Friday, 22 May 2015

UK: PRA consultation - 'corporate governance: board responsibilities'

The Prudential Regulation Authority is consulting on a proposed supervisory statement setting out its expectations on key aspects of the board's role and responsibilities: see here (pdf). The supervisory statement will apply to all PRA-regulated firms. It is not intended to be a comprehensive governance guide, but instead sets out the PRA's expectations in the following a reason: setting strategy; culture; risk appetite and risk management; board composition; the roles of executive and non-executive directors; knowledge and experience of non-executive directors; board time and resources; management information and transparency; succession planning; remuneration; subsidiary boards; and board committees.

Gibraltar: Supreme Court considers directors' duties

The Hon. Mr. Justice Jack, sitting in the Supreme Court of Gibraltar, gave judgment last month in Compson v FSC, Weal v FSC (Claim No 2015 C No 001 and Claim No 2015 C No 002): see here (pdf). This is an important decision on directors' duties and the operation of section 35(1A) of the Financial Services (Investment and Fiduciary Services) Act 1989, in which the trial judge accepted as relevant the principles on directors' individual and collective responsibility outlined by Jonathan Parker J. and approved by the English Court of Appeal in Baker v Secretary of State of Trade and Industry [2001] BCC 273.

UK: FRC review of the implementation and operation of the audit firm governance code

The Financial Reporting Council has published the results of its review of the implementation and operation of the Audit Firm Governance Code, in a consultation paper published yesterday: see here (pdf). The paper seeks views on a number of proposals and questions, including a change in the stated purpose of the Code.

Thursday, 21 May 2015

UK: England and Wales: directors' duties and resignation

Mr Justice Hildyard gave judgment earlier this week in Allfiled UK Ltd v Eltis [2015] EWHC 1300 (Ch). The duties of directors, in particular section 175 ("Duty to avoid conflicts of interest") of the Companies Act 2006, were considered in the context of a claim for interlocutory injunctive relief. Of note is the position, accepted by Mr Justice Hildyard, that "...the rigour of fiduciary accountability may occasionally be abated where resignation has been forced upon the director and he or she has not actively sought to seduce the company's customers or to exploit any opportunity belonging to it" (para. [102]).

UK: England and Wales: challenging alterations to the articles of association

The Court of Appeal gave judgment yesterday in Arbuthnott v Bonnyman [2015] EWCA Civ 536. At first instance, the trial judge dismissed the petition brought by Mr Arbuthnott in which he alleged that the company's affairs had been conducted in a manner unfairly prejudicial to him under section 994 of the Companies Act 2006 (see [2014] EWHC 1410 (Ch)). His petition was based, in part, on an alteration to the company's articles of association. Mr Arbuthnot appealed and, as we learned yesterday, was unsuccessful. The decision is noteworthy because the Chancellor of the High Court, in the leading judgment, provided seven principles, derived from the case law, regarding the circumstances in which alterations to the articles of association may be held invalid (see paras. [90] to [97]).

Wednesday, 20 May 2015

UK: England and Wales: FCA notices - identification and third party rights

The Court of Appeal gave judgment yesterday in Financial Conduct Authority v Macris [2015] EWCA Civ 490. At issue was whether Mr Macris was identified in certain notices given by the Authority to JPMorgan Chase Bank. Individuals identified in such notices are given certain 'third party' rights under section 393 of the Financial Services and Markets Act 2000. Mr Macris was JP Morgan's International Chief Investment Officer and whilst the notices did not name him they were critical of JP Morgan's Chief Investment Office in London and New York.

The Upper Tribunal held that Mr Macris had been identified and was therefore entitled to the rights set out in section 393: see [2014] UKUT B7 (TCC). The Court of Appeal agreed that Mr Macris had been identified, in what is now the leading judgment on section 393.

Tuesday, 19 May 2015

Canada: securities administrators publish guidance for proxy advisory firms

The Canadian Securities Administrators have adopted National Policy 25-201 Guidance for Proxy Advisory Firms: see here (pdf). The policy document contains recommended practices in respect of conflicts of interest; the determination of vote recommendations; the development of proxy voting guidelines; and communications with clients, market participants, other stakeholders, the media and the public.

Monday, 18 May 2015

Guernsey: consultation - transparency of beneficial ownership of companies

The States of Guernsey has published a consultation paper on the transparency of beneficial ownership of companies in Guernsey: see here (pdf). The key question asked in the paper is whether Guernsey should establish a central register of beneficial ownership information and, if so, who should have access to it.

Friday, 15 May 2015

UK: High Pay Centre calls for reforms to performance related pay

The High Pay Centre has published a report titled No Routine Riches - Reforms to Executive Pay: see here (pdf). The report calls for major reforms to performance related pay for directors, including the abolition of long-term incentive plans (LTIPs). LTIPs have, the report argues, driven up executive pay without a corresponding increase in company performance. Other proposed reforms include: diversifying the membership of remuneration committees; requiring annual bonuses to be paid in cash not shares; and limiting the circumstances in which 'golden hello' payments can be made.

Germany: new edition of corporate governance code published

The Corporate Governance Code Commission has published an updated edition of the German Corporate Governance Code: see here. A copy of the Code, in English, is expected soon.

Thursday, 14 May 2015

Guernsey: The Companies (Guernsey) Law, 2008 - update on transitional provisions

The Guernsey Registry has provided an updated guidance note explaining which of the transitional provisions in the Companies (Transitional Provisions) Regulations 2008 will expire on 31 December 2016: see here (pdf). These provisions relate to the company law framework set out in the Companies (Guernsey) Law, 2008, which was commenced in July 2008. The Registry is advising companies formed before July 2008 to review their memorandum and articles of incorporation to ensure that they are consistent with the new framework.

Wednesday, 13 May 2015

Europe: Bank of England responds to capital markets union green paper

Earlier this year the European Commission published a green paper seeking ideas on how to create a capital markets union: see here. Today the UK's central bank, the Bank of England, published its response and indicated its strong support the Commission's initiative: see here (pdf).

Tuesday, 12 May 2015

Gibraltar: Private Trust Companies Bill 2015

The Private Trust Companies Bill, which contains a framework for the voluntary registration of private trust companies, was published in the Gibraltar Gazette earlier this month: see here (pdf). The accompanying command paper, with includes a very brief explanatory memorandum, is available here (pdf).

Monday, 11 May 2015

UK: Takeover Panel consultation - dividends paid by an offeree company

The Takeover Panel issued a consultation paper today containing proposed amendments to the Takeover Code in respect of the treatment of dividends paid by an offeree (target) company to its shareholders: see here (pdf).

Friday, 8 May 2015

Ireland: Central Bank consults on governance requirements for investment firms

The Central Bank of Ireland has published a consultation paper setting our proposals for the governance requirements of investment firms: see here (pdf).

Thursday, 7 May 2015

Ireland: Companies Act 2014 implementation - commencement Order made

The Companies Act 2014, which contains Ireland's new company law framework, became law last December: see here. The secondary legislation that will bring the new framework into force on 1 June this year - the Companies Act 2014 (Commencement) Order 2015 - has now been made and published on the Irish Statute Book website: see here (pdf). Further information about the Act and its implementation is available here.

Wednesday, 6 May 2015

USA: SEC publishes disclosure rules on the relationship between executive pay and company financial performance

The Securities and Exchange Commission has published for consultation proposed rules that will require certain companies to disclose the relationship between executive pay and company financial performance: see here (pdf). A summary of the proposed rules is available here; they will implement section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010.

Tuesday, 5 May 2015

Europe: Joint Committee finds that financial system risks have intensified

The Joint Committee of the European Supervisory Authorities has today published its fifth report Risks and Vulnerabilities in the EU Financial System: see here (pdf). The report finds that risks affecting the financial system have not changed in substance but have intensified.

Monday, 4 May 2015

Isle of Man: locus standi to present a winding-up application

A copy of the judgment Wallis v Soberano (case number 21 of 2014), which was delivered in April this year in the High Court (Staff of Government, Appeal Division), has recently been published on the Isle of Man courts website. The court considered, amongst other things, issues of locus standi (legal standing) in respect of the winding-up of companies and limited partnerships. The judgment is noteworthy because the court appears to have recognised the existence of a residual discretion to permit an individual to proceed with a winding-up application in exceptional circumstances where that individual falls outside of the statutory categories of those entitled to make such an application.

Friday, 1 May 2015

UK: FCA publishes policy development update

The Financial Conduct Authority has published a policy development update: see here (pdf). This provides details of its on going work concerning high level standards - many of which relate to governance - and likely publication dates.

Wednesday, 29 April 2015

UK: Supreme Court decision in Olympic Airlines

The Supreme Court handed down its judgment today in Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2015] UKSC 27: see here or here (pdf). A summary of the decision is available here (pdf). Lord Sumption delivered the only reasoned judgment and dismissed the appeal (from [2013] EWCA Civ 643).

The court was required to consider what connection a foreign company should have with the United Kingdom in order to entitle an English court to wind it up where the company's centre of main interests was in another EU Member State. Lord Sumption said there needed to be a fixed place of business, with business activity consisting of dealings with third parties, and not merely acts of internal administration. In his Lordship's view, Olympic Airlines SA was not carrying on business activity at its head office on 20 July 2010 (the date when pension scheme trustees presented a winding-up petition in England) and did not therefore have an 'establishment' in the UK at that date. There was consequently no jurisdiction to make the winding-up order.

Ireland: implementing the new company law framework

The Companies Act 2014, which contains Ireland's new company law framework, became law last December: see here. The new framework will come into force on 1 June this year. Secondary legislation is now being made and the first Regulations - the Companies Act 2014 (Forms) Regulations 2015 - have been published on the Irish Statute Book website: see here (pdf). Further information about the Act and its implementation is available here.

Tuesday, 28 April 2015

ICGN says stewardship does not benefit from differential ownership rights

The International Corporate Governance Network has today set out its opposition to differential ownership rights as a means of promoting stewardship: see here (pdf). According to the ICGN's viewpoint document, "...the introduction of differential ownership rights should be discouraged - even if the nominal intent to promote long-term thinking is a worthy one".

Monday, 27 April 2015

Jersey: arbitration and the unfair prejudice remedy

Last week a copy of the Jersey Court of Appeal judgment Consolidated Resources Armenia v Global Gold Consolidated Resources Limited [2015] JCA061 was published (the judgment was handed down in March). Amongst the questions considered was one concerning the operation of the unfair prejudice remedy found in Article 141 of the Companies (Jersey) Law 1991 (the equivalent of section 994 of the UK Companies Act 2006). The judgment is noteworthy because the court adopted the approach taken in England, by the Court of Appeal in Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855, [2012] Ch 333], and held that there was no reason of public policy for holding that either an unfair prejudice claim or a claim for a just and equitable winding-up were incapable of arbitration. Bompas JA, delivering the judgment of the court, noted (at para 89):
There are many good reasons why the shareholders in a company may agree to refer future or present disagreements to arbitration. They may wish to maintain confidentiality to preserve commercial secrets, or to avoid tarnishing the public reputation of the company perhaps to protect the price of the company’s shares on a stock exchange. They may wish to have a method of achieving a speedier resolution than would be achievable through the courts. There is no public interest in denying parties the opportunity to do so unless there are third parties rights that cannot be protected in the arbitration. The duty of the courts is to hold the parties to the agreement they have reached".

Friday, 24 April 2015

UK: England and Wales: High Court authorises ESMA to conduct on site inspection of UK trade repository

Last month, Mrs Justice Rose, sitting in the High Court, authorised the European Securities and Markets Authority to carry out an inspection at the premises of a UK trade repository (DTCC Derivatives Repository Ltd). This was the first time that such permission had been given, within the framework set out in regulation 17 of the Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013. Today, a short judgment was published in which Mrs Justice Rose explained her decision and the principles that applied to the court's power to grant permission: see European Securities and Markets Authority (ESMA) v DTCC Derivatives Repository Ltd [2015] EWHC 1085 (Ch).

UK: Supreme Court to give judgment next week in Olympic Airlines

The Supreme Court has announced that it will hand down its judgment next Wednesday in Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA: see here. A summary of the issues before the court, which included the meaning of 'establishment' under the Insolvency Regulation (Council Regulation (EC) 1346/2000), is available here.

Thursday, 23 April 2015

UK: Scotland: loans to football club were not repayable on demand

Lord Tyre, sitting in the Court of Session (Outer Court), gave judgment earlier this month in Nixon v Livingston Football Club Ltd [2015] CSOH 43. At issue was whether money loaned by a director (and companies under his control) to the Livingston Football Club was repayable on demand. The judge held, on the evidence before him, that the loans were not repayable on demand but only when the company could afford to repay them. In doing so he noted that "... the concept of making a loan on the basis that it is not repayable unless and until the borrower can afford to repay, which might be regarded in certain contexts as uncommercial and therefore improbable, seems to me to be much less improbable where the borrower is a company operating a football club" (para. [26]).

Wednesday, 22 April 2015

UK: Supreme Court gives judgment in Jetivia v Bilta

The Supreme Court gave judgment earlier today in Jetivia SA v Bilta (UK) Ltd [2015] UKSC 23: see here or here (pdf). The court held that the appeal should be dismissed, finding that the wrongful activity of a company's directors and shareholders could not be attributed to the company; it also held that section 213 ("Fraudulent trading") of the Insolvency Act 1986 had extra-territorial effect.

A summary of the decision is available here (pdf) and also in the below video (if you cannot see the video, try viewing it here):

Tuesday, 21 April 2015

Ghana: company law reform - the Companies Bill 2013

A new session of Parliament began in February: see here. Amongst the Bills for consideration is one that will introduce a new company law framework: the Companies Bill 2013, a copy of which is available here (pdf).

Monday, 20 April 2015

Mongolia: new edition of the corporate governance code published

A new edition of the Mongolian corporate governance code has recently been published by the Financial Regulatory Commission: see here.

Friday, 17 April 2015

UK: Supreme Court to give judgment next week in Jetivia v Bilta

The Supreme Court has announced that it will hand down its judgment next Wednesday in Jetivia SA v Bilta (UK) Ltd: see here. A summary of the issues before the court, which included the operation of section 213 of the Insolvency Act 1986, is available here.

UK: feedback sought on the Code for the Voluntary and Community Sectors

Ten years ago, a code of governance for the voluntary and community sectors was published. The code, titled Good Governance - a Code for the Voluntary and Community Sectors, was last updated in 2010: see here. The code's steering group has this month started seeking views on whether the code addresses the main governance challenges faced by larger and more complex voluntary and community organisations: see here.

Nigeria: National Code of Corporate Governance - draft published by Financial Reporting Council

Earlier this week the Financial Reporting Council published for comment a draft National Code of Corporate Governance: see here. The Code is divided into three parts: private sector, public sector and not for profit. A short press release about the new Code, with information on how to respond to the consultation, is available here.

Thursday, 16 April 2015

South Africa: the King IV corporate governance code - terms of reference published

The terms of reference for the review of South Africa's corporate governance code have been published: see here (pdf). Further information about the review, which will lead to a new governance code to be known as 'King IV', is available here.

Singapore: company law reform - implementation of the Companies (Amendment) Act 2014

Parliament passed the Companies (Amendment) Bill 2014 in October last year: see here (pdf). A copy of the Act is available here. The Act is being implemented in two stages, the date of stage one being 1 July 2015. The Accounting and Corporate Regulatory Authority  yesterday provided information concerning the provisions that will be implemented as part of stage one: see here. Further background information is available here.

Finland: corporate governance code review underway

A review of the Finnish Corporate Governance Code (published in 2010 by the Securities Market Association) is underway. The aim is to have a new code in force for the spring of 2016. Further information, in Finnish, is available here. Information about the review has not yet been published in English on the SMA website.

Wednesday, 15 April 2015

Australia: a 30% target for women on boards

Various initiatives are taking place, the aim of which is to increase the proportion of women on company boards. In February, the Australian Council of Superannuation Investors set a target of 30% for women on ASX200 company boards, to be met within three years: see here (pdf). A few days ago, the Australian Institute of Company Directors adopted the same target, but argued that it was appropriate for all companies, not just listed companies: see here (pdf).

Tuesday, 14 April 2015

Ireland: Companies (Amendment) Bill 2015 - officer liability for breaches of employment law

The Companies (Amendment) Bill 2015 was introduced in the Dáil Éireann earlier this year: see here. It is a Private Member's Bill and a copy, as introduced, is available here (pdf). The Bill will, if enacted, amend the Companies Act 2014 by inserting the following new subsection in section 224 ("Directors to have regard to interests of employees") of the 2014 Act:

(3) Where a breach of employment law is committed by a body corporate or by a company officer or officers acting on behalf of a body corporate and is determined to have been so committed, with the consent, connivance or approval of, or to have been attributable to any neglect on the part of, a person or persons who, when the breach was committed was a company officer or officers of the body corporate, then that person or persons shall be personally liable for the breach committed.”

Monday, 13 April 2015

Philippines: SEC recommendations on governance best practice

The Philippines Securities and Exchange Commission has written to all publicly listed companies recommending that they follow certain governance practices (as outlined in the ASEAN Corporate Governance Scorecard), including the appointment of at least one female independent director: see here (pdf).

Austria: amended corporate governance code published

Earlier this year the Working Group for Corporate Governance published an amended version of the Austrian corporate governance code. A copy of the new code, in English, is available here (pdf).