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- The first thing we will consider is the Autumn Budget.
The Budget refers to the government’s annual financial plan with regards to taxation and expenditure. The UK Autumn Budget was detailed on Wednesday, and included a pretty hefty £26 billion rise in taxation.
Key business-relevant announcements from the Budget include:
- National Insurance Contributions being introduced for salary sacrifice pension schemes where contributions exceed £2,000;
- tax rates on property and savings/dividend income going up by 2%;
- the annual cash ISA limit being pushed down to £12,000 in 2027; and
- both the minimum and national living wage going up.
- The second thing is that something is brewing at Swatch.
Swatch, a Swiss watchmaker known for upmarket brands like Omega and Longines faces internal angst from a discontent shareholder. Steven Wood owns shares worth only 0.5% of the voting rights in the company. Despite this, he has posited ambitions to join the company board and has more recently put forth a number of proposals for changes in the company’s governance. However, the Hayek family (with Nick Hayek running the company) has successfully blocked his efforts to join the board.
This is because the company’s shareholding is split between a dual class share structure, constituting bearer shares and registered shares. Bearer shares convey weaker voting rights than registered shares, and registered shares are held by the Hayek family. Voting rights refer to the eligibility of shareholders to vote on corporate actions (like starting a merger). This means change is very difficult to drive as a bearer shareholder, even with a large shareholding.
Knowing the story isn’t enough. In applications and interviews, firms expect you to explain why this matters commercially and how it affects clients. The Commercial Awareness Starter Pack shows you exactly how to do this using a simple, repeatable framework.
How to use this in applications
- The budget news mean that for law firms, extra work is coming their way. A pensions team may have to support businesses in reorganising their pension schemes to reconcile with what can be substantial National Insurance payments for both them and the employee. The Private Client team may need to support high net worth individuals with restructuring their portfolio in light of the higher tax rate on savings and dividend income. And finally, the Corporate teams may see greater IPO activity in the UK as the falling cash ISA limit forces people to invest their money into stocks and shares through the S&S ISA.
- Activists shareholders have always been an issue, but recently this is turning into a trend. As a result, more Capital Market teams may be approached to advise on how companies can structure their shareholdings strategically to prevent corporate actions being influenced by loud minorities.
We explain how this story can be discussed in written applications and interviews. Register now for free to unlock the full article.
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