“The latest consultation from the Government starts to fill in the much anticipated detail on proposed changes to the notifiable events regime. Extending both the list of notifiable events, and the duties on employers to provide information to the Regulator about proposed corporate transactions, the draft Regulations are doing pretty much what was promised ahead of the 2021 Act.
“Sponsors and trustees are likely to welcome a clearer picture of the types of events covered, the timing of required notification and the contents of the accompanying statement. In particular, the draft Regulations spell out what sorts of security granting is relevant, and what a ‘material proportion’ of a business or its assets is (a quarter of, respectively, its annual revenue or the gross value of its assets, either in isolation or cumulatively with other sales occurring within a year). The thresholds won’t be perfect, but they do seem pragmatic.
“However, in other areas there remains some uncertainty with the inevitable challenge of trying to set down rules in a way that doesn’t become unduly restrictive or too onerous. Specifically, with statements for the ‘relinquishing control’, ‘intended sale’ and ‘granting security’ events required ‘when the main terms of the relevant event have been proposed’, it appears judgement will be required to apply this principle to a given set of circumstances. Ultimately, companies will need additional support and advice to navigate the new rules carefully. There is some hope that more clarity might come from the Pensions Regulator in the revised code of practice and accompanying guidance that is to follow.
“Overall, we remain supportive of the policy intent to get companies to consider the pension scheme in any material corporate activity, and to engage positively with the Regulator and trustees to ensure that the scheme is treated fairly. In our experience, it is best to involve both early on if the impact of the transaction is material. Of course, it is important that the changes do not slow down the pace at which corporate activity can be undertaken, particularly in the current environment. We would caution the Regulator not to take an overly heavy-handed approach to dealing with potential transactions. If earlier reporting prompts onerous follow-up dialogue with the Regulator then this could distract key stakeholders from time-critical actions connected to the transaction.”
|
