Norton Rose Fulbright LLP
01/21/2022 | News release | Distributed by Public on 01/21/2022 06:08
Essential Corporate News – week ending January 21, 2022
Content
BEIS: The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022
These regulations (Company Regulations), made on January 17, 2022, make changes to reporting requirements by certain UK companies to require them to produce additional disclosures in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) which were published in 2017. Separate regulations, the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (LLP Regulations), make equivalent changes to reporting requirements by certain UK limited liability partnerships.
The Company Regulations, which come into force on April 6, 2022 and apply in respect of any financial year of a relevant company which commences on or after that date, will require certain companies to report climate-related financial information in the non-financial and sustainability information statement which forms part of their strategic report. The information to be disclosed will be descriptions by the company of the climate-related risks and opportunities it identifies as material for its business; its governance and risk management approaches to these; how these risks and opportunities impact its strategy and business model; and the targets and performance indicators it applies to managing them.
The Company Regulations will apply these disclosure requirements to companies which meet the following criteria:
- UK companies currently required to produce a non-financial information statement, being companies which have more than 500 employees and have transferable securities admitted to trading on a UK regulated market, banking companies or insurance companies ('Relevant Public Interest Entities');
- UK registered companies with securities admitted to the Alternative Investment Market of the London Stock Exchange with more than 500 employees; or
- UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m.
The Government intends to publish a set of non-binding Q&A guidance alongside the LLP Regulations and the Company Regulations. This Q&A guidance is intended to support in scope companies and LLPs in their application of the relevant Regulations.
BEIS: The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022
These regulations (LLP Regulations), made on January 17, 2022, make changes to reporting requirements by certain Limited Liability Partnerships (LLPs) to require them to produce additional disclosures in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) which were published in 2017. Separate regulations, the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (Company Regulations), make equivalent changes to reporting requirements by certain companies.
The LLP Regulations, which come into force on April 6, 2022 and apply in respect of any financial year of a relevant LLP which commences on or after that date, define "climate-related financial disclosures" and require the relevant LLPs to make the disclosures in either their strategic report or energy and carbon report. The LLP Regulations amend regulation 12A and 12B of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008/1911 and operate by applying to the relevant LLPs, with appropriate modifications, those amendments which have been made to sections 414C, CA and CB Companies Act by the Company Regulations.
The LLP Regulations will require UK banking and traded LLPs and other large UK LLPs which have more than 500 employees and a turnover of more than £500m to report climate-related financial information. The information to be disclosed will reflect the TCFD's recommendations and its four thematic "pillars" of business governance, risk assessment, strategy, and targets and metrics. The information to be disclosed will be descriptions by the UK LLP of the climate-related risks and opportunities it identifies as material for its business; its governance and risk management approaches to these; how these risks and opportunities impact its strategy and business model; and the targets and performance indicators it applies to managing them.
The Government intends to publish a set of non-binding Q&A guidance alongside the LLP Regulations and the Company Regulations. This Q&A guidance is intended to support in scope companies and LLPs in their application of the relevant Regulations.
FCA: Strengthening our financial promotion rules for high risk investments, including cryptoassets - CP22/1
On January 19, 2022 the Financial Conduct Authority (FCA) published Consultation Paper 22/1 in relation to proposals to strengthen its financial promotion rules for high-risk investments, and for authorised firms which approve and communicate financial promotions. These proposals build on the questions the FCA asked in its Discussion Paper DP21/1 on how it could strengthen its financial promotions rules.
The FCA states that it is publishing this CP now to ensure its financial promotion regime is robust and remains fit for purpose, noting that the investment environment has changed, with promotions distributed to a mass audience at increasing speed via online platforms and through social media. The proposals complement work by HM Treasury to improve the financial promotions regime. This work includes the proposed new regulatory gateway (s21 gateway) for authorised firms who approve the financial promotions of unauthorised firms (s21 approvers), extending the regime to promotions of qualifying cryptoassets and consulting on reforms to the exemptions for high net worth and sophisticated investors.
Chapter 5 of CP22/1 is concerned with strengthening the role of authorised firms communicating and approving financial promotions, and, in broad terms, the FCA is proposing changes to three key areas of the financial promotion lifecycle:
- Approving and communicating promotions - including a new date stamp for approved promotions and a new competence and expertise requirement for firms communicating or approving financial promotions;
- Lifetime of the promotion - including an ongoing monitoring requirement for firms approving promotions; and
- Consumer journey - to clarify the role of firms approving promotions in the client categorisation and appropriateness test for 'Restricted Mass Market Investments' and preliminary assessment of suitability for 'Non Mass Market Investments' (as defined in Chapter 3 of CP 22/1).
Feedback on the proposals is requested by March 23, 2022. The FCA will consider all feedback and, depending on the responses, intends to publish a Policy Statement and final Handbook rules in summer 2022. It is proposed that firms will be given three months from publishing final rules to comply with the new requirements for the consumer journey outlined in Chapter 4 and the new requirements for s21 approvers outlined in Chapter 5 of the CP.