Thursday, 17 August 2017

UK: Board diversity - Green Park's 10,000 report

Green Park has published the fourth edition of its Leadership 10,000 report, which now includes a ranking of FTSE100 companies in respect of their success and commitment in improving leadership diversity: see here. The report notes that 58% of FTSE100 boards have no directors from ethnic minorities; the Parker Review recommended, last year, that by 2021 all FTSE100 boards should have at least one director of colour.

Wednesday, 16 August 2017

IOSCO consults on recommendations to improve the transparency of corporate bond markets

The International Organisation of Securities Commissions has published for public consultations a series of recommendations the aim of which is to improve the transparency of corporate bond markets: see here (pdf).

Tuesday, 15 August 2017

UK: FRC consults on updated Guidance on the Strategic Report

The Financial Reporting Council has published for consultation an updated edition of its Guidance on the Strategic Report: see here. The amendments take into account the increased disclosure obligations to which certain large companies are subject under the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, but also reflect the FRC's intention to strengthen the link between the purpose of the strategic report and the matters to which directors should have regard as part their duty to promote the success of the company under section 172 of the Companies Act 2006.

Wednesday, 9 August 2017

Australia: new FSC standard - Principles of Internal Governance and Asset Stewardship

The Financial Services Council has published a new standard titled Principles of Internal Governance and Asset Stewardship: see here (pdf). The purpose of the standard is, to quote directly from it, " provide guidance to FSC Members who undertake the role of Asset Managers in setting and achieving best practice in fulfilling their fiduciary responsibility as custodians of one of the largest pools of managed funds in the world". The standard is mandatory for FSC full members from 1 July 2018. The standard will operate very much like the stewardship codes seen in other jurisdictions.

Tuesday, 8 August 2017

USA: Federal Reserve Board consults on supervisory expectations for boards of directors

Last week the Federal Reserve Board published for public comment a proposal setting out its supervisory expectations for the boards of directors of a range of financial institutions including bank holding companies, including (for example) the attributes of an effective board: see here (pdf).

Monday, 7 August 2017

UK: HMRC consults on draft corporation tax reform guidance

HMRC has published, for consultation, draft guidance on forthcoming reforms to the corporation tax regime, more specifically restrictions on what can be deducted in respect of loss relief and corporate interest: see, respectively, here and here. This consultations follows the publication of draft legislation for these changes last month (see here and here.

Friday, 4 August 2017

UK: FRC update on Stewardship Code signatories, tiering and forthcoming reviews

The Financial Reporting Council has published an updated list of signatories to the UK Stewardship Code: see here. Last year the FRC published a ranking of Code signatories, placing 40 in the lowest tier - tier 3 - indicating that their approach to stewardship required greater transparency and engagement. Yesterday the FRC announced that tier 3 had been removed, with half of those within it moving into tier 1 or 2 and the remainder deciding they no longer wished to be Code signatories: see here.

The FRC has also announced that its review of the UK Corporate Governance Code, being held later this year (twenty five years after the publication of the Cadbury Report and Code), will include questions on the approach it should take in its review of the UK Stewardship Code in 2018.

Thursday, 3 August 2017

UK: CIPD/HPC annual survey of FTSE100 executive director pay

The CIPD and High Pay Centre have published their annual survey of FTSE100 executive director pay: see here (pdf). To quote the opening paragraph from the executive summary: "Our review of FTSE 100 CEO pay packages shows a sharp turnaround in the rising trend of remuneration. FTSE 100 CEOs have seen an overall drop in pay packages, especially at the top end, though the gulf between the highest paid executives and the rest of the workforce still remains".

Wednesday, 2 August 2017

India: Lok Sabha passes Companies (Amendment) Bill, 2017

The Companies (Amendment) Bill, 2017, which makes amendments to the Companies Act, 2013, was passed by the Lok Sabha last week and now proceeds to the Rajya Sabha. The record of debate is available here (pdf). A copy of the Bill, as passed, is available here (pdf). The Bills amends, amongst other things, the independence requirements for independent directors of listed companies. It also provides further details on the framework for identifying beneficial ownership.

Tuesday, 1 August 2017

UK: England and Wales: the right to inspect (and require a copy) of the register of members

The Court of Appeal gave judgment late last month in Fox-Davies v Burberry Plc [2017] EWCA Civ 1129 (on appeal from [2015] EWHC 222 (Ch)). This is an important case on the right to inspect a company's register of members under section 116 of the Companies Act 2006 and, in particular, the circumstances in which an application will be regarded as "not sought for a proper purpose" under section 117.

Monday, 31 July 2017

Zimbabwe: public comments invited on the Public Entities Corporate Governance Bill

The Public Entities Corporate Governance Bill was gazetted by the Clerk of Parliament on 21 July and public comments are now invited. A copy of the invitation, and draft Bill, are available here. The first schedule of the Bill reproduces the National Code on Corporate Governance (known as Zimcode).

Friday, 28 July 2017

UK: FRC report - developments in audit 2016/17

The Financial Reporting Council has published the 2016/17 edition of its annual audit developments report. A copy of the full report is available here (pdf) and a summary is available here (pdf). The report notes that the FRC issued more than £14.2 million of sanctions on auditors and audit firms in 2016/17. These sanctions, and the rest of the FRC's work, demonstrate the importance of auditors' professional scepticism and their ability to sufficiently challenge management in an independent and objective way.

Thursday, 27 July 2017

UK: the future of LIBOR

Andrew Bailey, the chief executive of the Financial Conduct Authority, delivered a speech today titled 'The future of LIBOR': see here. The speech makes clear that the FCA's support for LIBOR will continue until the end of 2021 but planning should begin now for the transition to alternative reference rates that are based firmly on transactions.

Wednesday, 26 July 2017

UK: extending the Senior Managers and Certification Regime

The Financial Conduct Authority and Prudential Regulation Authority have today published proposals to extend the reach of the Senior Managers and Certification Regime: see, respectively, here and here. The FCA's proposals will mean that the Regime will apply to almost all regulated firms; the PRA's proposals will extend the regime to all insurers.

Tuesday, 25 July 2017

Burma: Companies Bill introduced in the Amyotha Hluttaw

The Directorate of Investment and Company Administration has published the latest version of the Companies Bill. The Bill will introduce a new company law framework in Burma. A copy of the Bill, in English, is available here (pdf). It has been reported that the Bill has begun its legislative journey following its introduction in the Amyotha Hluttaw: see here.

Monday, 24 July 2017

UK: implementing the new framework for insurance special purpose vehicles

Last November HM Treasury published for public comment the Regulations that will introduce the new regulatory and tax framework for insurance special purpose vehicles (ISPVs), also known as insurance linked securities vehicles. The comments have been considered and HM Treasury's response was published earlier this month: see here (pdf). Final Regulations (subject to Parliamentary approval) have also been published: see the Risk Transformation Regulations 2017 (pdf) and the Risk Transformation (Tax) Regulations 2017 (pdf). The Prudential Regulation Authority has also published an update on its related consultation concerning the authorisation and supervision of ISPVs: see here (pdf).

HM Treasury have decided that a protected cell company structure should be provided for multi-arrangement ISPVs. The duties of directors of protected cell companies will largely be the same as for directors under the Companies Act 2006.  However, additional duties will be owed and section 172 of the 2006 Act will apply in modified form: the Risk Transformation Regulations 2017 explain that the reference in section 172(1)(f) to members should be regarded as a reference to shareholders and that the need to act fairly between shareholders of the protected cell company should be separately assessed for each part of the protected cell company.

The Regulations also provide for the powers of directors: they have such powers as (a) are necessary to fulfil their duties; or (b) are conferred upon them by the protected cell company’s instrument of incorporation.

Friday, 21 July 2017

UK: HM Treasury consults on the anti-money laundering supervisory regime

HM Treasury has published a consultation paper concerning the creation of the new Office for Professional Body AML Supervision (OPBAS): see here. Draft Regulations have also been published: see here (pdf). HM Treasury would like to know, in particular, whether respondents believe that the Regulations are drafted so as to permit OPBAS to help (and ensure) professional body AML supervisors comply with their obligations; views are also sought on the likely impact of OPBAS on business.

Thursday, 20 July 2017

UK: FRC publishes annual report for 2016/17

The Financial Reporting Council yesterday published its annual report for 2016/17: see here (pdf). The report notes - as already announced - that a review of the UK Corporate Governance Code will begin in 2017/18. It is also noted, however, that this will be followed by a review of the UK Stewardship Code.

Wednesday, 19 July 2017

EU: employee participation on the supervisory board and employees working outside of Germany

The Court of Justice of the European Union gave judgment yesterday in Konrad Erzberger v TUI AG (Case C-566/15). Under German law (as interpreted by case law and understood by some, but not all, writers) only employees employed in Germany are permitted to elect employee representatives to the supervisory board. At issue before the court was whether this provision was contrary to EU law. The court held that it was not. A summary of the decision is available here (pdf).

Tuesday, 18 July 2017

Pakistan: listed companies and board diversity

The Securities and Exchange Commission of Pakistan has announced that in the revised Code of Corporate Governance it will be a requirement for listed companies to have at least one female director: see here (pdf). According to the SECP, 69 out of the 100 companies that comprise the KSE100 index have no female directors.

Monday, 17 July 2017

Australia: Treasury consults on Banking Executive Accountability Regime

The Treasury has published a consultation paper seeking views on the key policy considerations that will shape the design of the new Banking Executive Accountability Regime: see here (pdf). The purpose of the new regime is to enhance the responsibility and accountability of authorised deposit-takers and their directors and senior executives. The consultation seeks views on a range of matters including the institutions and individuals to be covered by the new regime.

Friday, 14 July 2017

Canada: the personal liability of directors and the oppression remedy

In a judgment given yesterday - Wilson v Alharayeri 2017 SCC 39 (on appeal from 2015 QCCA 1350)- the Supreme Court has, once more, considered the operation of the oppression remedy found in section 241 of the Canada Business Corporations Act 1985. More specifically, the court considered the circumstances in which it was appropriate to make a director personally liable under section 241(3) in respect of oppressive or unfairly prejudicial conduct and the factors that should be considered in fashioning a remedy.

UK: FRC publishes 'Keys Facts and Trends in the Accountancy Profession'

The Financial Reporting Council has published the latest edition of its annual publication Key Facts and Trends in the Accountancy Profession: see here (pdf). Section 5, on audit firms, provides data on the concentration of listed companies' audits and highlights the dominance of the 'Big Four' in respect of FTSE100 companies and, indeed, those companies in the FTSE250.

Thursday, 13 July 2017

UK: governance standards and listed companies - a couple of consultations

A couple of consultations have begun this week relating to listed companies and governance. First, the Financial Conduct Authority (as the UK's Listing Authority) is seeking views on a proposal to create a new premium listed category for sovereign controlled companies, which would see a relaxation of the related party and controlling shareholder rules for such companies: see here (pdf). Second, a review of the AIM Rules has begun and as part of this the London Stock Exchange is seeking views on the appropriateness of the current corporate governance arrangements and requirements: see here (pdf).

Wednesday, 12 July 2017

Canada: corporate governance reform - an update

An update on the Bill that will, when enacted, make changes to the governance framework by amending the Canada Business Corporations Act, the Canada Cooperatives Act, and the Canada Not-for-profit Corporations Act. The Bill received its third reading in the House of Commons last month (see here) and has now begun its journey through the Senate, where it received first reading on June 21: see here. The text of the Bill is available here and further information is available here and here. Among the changes proposed are those relating to the election of directors (including annual elections and votes for individual directors), the disclosure of information regarding board diversity and communications with shareholders.

Tuesday, 11 July 2017

UK: The Taylor Review of Modern Working Practices and corporate governance

The Taylor Review of Modern Working Practices - titled Good Work - was published today: see here (pdf). The Review adopted this ambition: that all work in the UK economy should be fair, decent and capable of providing realistic scope for development and fulfillment. The best way to achieve better work, according to the Report, is not through national regulation but through "responsible corporate governance, good management and strong employment relations within the organisation". Among the recommendations made in the Report, and directed at the Government, is one requiring companies to be much more transparent about their workforce structure.

Monday, 10 July 2017

USA: Delaware corporate law and distributed ledger technologies

The House of Representatives has passed a Bill one of the purposes of which is to provide specific authority for Delaware corporations to use distributed ledgers (of which blockchain is an example) for the creation and maintenance of corporate records: see here. The Bill was passed by Senate earlier in the year and will become law on receipt of the Governor's approval.  A copy of the Bill as introduced is available here or here (pdf).

Thursday, 6 July 2017

EU: The Prospectus Regulation and ESMA's draft technical advice

The Prospectus Regulation (2017/1129) was published in the Official Journal of the European Union a week ago: see here. Further information about the Regulation, the purpose of which is (amongst other things) to improve the current regime to make it easier for SMEs to access capital, is available here. The European Securities and Markets Authority is now consulting on the draft technical advice to accompany the Regulation. Three consultation papers have been published covering the form and content of the Prospectus (including the EU Growth Prospectus) and the approval process: see here.

Wednesday, 5 July 2017

Zambia: the Banking and Financial Services Act 2017

The Banking and Financial Services Act 2017 was passed earlier this year by the National Assembly and contains, amongst other things, provisions on corporate governance. These are set out in Part IV and include, for example, the responsibilities of directors (section 32) and board composition (section 35). A copy of the Act is available here (pdf).

Tuesday, 4 July 2017

Turks and Caicos: the Companies Ordinance 2017

The Turks and Caicos Islands, a British Overseas Territory, have introduced a new company law framework. The Companies Ordinance 2017 was passed by the National Assembly earlier this year: a copy is available here.

Monday, 3 July 2017

Australia: the regulation of financial benchmarks

The Australian Treasury has published for comment the legislation that will provide a new framework for the regulation of financial benchmarks in Australia: see here. In brief, the administrators of significant benchmarks will need to obtain a licence and comply with new requirements.

Friday, 30 June 2017

UK: The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017

The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 were laid before Parliament on 22 June: see here or here (pdf). These Regulations form part of the legal framework through which the UK will implement MiFID II and MiFIR. Further information is available in the accompanying explanatory memorandum (herepdf), transposition note (herepdf) and impact assessment (herepdf).

Thursday, 29 June 2017

Pakistan: implementing the new company law framework

Earlier this year the President signed the Companies Bill, 2017 and the Bill became the Companies Act, 2017. A copy of the Act, which also contains provisions relating to insolvency, is available here (pdf). The task of producing secondary legislation to support the Act is now underway. Amongst the draft Regulations published so far have been those concerning the incorporation process and the reporting obligation of auditors. The draft secondary legislation can be found here.

Wednesday, 28 June 2017

Kenya: Stewardship Code published in the Kenya Gazette

Kenya's new Stewardship Code, developed by the Capital Markets Authority, has been published in the Kenya Gazette: see here (pdf, p. 2892). Background information is available here.

Tuesday, 27 June 2017

OECD publishes annual report on its Guidelines for Multinational Enterprises

The OECD has published its annual report on its Guidelines for Multinational Enterprises: see here (pdf). The report provides a summary of the activities undertaken by the OECD Secretariat, adhering governments and National Conduct Points to promote the effective implementation of the Guidelines in the year ending December 2016.  Annual reports for earlier years can be found here.

Monday, 26 June 2017

UK: The Scottish Partnerships (Register of People with Significant Control) Regulations 2017

The Scottish Partnerships (Register of People with Significant Control) Regulations 2017 were laid before Parliament last week. A copy of the Regulations is available here and here (pdf). The Regulations came into force today (although regulation 4 and regulation 81 will come into force on 24 July) and their effect is to require (a) Scottish Limited Partnerships and (b) General Scottish Partnerships where all partners are corporate bodies, to maintain a register of people with significant control.

The following documents have been published alongside the Regulations: an impact assessment (pdf) and a transposition note (pdf). Companies House has also published guidance - see here - as has the Department for Business, Energy and Industrial Strategy: see here.

Friday, 23 June 2017

USA: Delaware corporate law and distributed ledger technologies

Earlier this month the Delaware Senate passed a Bill one of the purposes of which is to provide specific authority for Delaware corporations to use distributed ledgers (of which blockchain is an example) for the creation and maintenance of corporate records: see here. A copy of the Bill is available here or here (pdf).

Thursday, 22 June 2017

EU: Commission proposes new transparency rules for tax intermediaries

The European Commission yesterday published proposals to require intermediaries (e.g., tax advisers, accountants and lawyers) to report to their local tax authorities any cross-border tax planning arrangements where these bear at least one of a number of identified hallmarks (including, for example, that the arrangement involves a cross-border payment to a recipient resident in a no-tax country; or, the arrangements involve a jurisdiction with inadequate or weakly enforced anti-money laundering legislation). For further information see the following materials from the Commission: FAQs | press release | video | dedicated website.

Wednesday, 21 June 2017

UK: Good Mortgages Bill in Queen's Speech

Last year the Law Commission published proposals for the reform of the law governing bills of sale, including the repeal of the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882 and the introduction of new legislation - a Good Mortgages Act - providing more protection for borrowers and fewer burdens on lenders: see here. This proposed new law was amongst the legislative proposals contained in today's Queen's Speech, in which the Government's plans for the next couple of years were set out. A copy of the Speech will be available here shortly.

Tuesday, 20 June 2017

USA: PCAOB adopts new standard to enhance relevance and usefulness of the auditor's report

The Public Company Accounting Oversight Board has adopted a new standard the purpose of which is to enhance the relevance and useful of the auditor's report. An overview is available here and the new standard is available here (pdf). Included is the requirement for the auditor to disclose in its report certain "critical audit matters" (or to state that there are no such matters). In general terms, such matters are those communicated to the audit committee (or required to be communicated), relating to disclosures that are material to the financial statements and involving especially challenging, subjective or complex audit judgment.