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Corporate Review: Corporate governance and the European Securities Markets Authority

30 November 2010

In the November edition of Corporate Review we report on a number of announcements and guidance from different bodies.

The ICAEW has published finalised guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006 – Tech 02/10. Corporate governance developments continue with revised guidance and notes on terms of reference for audit, nomination and remuneration committees and new guidance on terms of reference for risk committees having been published by ICSA. The FRC has released an update for audit committees with the aim of influencing the thinking and focus of audit committee work during the 2010/2011 annual reporting season. And from the Institute of Directors, new guidance aimed at UK unlisted companies. The government has given the go-ahead to both the proposed 2012 pensions auto-enrolment regime and the national alternative pension saving vehicle. Finally, the pensions regulator has issued guidance to pension scheme trustees and employers on the risks of breaching legal restrictions on employer-related investment.

The European Securities Markets Authority (a replacement for CESR) will be operational from 1 January 2011. It will form part of a new European system of financial supervisors, which has been approved by the European Council. The government has announced the possible early implementation of two Prospectus Directive amendments – the amending directive is expected to come into force in the next month or two and Member States will have 18 months to implement it.

We also report on a tax decision by the ECJ in the first of the “payments and transfers” VAT cases referred from the UK. This has the potential to undermine the current UK interpretation of the scope of the “payments and transfers” exemption from VAT – used in a wide range of commercial arrangements.

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