users’ location—by online traders and content publishers has been published by the European Commission.
Expected to be adopted in 2017, the new rules aim to stop EU traders discriminating against customers in other member states by denying them access to e-commerce sites or redirecting them to websites offering inferior goods or sales conditions.
Morrison & Foerster lawyer, Sue McLean, said that traders should review the technical features of their platforms, and their terms and conditions, to identify whether they discriminate against customers based on their nationality or place of residence/establishment.
The regulation does not require traders to deliver goods cross-border and will not apply to copyrighted content, financial services, transportation services, healthcare services or gambling.
Takeover code amended
Amendments to the Takeover Code took effect from 12 September 2016 to ensure rules on distributing information and opinions during a takeover offer reflect recent technological changes.
Any new information or opinions published by an offeror or offeree should simultaneously be published through a Regulatory Information Service.
Information about an offer shared with a shareholder or the media must also be published on a website, and restrictions are introduced on the use of videos and social media to communicate information or opinions about an offer.
Dutch Whistleblowing Act takes effect
A new Dutch Whistleblowing Act (Wet Huis voor klokkenluiders) has come into effect. Employers with 50+ employees must adopt a whistleblowing policy setting out: how internal reporting of wrongdoing is tackled; the definition of wrongdoing; and officers to whom wrongdoing can be reported.
The policy should allow employees to report wrongdoing confidentially and obtain legal advice. Employers must tell employees in writing when wrongdoing may be disclosed externally and about the anti-retaliation provisions in the Act. Any retaliation against employees who have disclosed wrongdoing in good faith is prohibited.
An independent government institution—the House for Whistleblowers—has been created, which can advise employees who wish to report wrongdoing.
Legal & regulatory roundup is supported by Mazars.