Countdown to MiFID II
In our previous update about MiFID II we outlined that a number of regulated services provided to our corporate clients, their employees and investors are required to be adapted to meet enhanced regulatory reporting requirements. In the second of our series of MiFID II updates , we look at these new reporting requirements and highlight the key impacts.
Equiniti handles thousands of reportable transactions every day and will need to make changes to all channels used to collect those instructions. It is important that corporate clients understand the changes taking place to help with any decisions about when and what additional information, if any, should be provided to their employees and shareholders.
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017
On 6 April 2017 the Gender Pay Gap Information Regulations 2017 came into force.
In our February Employee Services Update we provided an outline of these regulations and the duties imposed on employers with 250 or more employees to publish information relating to differences in pay between male and female employees.
In March, together with Tapestry Compliance LLP, we held a discussion forum for clients where information was shared about reporting requirements and some of the practical implications of including employee share plan data. There was some discussion around the impact of only reporting employees’ tax advantaged Share Incentive Plan income when a taxable event occurs. As only taxable payments are reported, there could be a problem with either odd results or double-counting. However, the pragmatic view was to follow the agreed standard method, obtain and report on the data from payroll and add an explanatory note to the report if needed. Presentation slides can be downloaded from below.
Our Prism Cosec team have examined reporting requirements outside of the Annual Report which includes Gender Reporting. Click for the latest Prism Cosec Briefing.
The Government’s reporting website has now launched and links to some of the key pages are below:
Report your gender pay gap data
Gender pay gap reporting overview
View the published information
New prospectus rules adopted
On 16 May 2017, the Council of the EU adopted new rules on prospectuses for the issuing and offering of securities. The press release can be found here. Replacing directive 2003/71/EC (the Prospectus Directive), the new rules set out to simplify administrative obligations related to the publication of prospectuses but in a manner that still ensures that investors are well informed.
Page 11 of the ‘Regulation of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC’ includes:
(17) Incentivising directors and employees to hold securities of their own company can have a positive impact on companies' governance and help create long-term value by fostering employees' dedication and sense of ownership, aligning the respective interests of shareholders and employees, and providing the latter with investment opportunities.
Participation of employees in the ownership of their company is particularly important for small and medium-sized enterprises (SMEs), in which individual employees are likely to play a significant role in the success of the company.
Therefore, there should be no obligation to publish a prospectus for offers made in the context of an employee-share scheme within the Union, provided a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer or allotment, to safeguard investor protection.
To ensure equal access to employee-share schemes for all directors and employees, independently of whether their employer is established in or outside the Union, no equivalence decision of third country markets should be required any longer, as long as such information document is made available. Thus, all participants in employee-share schemes will benefit from equal treatment and information.
Although some information must be provided, inclusion of ‘no equivalence decision of third country markets should be required’, means that post-Brexit, UK companies will not have the expense of producing a formal prospectus when offering share plans to their EU-based employees. However, key to this is whether there is any time gap between Brexit and the application of this regulation in all member states. The regulation is still subject to publication in the Official Journal with a two year implementation date from the publication date.
ProShare, along with Alexy Armitage, Director KPMG UK LLP who chairs their Global Issues Focus Group, have been supporting these amendments and keeping ProShare members up to date with their progress. You can be added to their newsletter distribution this by emailing team@proshare.org or join their LinkedIn group.
Out and about and AR
We recently attended GEO’s 18th Annual Conference in Rome where Equiniti’s Phil Ainsley, Jade Jordan-James and Natasha MacLeod presented alongside Anne Steele, DS Smith on how to bring share plans to life using Augmented Reality (AR).
The interactive session enabled attendees to look at how AR is being used and also experience the future by viewing 360 degree videos.
Phil said, ‘It was a great event in a wonderful location. Our presentation enabled us to showcase the successes being achieved with AR and talk through the ‘Omni Channel’ approach to employee communication.’ Download the slides below.
Dividend tax-free allowance change
In the latest budget, Philip Hammond included a proposal to reduce the tax-free allowance on dividends from the current £5,000 to £2,000 from April 2018. This will mean that SIP documentation will need to be reviewed and updated if needed. However, this change was not included in the Finance Act 2017 so we are now waiting for confirmation of when this change will come into force.
Section 431 elections and holding periods
Where a discretionary employee share plan includes a holding period restriction, employees may need to complete a section 431 election to ensure they will not be subject to further income tax or national insurance on the shares when the holding period restriction is lifted. Whilst this is covered in HMRC’s Employment Related Securities Manual, companies may wish to discuss this with their share plans adviser.
Stamp Duty on paper share transactions
In our February edition of our Employee Services Update we included information about the Office of Tax Simplification’s project to simplify and digitise Stamp Duty. Following input from the project team, the first report that makes a number of suggestions and recommendations has now been released and is available here. The OTS welcome feedback on their paper.
Employment related securities - online filing update
This year’s online annual share plan returns filing period started on 6 April 2017 with a deadline of 6 July 2017. Although there haven’t been any major changes to the filing process from last year, there have been some issues with being able to submit the returns though the HMRC online service. The service is likely to be back up and running again from the end of May 2017.
For further information on any of the subjects above, please contact your Equiniti relationship manager.