New Zealand: new 'super regulator' for financial markets

The Government has announced that a new 'super regulator' will be created - the Financial Markets Authority (FMA) - and that it will consolidate various functions currently carried out by the Securities Commission, the Ministry of Economic Development and the New Zealand Stock Exchange.

In a press release published yesterday, Commerce Minister Simon Power stated that the FMA will "enforce securities, financial reporting, and company law as they apply to financial services and securities markets. It will also regulate and oversee, trustees, auditors, financial advisers and financial service providers including people who offer investments". The Reserve Bank will retain responsibility for prudential regulation.

The Government's intention is that legislation establishing the FMA will be passed this year and that the FMA will begin operating early in 2011. For further information see here (and, in respect of auditor oversight, here).

UK: FRC to examine the value of the external audit

In a lecture delivered earlier this week - available here (pdf) - the chief executive of the Financial Reporting Council, Stephen Haddrill, announced that the FRC would later this year begin a consultation on the value of the external audit. As part of this work, Mr Haddrill identified the following issues (to quote directly from the transcript of his speech):

• How do we achieve a strong alignment between the auditor and the interests of the shareholder? Shareholders are remote from audit. Management are in the room. Do we need to do more to reinforce the auditors’ sense of responsibility to investors?
• Do we need to change the form of the audit report to make it more useful? Can the auditor say more about how much risk is being carried and about the nature of valuations: are they central estimates or at the edge of riskiness?
• Do we need to see more said in the front of the report about risk and the business model and should the auditor provide greater assurance about such matters?
• Can auditors give more help to regulators and avoid conflicts of interest in doing so? They have in the past and they should again.

UK: ICSA's board performance evaluation report

The Institute of Chartered Secretaries and Administrators has published a report in which it reviews the manner in which the top 200 listed companies (at the end of 2009) undertook and reported their annual evaluation of the performance of the board, the audit, nomination and remuneration committees and the individual members of the board in line with Principle A6 of the Combined Code: see here (pdf).

According to the report, 16% of companies undertook some form of external board evaluation process. The Financial Reporting Council, in its 2009 report on the Combined Code, stated (para. 3.41):

... the potential benefits resulting from the greater objectivity that an external facilitator can bring to the evaluation process are such that a provision should be added to the Code recommending external facilitation of the board review at least every three years. Those companies that consider this to be unnecessary or undesirable will, of course, continue to be able to choose to explain rather than comply. Those companies that choose to comply will be free to decide what form of external involvement would be most beneficial to them".

Australia: listed company directors - disqualification and deterrence

Last week, in Australian Securities & Investments Commission v Soust (No 2) [2010] FCA 388, the Federal Court ordered that a director should be disqualified from managing corporations for a period of 10 years under Section 206C of the Corporations Act (2001). In doing so the trial judge stressed the importance of deterrence in determining the period of disqualification and made these observations concerning the trust reposed in the directors of listed companies (at para. [71]):

I am satisfied that a significant period of disqualification is required and justified in the present circumstances. In particular there is a significant role for personal deterrence to play for the reasons to which I have referred. It is also important that there be a general deterrence component of the period of disqualification as it is necessary to make it clear to directors and other persons in the commercial community that personal dishonesty in acting as a director of a corporation will not be condoned by the Court and will be visited with severe sanctions. Directors of corporations and, particularly, directors of listed public corporations must realise that they have a considerable amount of trust committed to them not only by the shareholders in their company but also by the company’s creditors, the commercial community and the public generally. They occupy a position of trust which, if misplaced, in appropriate cases should disqualify them from further participation in the management of such corporations for significant periods".

Ireland: proposed corporate governance standards for banks and insurers

The Financial Regulator has published for consultation minimum corporate governance standards for banks and insurance companies: see here (pdf).

Amongst the proposals are the following (to quote directly from para. 1.5 of the consultation paper):

• Impose requirements in terms of the minimum number of directors on the Board.
• Limit the number of directorships which directors may hold so as to ensure they can comply with the expected demands of Board membership of an institution.
• Require that Board membership is reviewed at a minimum every 3 years.
• Require clear separation of the roles of Chairman and CEO and preclude an individual who has been CEO, director or senior manager during the previous five years from becoming Chairman of that institution.
• Set out clearly the role of the independent non-executive directors.
• Require the Board to set the risk appetite for the institution and to monitor adherence to this on an ongoing basis.
• Set out the minimum requirements for Board committees.
• Require annual confirmation of compliance to the Financial Regulator.

UK: non-financial reporting in FTSE100 company annual reports

CORE - the Corporate Responsibility Coalition - has today published research examining FTSE100 companies' business reviews: see here (pdf). The obligation to produce a business review is found in Section 417 of the Companies Act (2006). CORE's report, based on an analysis of a representative sample of FTSE100 reports, states:

There were three areas in which it was not clear how, if at all, companies were complying with the Act. Firstly, s417 says that the purpose of the Business Review is to ‘help them assess how the directors have performed their duty [to promote the success of the company] under section 172’. An obvious way to do this would be to describe the way the Business Review was prepared. Yet ... only a minority of companies did so.

Secondly, s417 requires that if a Business Review does not contain information about each of the specified key factors which underlie the business’ performance, then these omissions should be stated. This does not appear to have been done in any of the Annual Reports.

Thirdly, there was evidently considerable confusion as to what a Business Review actually was. At its worst this meant that in some cases, it was not possible to identify the Business Review: 8 Annual Reports appeared to have no identifiable Business Review section. This does not seem to be compliant with the Act and is certainly outside its spirit. Yet even where it was possible to identify the Business Review, there was a great variety of practices concerning the status and use of external sources of non-financial information. For example, some companies referred to more detail on their websites, others referred generally to their CR reports, while yet others made reference to an internet location at which further detail could be found. According to legal advice obtained by CORE, such general references should not be considered a part of a Business Review".

UK: AIM directors' remuneration - PwC report

PricewaterhouseCoopers has published a report examining the level and structure of AIM company directors' remuneration: see here (pdf).

UK: the Bribery Act 2010 - explanatory notes published

The explanatory notes for the Bribery Act (2010), prepared by the Ministry of Justice, have been published on the OPSI website: see here (html) and here (pdf).

UK: England and Wales: the Winterflood case and market abuse

The ICLR, as part of its (free) WLR Daily service has published a summary for Winterflood Securities Ltd & Ors v The Financial Services Authority [2010] EWCA Civ 423: see here.

Europe: Barnier calls for change in corporate governance culture

In a speech delivered yesterday, the European Commissioner for the Internal Market, Michel Barnier, called for a "new deal" between "the world of finance and society" and argued, amongst other things, that a change in the culture of governance was required. He stated: "We need better corporate governance. More transparency. Better risk management – within companies first. But also more effective external checks and controls".

Austria: the Austrian Code of Corporate Governance

In January this year the Austrian Working Group on Corporate Governance published an amended edition of its Corporate Governance Code. A copy of the code, in English, is now available: see here (pdf).

Jamaica: new governance code published

The Private Sector Organisation of Jamaica published an updated edition of its corporate governance code earlier this year: see here for further information (the code is not available to view online).

UK: the Financial Services Act 2010 - FSA implementation

The Financial Services Authority has published a consultation paper in which it sets out proposals concerning some of it new powers and duties under the Financial Services Act (2010): see here (pdf). The consultation paper focuses on short-selling rules, enforcement powers and the new financial stability information-gathering power.

With regard to short-selling, the FSA notes in the paper (para. 2.8):

We consider that the present scope of the disclosure obligations affecting net short positions held in UK financial sector companies remains appropriate. At this stage we do not want to extend the scope of the disclosure obligations before finalising a comprehensive regime at international level. Accordingly, we propose that holders of significant net short positions in UK banks, UK insurers and the UK-incorporated parent undertakings of UK banks and UK insurers, as defined in the Glossary to the FSA Handbook, should be required to disclose those positions".

Australia: Corporate Governance Principles and Recommendations - proposed amendments

The Australian Securities Exchange Corporate Governance Council has published an exposure draft containing proposed amendments to the Corporate Governance Principles and Recommendations (2007): see here (pdf).

Many of the proposed changes concern diversity at board level and throughout the company. For example, proposed recommendation 3.2 provides that "Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy" and that this policy "should include measurable objectives for achieving gender diversity". In this regard, diversity includes gender, age, ethnicity and cultural background.

UK: the IoD on takeover rule reform and the stewardship code

The Institute of Directors is calling for reform of the UK takeover rules: see here. The Institute argues, amongst other things, that a greater role should be given to the shareholders of the bidding company and advocates a rule that would require hostile takeovers to be approved by a two-thirds majority of shareholders in the target and bidding companies.

The Institute has also published its submission to the FRC's consultation on the stewardship code for institutional investors - see here - and has called for much greater engagement between institutional investors and boards where the investor holds more than one per cent of the company's market capitalisation. The Institute also argues that the stewardship code should deal explicitly with share lending and that it should recognise that it is bad practice to borrow shares for the purpose of shareholder voting.

UK: England and Wales: FSA wins market abuse case in Court of Appeal

The Court of Appeal gave judgment yesterday in Winterflood Securities Ltd & Ors v The Financial Services Authority [2010] EWCA Civ 423, an important decision concerning market abuse under Section 118 of the Financial Services and Markets Act (2000).

The court held that an actuating purpose - defined in the FSA Handbook glossary as "a purpose which motivates or incites a person to act" - was not required in respect of two examples of market abuse (price positioning and artificial transactions) in the Code of Market Conduct.

The FSA has welcomed the decision: see its announcement here. Background facts for the case are available here (pdf).

UK: GC100 responses - FRC stewardship code consultation and ICSA Higgs review

GC100 - the Association for the General Counsel and Company Secretaries of FTSE100 companies - has published its submissions to the FRC's stewardship code consultation and ICSA's Higgs guidance review: see, respectively, here (pdf) and here (pdf).

UK: ICSA response to FRC stewardship code consultation

The Institute of Chartered Secretaries and Administrators (ICSA) has published its response to the Financial Reporting Council consultation on the stewardship code for institutional investors: see here (pdf). ICSA supports the policy objectives identified by the FRC in its consultation paper (here, pdf) and is, in general, supportive of the principles in the code.

UK: governance in the public sector

One of the interesting developments in the past decade or two has been the way in which the 'corporate governance' label has been used to describe governance and accountability issues beyond the corporate sector. A good example was provided this week by the Audit Commission, which published a corporate governance inspection report for Doncaster Metropolitan Borough Council: see here (pdf). The report notes:

Good governance is about running things properly. It is the means by which a public authority shows it is taking decisions for the good of the people of the area, in a fair, equitable and open way. It also requires standards of behaviour that support good decision making – collective and individual integrity, openness and honesty. It is the foundation for the delivery of good quality services that meet all local people’s needs. It is fundamental to showing public money is well spent. Without good governance councils will struggle to improve services when they perform poorly".

See here for further information about the Audit Commission's corporate governance inspection work, this includes information about the Commission's key lines of enquiry and policy and methodology in respect of governance inspections.

UK: FSA report to HM Treasury on the implementation of the recommendations of the Rights Issue Review Group

The Financial Services Authority has published its report to HM Treasury on the implementation of the recommendations of the Rights Issue Review Group: see here (pdf). The report notes:

The RIRG report’s two key recommendations were to shorten the minimum rights issue subscription period from three to roughly two weeks and to increase the allotment ceiling from one-third to two-thirds. The implementation of these recommendations has created a significantly better environment for rights issues from that when the RIRG report was published.

The RIRG report made a number of other recommendations relating to the duration of rights issues and to underwriting and short selling. These are also addressed in this paper as are the three RIRG recommendations concerning conditional rights issues, compensatory open offers and accelerated pre-emptive issues. The latter three topics have been the subject of a series of meetings with market participants in 2009. We originally thought they would have been the basis of a consultative paper, either a discussion paper or a consultation paper, depending on our findings. However, we have now concluded that a consultative paper is not needed ..."

UK: ICSA review of the Higgs guidance - Company Law Committee response

The City of London Law Society Company Law Committee has published its response to ICSA's review of the Higgs guidance: see here (pdf). The Committee agrees with the aim of the review ("to offer guidance which, without being prescriptive, assists boards in understanding and implementing the purpose of the Code and, in so doing, delivers practical advice to boards on how they can apply the Code to enhance their effectiveness").

In section 1.1 of the first consultation paper (here, pdf) published as part of ICSA's review it was stated that the revised guidance would "refer to ethical sensitivity, and the need for the board to take account of ethical issues in setting business strategy and the manner in which business is undertaken". The Committee takes the view that this would not be useful for several reasons including the fact that including material on ethical issues may put at risk the largely uncontroversial nature of the Higgs guidance.

Australia: Government provides very strong support for Productivity Commission remuneration recommendations

The Productivity Commission published its report on executive remuneration last year (see here, pdf - 2.6MB). The report rejected the introduction of a cap on executive pay and a binding shareholder vote on remuneration. Instead it contained 17 recommendations designed to strengthen the corporate governance framework, including the requirement that where a company’s remuneration report receives a ‘no’ vote of 25 per cent or more of eligible votes cast at an AGM, the board should be required to explain in its subsequent report how shareholder concerns were addressed and, if they have not been, the reasons why; where the subsequent remuneration report receives a 'no' vote of 25 per cent or more of eligible votes cast at the next AGM, a resolution should be put that the elected directors who signed the directors’ report for that meeting stand for re-election at an extraordinary general meeting.

The Government's response to the Commission's report has been published - see here (pdf) - and it supports the vast majority of the Commission's recommendations.

For further information about the Productivity Commission's report see: overview (including key points) (pdf) | recommendations and findings (pdf) | Productivity Commission remuneration enquiry site | submissions | public hearing transcripts |

UK: Takeover Code - updated edition published

An updated edition of the Takeover Code comes into force today, reflecting amendments adopted by the Code Committee in Response Statement 2009/1 (here, pdf) and made by Instrument 2009/6 (here, pdf). For further information, and a summary of the amendments, see here (pdf).

Pakistan: governance code amendments proposed

The Pakistan Institute of Corporate Governance has published proposed changes to the Pakistan Code of Corporate Governance (2002). The Code is available here (pdf) and the proposed amendments are available here (pdf). The amendments focus on, amongst other things, board structure, director responsibilities and director independence. It is also proposed that no individual should hold more than five listed company directorships.

UK: election 2010 - the Green Party manifesto

The Green Party published its election manifesto yesterday: see here (pdf). A permanent tax on bankers' bonuses is proposed along with the pledge that no one in a bank wholly or partly owned by the State should receive a bonus of more than £ 25,000. With regard to corporate governance, the manifesto contains the pledge to "[r]equire 40% of board members of larger companies to be female within five years". No definition of "larger companies" is provided and, presumably, the intention is for 40% to be a minimum threshold.

Denmark: revised corporate governance recommendations

Denmark's Corporate Governance Committee has revised its corporate governance recommendations: see here (pdf). The revisions reflect various developments in Denmark (including the new Companies Act) and Europe (e.g., the Commission's recommendations on remuneration).

UK: election 2010 - the Lib Dem manifesto

The Liberal Democrats published their election manifesto today: see here (pdf). The manifesto pledges that the party will work at the European level for "stricter international regulation of financial services and banking". It also pledges to "break up the banks" by requiring the separation of retail banking and investment banking.

With regard to those banks in which the Government has invested through UK Financial Investments Ltd., the manifesto states that the "taxpayers’ representatives on the boards of the banks the public own or part-own should insist banks lend to viable businesses on fair terms again" but offers no detail on how this would be achieved.

With regard to corporate governance broadly defined, the manifesto states that public companies will be required "to declare in full all remunerations of £200,000 per year or more". This is somewhat vague. Does this mean that individuals' names will be disclosed or just the number of directors and employees earning £200,000 or more? The manifesto also contains these pledges:

We will restore a public interest test so that a broader range of factors than just competition can be considered by regulators when takeovers are proposed and we will ensure that the outcome of takeover bids is determined by the long-term shareholder base. We will reintroduce the Operating and Financial Review, dropped in November 2005, to ensure that directors’ social and environmental duties will have to be covered in company reporting".

Some questions: which shareholders constitute the long-term shareholder base? To which companies will the requirement to publish an OFR apply and what will the reprised OFR contain that is not currently required in the business review under Section 417 of the Companies Act (2006)? What is a social duty?

Europe: CESR report on MAD options and discretions

The Committee of European Securities Regulators has published a report exploring Member States' use of options and discretions under the Market Abuse Directive: see here (pdf). A summary of the report is available in the accompanying press release: see here (pdf).

UK: election 2010 - the Conservative Party's manifesto

The Conservative Party published its election manifesto yesterday: see here (pdf). Corporate governance is not specifically discussed but the Conservatives continue to support major reform of the tripartite regulatory structure governing banking and financial services by giving the Bank of England greater responsibilities.

A central theme in the manifesto is Conservatives' intention to create a "society with much higher levels of personal, professional, civic and corporate responsibility". It is, however, difficult to work out what is meant by corporate responsibility in this regard.

The manifesto also contains the pledge to "reduce the number of forms needed to register a new business – moving towards a ‘one-click’ registration model – to make britain the fastest place in the world to start a business".

UK: election 2010 - Lib Dem bank bonus proposals

As part of their general election campaign, and ahead of the publication of their manifesto, the Liberal Democrats published a statement yesterday setting out proposed new rules governing bank bonuses: see here. The proposed rules are as follows (to quote directly from the statement):

• No cash bonuses – We will require all bonuses in excess of £2,500 to be paid in shares. These shares will only be redeemable after five years; it will be written into the right of entitlement of these shares that they will revert to the company if they are pledged or used as security prior to the date of their redemption.
• No bonuses at board level – We will ensure there are no bonuses at the board level of banks. This is not to say that board directors should not be well paid, but that they should have the long term interests of a company at heart - bonus payments do not encourage this.
• No rewards for failure – We will extend the Financial Services Act [and Markets Act (2000)] to ensure that no regulated institution which has made a loss can pay discretionary bonuses.
• Total transparency – We will require the publication of the names of all bank staff that have salaries and bonuses that are greater than the Prime Minster’s salary (which is just under £200,000). In addition we will require the FSA to publish its assessment of all regulated firms remuneration policy.
• Holding directors to account – We will extend the powers of the FSA to ensure that the directors of banks are personally fined if their institution breaks the current code of practice for remuneration.

Europe: update on financial services and company law reform

The Joint Brussels Office of the Law Societies of England and Wales, Scotland and Northern Ireland has published the April 2010 edition of its very useful EU financial services and company law reform update: see here (pdf). Amongst the recent developments noted in the update's "what's new" section is the following:

Two draft reports relating to corporate governance and to remuneration of directors and executives have undergone further discussion in the European Parliament. A Communication from the Commission on the subject of corporate governance in the financial sector is to be published in May. A public consultation is also expected".

UK: election 2010 - the Labour Party manifesto

The Labour Party published its election manifesto today: see here (pdf). Chapter 1, page 8, sets out several proposals under the heading of corporate governance reform:

To build strong businesses we need skilled managers, accountable boards, and committed shareholders – all with a culture of long-term commitment. We will strengthen the 2006 Companies Act where necessary better to reflect these principles. The UK’s Stewardship Code for institutional shareholders should be strengthened and we will require institutional shareholders to declare how they vote and for banks to put their remuneration policies to shareholders for explicit approval.

Too many takeovers turn out to be neither good for the acquiring company or the firm being bought. The system needs reform. Companies should be more transparent about their long-term plans for the business they want to acquire. There needs to be more disclosure of who owns shares, a requirement for bidders to set out how they will finance their bids and greater transparency on advisers’ fees.

There should be a higher threshold of support – two-thirds of shareholders – for securing a change of ownership and the case for limiting votes to those on the register before the bid should be examined".

These proposals are, inevitably, vague and imprecise in places and they raise many questions, particularly concerning the manner in which the proposed takeover reforms will be achieved. Despite the statement that the takeover process requires reform, there is nothing to suggest that a future Labour Government would be prepared to challenge the shareholders' central position in the UK corporate governance framework. Can changes to the rules regarding takeovers be made without also considering the wider governance framework?

A greater role for shareholders regarding banks' remuneration policy is envisaged in the manifesto although it is not clear how the proposal for "banks to put their remuneration policies to shareholders for explicit approval" would be different from the advisory vote currently required by Section 439 of the Companies Act (2006). What does explicit approval mean in this regard?

Elsewhere there is a clear commitment - "we will require institutional shareholders to declare how they vote" - which suggests that a future Labour Government would exercise the power available to it under Section 1277 of the Companies Act (2006). With regard to institutions, the manifesto refers to strengthening the UK's Stewardship Code, although the consultation on the content of this Code has not yet been completed by the Financial Reporting Council. The FRC is considering whether the Stewardship Code should be based on the Code on the Responsibilities of Institutional Investors issued by the Institutional Shareholders’ Committee (ISC). The manifesto reference to strengthening the Stewardship Code may well mean the ISC Code, but this would be to pre-empt the results of the FRC's consultation.

Europe: ecoDa's governance principles for unlisted companies

The European Confederation of Directors’ Associations (ecoDa) has published a set of fourteen governance principles for unlisted companies in Europe: see here (pdf). The first nine principles apply to all unlisted companies, whereas the final five apply to larger and more complex companies. The document also contains supporting guidance.

UK: FSA quarterly consultation

The Financial Services Authority has published its quarterly consultation document: see here (pdf). This contains several governance related matters, including: an amendment to clarify the operation of DTR 7.2 (corporate governance statements) to overseas issuers; a proposal to change the status of LR 1.6.1G from guidance to a rule; and amendments concerning share capital reflecting the implementation of the Companies Act (2006).

UK: the Bribery Act 2010

A copy of the Bribery Act 2010 is available here (html) and here (pdf). Sections 7 to 8, which have not yet been brought into force, contain the offence of failure by a commercial organisation to prevent bribery.

UK: the Financial Services Act 2010

A copy of the Financial Services Act 2010 is available here (html) and here (pdf). The Financial Services Authority has provided a very short overview of the changes brought about by the Act with regard to its objectives, powers and duties: see here. Some of the provisions came into force yesterday. See Section 26 of the Act for further information about commencement dates.

UK: the Financial Services Act 2010

The Financial Services Bill received Royal Assent yesterday and becomes known as the Financial Services Act 2010. Missing from the Act - following the wash-up negotiations - are provisions that would have created a Financial Stability Council, imposed a statutory obligation on the Financial Services Authority to promote international regulation and supervision, and introduced a mechanism for collective action in financial services claim. In due course a copy of the Act will be available here.

Update: a copy of the Act is available here (pdf).

UK: the Bribery Act 2010

The Bribery Bill received Royal Assent yesterday and becomes known as the Bribery Act 2010. In due course a copy of the Act will be available here.

Update: a copy of the Act is available here.

UK: the Financial Services and Markets Act 2000 (Liability of Issuers) Regulations 2010

The Financial Services and Markets Act 2000 (Liability of Issuers) Regulations 2010 were laid before Parliament on April 7 and come into force on October 1. A copy of the Regulations is available here (html) and here (pdf). In the accompanying explanatory memorandum - available here (pdf) - the purpose of the Regulations is explained as follows:

The purpose of these Regulations is to amend the Financial Services and Markets Act 2000 (FSMA) by substituting section 90A and inserting a new Schedule into the Act providing for a new regime for the liability of issuers to pay compensation to third parties who have suffered loss as a result of misstatements, or dishonest omissions in information published by the issuer, or dishonest delay by the issuer in publishing information".

UK: the Financial Services and Markets Act 2000 (Amendments to Part 18A etc.) Regulations 2010

The Financial Services and Markets Act 2000 (Amendments to Part 18A etc.) Regulations 2010 were laid before Parliament on April 7 and come into force today. A copy of Regulations is available here (html) and here (pdf). In the accompanying explanatory memorandum - available here (pdf) - the purpose of the Regulations is explained as follows:

The Markets in Financial Instruments Directive (MiFID) required competent authorities to be given powers to suspend trading in a financial instrument. The FSA was given these powers under [the Financial Services and Markets Act 2000 (FSMA)] as the competent authority in the UK. The FSA is currently required to give written notice individually to each institution on whom it proposes to impose a requirement to suspend or remove a financial instrument (such as the shares of a particular firm) from trading. The FSA does not find this procedure practical or efficient as they would have to identify and write to the thousands of firms who trade bilaterally (known as ‘over-the-counter’ or OTC trading). As a result, the FSA is not able to impose a trading suspension with immediate effect ...

The purpose of these Regulations is to amend Part 18A of the FSMA to permit the FSA to suspend trading in a financial instrument or class of financial instrument by notice to the market without the need for separate written notice to the institutions concerned".

Guernsey: the Companies (Guernsey) Law 2008 - consultation on proposed amendments

The States of Guernsey Commerce and Employment Department has published a consultation paper containing proposed amendments to the Companies (Guernsey) Law 2008: see here (pdf).

The majority of amendments are minor and clarify existing provisions or correct the occasional typographical error. Amongst the more significant changes are those concerning eligibility to be a director and the repeal of Section 171 on the duties of company secretaries.

UK: the Financial Services Bill - update

The Financial Services Bill passed the Committee Stage in the House of Lords yesterday evening. As part of the wash-up negotiations, clauses 18 to 25 - which would have introduced a mechanism for collective action in financial services claims - have been removed from the Bill.

Today the Bill will have its Third Reading and the Lords amendments will be considered by the Commons. Royal Assent then follows.

UK: Bribery Bill - update

The Bribery Bill received its Third Reading in the House of Commons yesterday and now awaits Royal Assent.

UK: England and Wales: a valid notice?

The ICLR, as part of its (free) WLR Daily Service, has provided a summary of the recent Court of Appeal decision Hilmi & Associates Ltd v 20 Pembridge Villas Freehold Ltd [2010] EWCA Civ 314: see here. The summary's headnote reads:

Where, before the coming into force of the Companies Act 2006, a corporate tenant served notice, pursuant to s 13 of the Leasehold Reform, Housing and Urban Development Act 1993, seeking to exercise a statutory right to acquire the applicable freehold, it was required, for the notice to be valid, to affix its corporate seal, or to supply the signature of two directors or a director and the company secretary".

UK: BIS Committee calls for wide-ranging review of corporate governance

The Business, Innovation and Skills Committee yesterday published its report Mergers, acquisitions and takeovers: the takeover of Cadbury by Kraft. The report is available here (html) and here (pdf). The Committee concluded its report with this recommendation for its successor:

The takeover of Cadbury by Kraft has highlighted a number of important issues in respect of the way in which foreign takeovers of UK companies are conducted. It has been the catalyst for a wider debate, both in Government and in the City, about how takeovers are conducted. In highlighting the Kraft takeover of Cadbury, we have contributed to that debate which now needs to continue, and with urgency. Time does not allow us to consider the wider proposals for reform in detail but it is clear that the Companies Act 2006 has not resolved these major issues in corporate governance. We urge our successor Committee to consider this Report as a starting point from which to conduct a detailed inquiry into these important issues and into the role of shareholders and managers of companies more generally. Recent experience of the behaviour of boards and shareholders in situations ranging from the fall of RBS to the Kraft acquisition of Cadbury indicate that it is time to reconsider many aspects of corporate governance".

UK: the Bribery Bill

As part of the wash-up of Bills prior to the dissolution of Parliament on 12 April, the Bribery Bill, which was introduced in the House of Lords, reaches the Report Stage in the House of Commons today and will also receive its Third Reading. Royal Assent is expected shortly thereafter.

UK: the Financial Services Bill

The Financial Services Bill reaches the Committee Stage in the House of Lords today. The Government has announced, as part of the wash-up of Bills prior to the dissolution of Parliament on 12 April, that the Bill's Report Stage and Third Reading will take place on 8 April. The Commons will consider Lords amendments on 8 April. Royal Assent is expected shortly thereafter.

UK: the Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 - draft published

A draft of the Companies Act 2006 (Transfer of Audit Working Papers to Third Countries) Regulations 2010 has been published by the Department for Business, Innovation and Skills: see here (pdf). Explanatory notes have been published here (pdf). Further background information is available here.

UK: the new listing regime

Changes to the Listing Regime come into effect today, with the creation of two segments: premium and standard. For further information see here. The revised Listing Rules are available here. Overseas companies with a premium listing of equity shares will be required to 'comply or explain' against the UK's Combined Code on Corporate Governance.

UK: Women in the City - Treasury Committee report published

The Treasury Committee has published its report Women in the City: see here (html) and here (pdf). Chapter two deals with women on boards. The Committee does not support law to require boards to have a minimum proportion of female directors but nevertheless endorses increased gender diversity. Specifically, the Committee states:

Concern about the under representation of women on boards can be about business performance as much as fairness. There is a consensus that an effective challenge function within a board is required in financial institutions, and that diversity on boards can promote such challenge. While it is impossible to know whether more female board members would have lessened the impact of the financial crisis, the arguments for fairness, improved corporate governance, a stronger challenge function and not wasting a large proportion of talent seem more than sufficient to conclude that increased gender diversity is desirable".