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Corporate Review: FSA enforcements, Takeover Code and Financial Reporting Consultations

03 October 2011

In the August/September edition of Corporate Review, we report on a suite of recent FSA enforcement actions against market manipulation and, in particular, against a form of trading known as “layering”. We also report on the first decision notice issued by the FSA, imposing a large fine for breach of Chapter 5 of the Disclosure and Transparency Rules, on substantial shareholder notifications.

In July, we reported on the release of the then proposed wide-ranging changes to the Takeover Code resulting from the fall-out from the Kraft/ Cadbury deal and other market developments. These changes took effect on 19 September 2011.

We have also seen the start of a number of consultations on financial reporting. As part of its work on the future of narrative reporting, BIS has published a consultation paper setting out a proposed new reporting framework for UK companies. It should be read alongside two recent papers from the FRC: the first on boards’ approach to risk oversight and the second on effective company stewardship.

There have also been a number of interesting judgments from the courts recently: the High Court has set out the fiduciary duties which arise in the context of an LLP; a Court of Appeal decision has provided a reminder of the strict nature of directors’ duty of loyalty and duty not to make a secret profit; and it has been clarified that shareholders may have unfair prejudice disputes determined by arbitration, rather than by the courts.

Finally, the Independent Commission on Banking has published its final report setting out recommendations on reforms to improve stability and competition in UK banking.

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