UK: the Government's Growth Review and corporate governance

HM Treasury and the Department for Business, Innovation and Skills published a policy document yesterday titled The path to strong, sustainable and balanced growth: see here (pdf). The document refers to the Government's review of corporate governance and states (at paras. 1.42 and 1.43):

For a more competitive economy, the Government must also ensure that long-term growth is not compromised by short-term volatility, or that its benefits are captured by a few at the expense of the many who provide the capital. The Government has launched a review into corporate governance to investigate issues including the problems of short-termism, investor engagement, directors’ remuneration, and the economic case for takeovers. This will be one of the Government’s priority areas over the coming months. The Government will also consider the role of directors and shareholders and ask fundamental questions about shareholder engagement, market short-termism and the long-term sustainability of UK companies".

Ghana: the SEC's Corporate Governance Guidelines

The Codes and Principles Directory maintained by the European Corporate Governance Institute has been updated to include a copy of the Securities and Exchange Commission's Corporate Governance Guidelines on Best Practices: see here.

Japan: the TSE Principles of Corporate Governance for Listed Companies

The Codes and Principles Directory maintained by the European Corporate Governance Institute has been updated to include a copy of the Principles of Corporate Governance for Listed Companies published by the Tokyo Stock Exchange: see here.

Hong Kong: Court of Final Appeal considers apparent authority of executive chairman and chief executive

The Hong Kong Court of Final Appeal has considered, in Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd. (FACV No. 9 of 2010), whether a company's executive chairman and chief executive (Mr Ting) had the apparent authority to enter various transactions with a bank: see here. The court's judgment was delivered earlier this month; Lord Neugerger of Abbotsbury, sitting as a non-permenant judge of the court, delivered the only reasoned opinion with which the other judges agreed.

Lord Neuberger stated that the bank would be able to rely on Mr Ting’s apparent authority (if he had such authority) unless its belief in this regard was dishonest or irrational (which included turning a blind eye and being reckless). His Lordship found that Mr Ting did not have apparent authority in respect of the transactions, although he noted noted that Mr Ting would, as executive chairman and chief executive, possess "a large measure of apparent authority - indeed, no doubt he would have had a large measure of actual authority" (para. [81]). Significant in this regard was Lord Neuberger's finding that the bank was irrational in its belief that Mr Ting had authority, not least because of the "peculiar" nature of the transactions, which benefited another company sharing the same parent as the company and under which the company gained a substantial liability.

Norway: the Code of Practice for Corporate Governance - revised edition published

Following a consultation earlier this year, the Norwegian Corporate Governance Board has published a revised edition of the Norwegian Code of Practice for Corporate Governance: see here (pdf). A marked-up copy of the Code, showing where the new edition differs from its predecessor, is available here (pdf).

UK: HoC Treasury Committee hears from Lord Turner and Hector Sants

Earlier this week, the chairman (Lord Turner) and chief executive (Hector Sants) of the Financial Services Authority gave evidence before the House of Commons Treasury Committee as part of the Committee's inquiry into competition and choice in the banking sector. An uncorrected transcript of their evidence has been published: see here.

South Africa: the Code for Responsible Investing by Institutional Investors - comments published

Earlier this year the Institute of Directors published a draft Code for Responsible Investing by Institutional Investors in South Africa: see here (pdf). The purpose of the Code, in conjunction with the King III Code, is "to provide a voluntary framework that can be used to ensure that sound governance is practised. The framework relates to the governance role of boards of companies, institutional shareholders and the ultimate beneficiaries". Comments received in respect of the draft Code have been published: see here.

Australia: the definition of derivatives

The Corporations and Markets Advisory Committee (CAMAC) has been asked by the Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP, to consider the legal definition of derivatives. The terms of reference are available here (pdf).

UK: financial regulation reform - responses to Government consultation

HM Treasury has published the responses received in respect of its consultation paper A new approach to financial regulation: judgement, focus and stability: see here. A summary of the responses, and the Government's position on various matters raised in the consultation, is available here (pdf).

The summary confirms that the Government has decided that the UK Listing Authority will remain a part of the successor to the FSA's markets division within the new Consumer Protection and Markets Authority (CPMA). It is also confirmed that the FSA's criminal enforcement powers in relation to market conduct will be retained within the CPMA and will not be transferred to a new Economic Crime Agency.

UK: Holland v HMRC judgment given - Mr Holland not a de facto director

The Supreme Court handed down its judgment in Holland v HMRC Commissioners [2010] UKSC 51 shortly before 10 am today: see here (pdf) or here (html). A press summary is available here (pdf). By a majority (3:2) the Court held that Mr Holland was not a de facto director.  There are substantial reasoned opinions from four of the five justices and opinion is strongly divided. The judgment is the leading authority on de facto directorship.

Lord Hope did not accept that Mr Holland had acted as a de facto director of the composite companies (ie., those companies having another company as sole director, this other company being one for which Mr Holland was a director). Lord Collins agreed, observing that "For the court to hold that every significant decision of individual directors of a corporate director is to be regarded as being taken as if they were directors of the company of which it is the corporate director goes considerably beyond the law as it has been developed at first instance and by the Court of Appeal in the modern de facto director cases, and beyond what I would regard as the function of the court" (para. [96]).

Lord Saville, in a short opinion, agreed with Lords Hope and Collins, observing that "it does not follow from the fact that Mr Holland caused the corporate director to make decisions in relation to the composite companies that he was accordingly a de facto director of the composite companies. To suggest that he was is to ignore or bypass the separate legal personality of the corporate director ..." (para. [98]).

Lords Walker and Clarke were in the minority. Lord Walker began his opinion by expressing a fear: that the Court's decision would "make it easier for risk-averse individuals to use artificial corporate structures in order to insulate themselves against responsibility to an insolvent company's unsecured creditors" (para. [101]). Lord Walker added: "The repeated assertion that everything that Mr Holland did was done in his capacity as a director of [the corporate director], and was within his authority as a director of that company, is no doubt not 'pure sham' but it is, in my view, the most arid formalism. In my view Mr Holland was acting both as a de jure director of [the corporate director] and as a de facto director of the composite companies" (para. [115]). Lord Clarke agreed: in his view "Mr Holland was a de facto director of the composite companies on the ground that he in fact made directorial decisions with regard to them" (para. [145].

A summary of the Supreme Court's judgment has been published by the ICLR as part of its WLR Daily service: see here. The Court of Appeal decision ([2009] EWCA Civ 625) is available here and the High Court decision ([2008] EWHC 2200 (Ch)) here.

Philippines: the PSE Corporate Governance Guidelines for Listed Companies

The Philippines Stock Exchange last week launched its Corporate Governance Guidelines for Listed Companies. The Guidelines are not yet available on the PSE's website but there is further information about them here (pdf).

Update (1 Dec 2010): the Guidelines are available here (pdf).

UK: Corporate Governance Guidance and Principles for Unlisted Companies

The Institute of Directors has published Corporate Governance Guidance and Principles for Unlisted Companies: see here (pdf). The publication is the UK edition of the pan-European guidance developed by the European Confederation of Directors’ Associations (ecoDa) and published earlier this year (see here, pdf).

Europe: disclosure of non-financial information by companies - Commission seeks views

The European Commission has published a questionnaire seeking views on the disclosure of non-financial information by companies and how such disclosure can be improved: see here.

UK: Supreme Court judgment in de facto director case due this week

The Supreme Court will hand down its judgment in Holland v HMRC Commissioners on Wednesday this week. See here for background information.

Europe: the European Company Statute - Commission report

The European Commission has published a report on the European Company Statute: see here (pdf).  The Report contains an overview of the factors which influence the setting up a European Company (SE), and the problems encountered, as well as highlighting trends on the distribution of SEs throughout the EU. Accompanying the report is a Commission working document (here, pdf), press release (here) and list of frequently asked questions (here).

UK: financial regulation reform and the UKLA

In a contribution to the Financial Times newspaper, the Financial Secretary to the Treasury, Mark Hoban MP, confirmed that the Government has decided that the UK Listing Authority should form part of the proposed Consumer Protection and Markets Authority and will not, therefore, be merged with the Financial Reporting Council: see here.

UK: FRC publishes updated audit committee guidance

The Financial Reporting Council has published updated guidance for audit committees with regard to issues arising from current economic conditions: see here (pdf). The purpose of the guidance is set out in the introduction: "to influence the thinking and focus of audit committee work during the forthcoming annual reporting season by posing some key questions prompted by recent FRC analysis of the current reporting environment".

UK: England and Wales: derivative claims under the Companies Act 2006

As noted in an earlier post, the High Court delivered its judgment last month in Cinematic Finance Ltd v Ryder and Others (Ch.D., 21 October 2010), in proceedings for permission to continue a derivative action/claim under Part 11 of the Companies Act (2006). The judgment has not yet been published on BAILII but a digest of the decision has been posted on the Company Law Forum: see here. Here is an extract from the digest:

In general, it was only the company, acting by its proper organ, that could bring proceedings for a wrong done to the company. A minority shareholder had no power to do so. A derivative claim represented an exception to the general rule whereby a minority shareholder was permitted to claim a remedy in respect of a wrong done to the company. The essential question was whether there had been a fraud on the minority, which generally involved an abuse of power by the directors and a stifling of the claim by reason of the control exercised by wrongdoers over the company.

In the instant case, the new statutory code in the Act, preserved the existing law as to the need to show 'wrongdoers control'. The new statutory rules did not formulate a substantive rule to replace the rule in Foss v Harbottle but provided a new procedure with more modern, flexible and accessible criteria for determining whether a shareholder could pursue an action. The Act would need radical language to displace such a well established rule. Section 261(4) of the Act made it clear that the court had a discretion whether to allow a derivative action to continue. Although s 263(2) of the Act did not mention that permission was to be refused where the applicant had control of the company, it would only be in exceptional circumstances that such an application would be allowed to continue. The instant circumstances were not exceptional. The evidence indicated that one of the principal reasons for the use of a derivative action procedure was to save the cost of pursuing the remedy through the insolvency procedure. That was not a sufficient reason to allow a derivative action to proceed".

UK: England and Wales: a partner or employee?

The Employment Appeal Tribunal delivered its judgment yesterday in Tiffin v Lester Aldridge LLP [2010] UKEAT 0255_10_1611: see here. In earlier proceedings, the Employment Tribunal held that the claimant, a solicitor, was a "partner" within the meaning of Section 1(1) of the Partnership Act 1890 and not an "employee" within the meaning of Section 230(1) of the Employment Rights Act 1996. Section 1(1) of the 1890 Act provides that partnership is "the relation which subsists between persons carrying on a business in common with a view of profit".

The solicitor was a fixed share partner, received a salary and a small share of the profits, was liable to contribute a small proportion of the capital to the respondent firm but had very limited involvement in the firm's management. Before the EAT it was argued, amongst other things, that the Employment Tribunal had erred in finding that the solicitor was a partner because his limited involvement in management negated the finding that he carried on a "business in common" as required by Section 1 of the 1890 Act. The EAT rejected this argument, observing that there was no minimum threshold that had to be reached with regard to a person's rights to profits or involvement in the firm's management in order to be regarded as a partner. In this regard, the EAT observed (paras. [19] to [20]):

There is no statutory provision or authority, which states that for a person to be a partner, he or she has to have a certain minimum number or a certain minimum types of rights to vote or to participate in management decisions. Indeed the members of this Tribunal are aware that in many large professional partnerships, all but very few of the partners have any right to participate in the overwhelming range of decisions made by the firm and yet they are clearly partners. There is evidence that the Claimant was entitled to participate in the Respondent's management as he could attend and vote at partnership and members meetings as well as being able to make representations at them. He had authority to sign cheques on behalf of the Respondent ... In our view, there was quite enough material ... to enable the Employment Tribunal to conclude that the Claimant carried on business in association with the Respondent".

Europe: corporate governance in financial institutions - responses to Commission green paper

The European Commission has published a general summary of the responses received in respect of its consultation on corporate governance in financial institutions: see here (pdf). Summaries are provided for each question in the consultation. For example, with regard to the question whether there should be a limit on the number of boards on which a director may sit, the Commission notes:

Whilst almost all respondents that provided an answer to this question agree that directors should commit sufficient time to their duties, a large majority consider a general rule on limitation of the number of boards on which a director may sit as inappropriate. The main reason for this being that such a limitation would be too arbitrary and inflexible, and would not allow to take account of the situation of each particular financial institution and individual circumstances of each director. Moreover, such a limitation would not in fact guarantee that director will dedicate enough time for his position.

The majority of respondents suggested the following alternatives:

Instead of a strict limitation of the number of mandates, there should be a general principle that directors devote sufficient time to their duties in a financial institution. The implementation of this general principle by financial institutions should be subject to monitoring by shareholders and supervisory authorities. A limitation of mandates may be envisaged as best practice with a "comply or explain" approach.

The expected time commitment should be defined in a letter of appointment for each director. All mandates held by each individual director should be publicly disclosed".

UK: the future of the FRC - subsumed within a securities regulator?

The chairman of the Financial Reporting Council, Baroness Sarah Hogg, recently commented on whether the UK Listing Authority should be merged with the FRC in an article appearing in the Financial Times newspaper: see here. Baroness Hogg's view was clearly put: she recognised the synergies that would arise from such a merger but argued that the UKLA, FRC and the market division of the FSA should be merged to create a comprehensive markets authority or securities regulator, with consumer interests protected by a separate agency. Debate on this matter began earlier this year with the publication of the Government's consultation paper A New Approach to Financial Regulation (see here).

Europe: the Alternative Investment Fund Managers Directive

Political agreement has been reached by the European Parliament and the Council of Ministers on the text of the Directive on Alternative Investment Fund Managers: see here. FAQs are available here. The text of the Directive adopted by the European Parliament is available here.

UK: BIS on auditors and concentration in the audit market

The Department for Business, Innovation and Skills has published its submission to the enquiry being conducted by the House of Lords Economic Affairs Committee with regard to the role of auditors and market concentration in the audit market: see here (pdf). The submission makes for interesting reading. For example, the Government states:

... there is value in a debate about the extent to which audit should be mandatory, and what the nature of any mandated audit should be. The Government’s view is that audit has an important but not unique role to play in ensuring vibrant capital markets. It is less clear that a modern audit, designed largely for listed companies with diverse shareholders, should necessarily be imposed on, for instance, a medium sized owner-managed company ...

The Government’s view is that while there is no evidence of systematic problems of auditor independence, the body best placed to bolster auditor independence is a strong audit committee ...

[The] Government’s initial view is that, with the current (four-player) state of the audit market, it may be difficult to identify measures that will be effective in increasing choice for the largest audits without also imposing major costs. Those costs might be hard to justify".

Europe: Portugal’s holding of golden shares in Energias de Portugal is contrary to European Union law

The European Court of Justice gave its opinion yesterday in Commission v Portugal (C-543/08), holding that Portugal’s holding of golden shares in Energias de Portugal was contrary to European Union law, such holding being an unjustified restriction on the free movement of capital: see here. A press release is available here (pdf).

Earlier this year the Court of Justice held that the Portuguese State's holding of golden shares in Portugal Telecom, which conferred special control and decision-making rights, constituted an unjustified restriction on the free movement of capital: see here.

UK: FSA consults on remuneration disclosure requirements

The Financial Services Authority has published a consultation paper regarding its implementation of the remuneration disclosure requirements set out in the Third Capital Requirements Directive: see here (pdf). The consultation period closes on 8 December and the FSA intends to publish a policy statement on remuneration disclosure in the middle of December.

The FSA has also formally announced (see here) that next month it will publish a policy statement in response to proposed changes to its Remuneration Code. The revised Remuneration Code will come into force on 1 January 2011 and will apply to awards paid out in respect of the 2010 remuneration round. The FSA has stated that firms coming into the scope of the Code for the first time will be able to make use of transitional provisions to implement certain provisions of the Code over a period of six months.

UK: conference papers published - directors' duties and shareholder litigation in the wake of the financial crisis

In September this year, a conference titled "Directors' Duties and Shareholder Litigation in the Wake of the Financial Crisis" was held in Leeds under the auspices of the University of Leeds Centre for Business Law and Practice. An audio recording of the panel discussion session is available here (mp3). Copies of the papers presented have also been published:

Mr Robin Hollington QC, New Square Chambers: The Winding up of Hedge Funds on Treasure Islands (pdf).

Professor John Armour, Oxford University: Is Delaware Losing Its Cases? (pdf). 

Andrew Campbell, Ashridge Strategic Management Centre: Why Good Leaders Make Bad Decisions (pdf, abstract only).

Professor Janet Dine, Queen Mary, University of London: Post-Concession Company Models in Potential European Company Law (pdf). 

Mr Louis Doyle, Kings Chambers: The Susceptibility to Meaningful Attack of Breaches of Directors' Duties under English Law (pdf).

Dr Michael Galanis, University of Leeds: The Dynamics of Corporate Bargaining and the Law vs. Contract Debate: Chocolate, Cars and Other Systemic Issues (pdf). 

Professor Andrew Keay, University of Leeds: The Duty to Promote the Success of the Company: Is it Fit for Purpose? (pdf).

Professor Roman Tomasic, Durham University: Shareholder Activism and Legislation Against UK Banks - The Limits of Company Law Remedies (pdf). 

Ireland: publication of the Corporate Governance Code for Credit Institutions and Insurance Firms

The Central Bank has published its Corporate Governance Code for Credit Institutions and Insurance Firms: see here (pdf). The Code sets out, amongst other things, a minimum board size; requirements on the role and number of non-executive directors; criteria for director independence and consideration of conflicts of interest; limits on the number of directorships which directors may hold in financial and non financial companies; separation of the roles of Chairman and CEO; minimum requirements for board committees including audit and risk committees; and a requirement for an annual confirmation of compliance to be submitted to the Central Bank.

Unlike many other governance codes, this new Code will not operate on the 'comply or explain' basis. Instead it sets out minimum standards which apply to existing directors and boards with effect from 1 January 2011 although some institutions will have until 31 December 2011 to comply with particular requirements (e.g., board changes).

With regard to enforcement of the Code, failure to comply may be subject to supervisory action and disciplinary procedures by the Central Bank, including its new regulatory powers to refuse to appoint directors, or to suspend, remove or prohibit directors under the Central Bank Reform Act 2010. Some useful background on the development of the Code was given by the Bank's Head of Financial Regulation, Matthew Elderfield, in a speech delivered yesterday: see here.

UK: women on listed company boards

The Department for Business, Innovation and Skills opened a call for evidence regarding the proportion of women on listed company boards last month (see here), as part of a review being undertaken for the Government by Lord Davies of Abersoch. A report in today's Guardian newspaper, available here, reproduces the following interesting comments of Lord Davies in a recent interview:

"There is a range of options. One of them is to bring in a direct quota or a timeline that leads to a quota. My view is that to say 20% of people on a board should be women is not enough. It has to be 30% to 40% to make a real change".

UK: before the Supreme Court today

The Supreme Court hears argument today in Coke-Wallis v Institute of Chartered Accountants in England and Wales, an appeal from [2009] EWCA Civ 730. The Supreme Court's summary of the case - available here - describes the questions and facts as follows:

Whether the principles of autrefois acquit, res judicata or abuse of process should prevent the preferment of a disciplinary complaint based on conduct underlying a conviction, when a complaint based on the conviction has already been dismissed.

The appellant, a chartered accountant, was convicted in Jersey of an offence of failing to comply with a direction of the Jersey Financial Services Commission. He was then subject to disciplinary proceedings by the respondent [ICAEW] based on his conviction. When this complaint was dismissed by the disciplinary tribunal on the ground that there was no corresponding offence in England and Wales, a second complaint was preferred against the appellant, based on the conduct underlying the conviction".

Europe: Commission consults on credit rating agencies

The European Commission has published a consultation on credit rating agencies: see here (pdf). The purpose of the consultation is to gather opinion on certain matters not covered by Regulation (EC) No 1060/2009 on credit rating agencies (OJ L 302 of 17.11.2009, here, pdf), including the risk of overreliance on credit ratings by financial market participants, the high degree of concentration in the credit rating sector, the civil liability of credit rating agencies and the remuneration models used by credit rating agencies.

UK: England and Wales: majority shareholder can bring derivative action in exceptional circumstances

Last month the High Court delivered its judgment in Cinematic Finance Ltd v Ryder and Others (Ch.D., 21 October 2010), in proceedings for permission to continue a derivative action under Part 11 of the Companies Act (2006). The judgment has not yet been published on BAILII but a summary has been provided on Lawtel (for those with a subscription). On the i-law.com website a shorter summary for non-subscribers has been published - see here - from where the following extract is taken:

Whilst proceedings for derivative claims are now covered by the Companies Act 2006, the Act had not sought to establish a radical reversal of the long-standing principle that an action should be pursued by the company and not its shareholders. Although s261(4) gave the court power to allow a derivative claim, the discretion to do so would be exercised in accordance with the established principles. Although it could not be said that it would never be appropriate for a derivative claim to be brought by a majority shareholder in control of a company, permission to do so would be given only in very exceptional circumstances, and it was difficult to envisage what such exceptional circumstances might be! The claimant had contended at the outset that it was having difficulty in achieving access to the company books and records but had not disclosed, that it was in fact the company’s majority shareholder and so had complete control over them. The application was dismissed with costs on the indemnity basis".

The decision looks particularly interesting, not least because it provides a further example of the cautious approach so far taken by the courts with regard to the new regime.

UK: FSA's remuneration code - policy statement on proposed changes delayed

Earlier this year the Financial Services Authority consulted on changes to its remuneration code and stated that a policy statement would be published this month, with new rules taking effect on 1 January 2011: see here. However, in the latest edition of the FSA's Handbook development newsletter, available here (pdf), it's stated that the policy statement (and presumably the revised code) will be published next month.

UK: FSA bans directors in respect of irresponsible lending and unfair practices

The Financial Services Authority has, for the first time in the context of findings of irresponsible lending and unfair practices in respect of dealing with customers in arrears, banned four company directors from performing controlled functions and/or significant influence functions in a regulated firm: see here. The FSA's actions provide a strong reminder of the standards expected of the directors of regulated firms.

One of the directors was the driving force behind the business and received a financial penalty. This director had, amongst other things, delegated responsibility for underwriting loan applications and assessing affordability to a third party mortgage adviser but did not formally assess that third party's competence or adequately monitor his performance. The FSA also found that this director made lending decisions arbitrarily, did not record how decisions were made, and kept no material customer information regarding income and affordability.

The other three directors were family members and failed to appreciate their regulatory responsibilities and, notwithstanding their approved person status, had no meaningful involvement with the business. They failed, according to the FSA, to take reasonable steps to (a) inform themselves about the company's affairs and (b) ensure that the company's business complied with regulatory requirements in respect of appropriate systems and controls.

USA: SEC proposes new whistleblower programme under the Dodd-Frank Act

The Securities and Exchange Commission has published proposed rules under Section 922 of the Dodd-Frank Wall Street Reform Act for a whistleblower program to reward individuals who provide the SEC with information leading to successful enforcement actions: see here (rule proposal, pdf) or here (press release/fact sheet). According to the press release:

To be considered for an award, a whistleblower must voluntarily provide the SEC with original information about a violation of the federal securities laws that leads to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million.

UK: realised and distributable profits under the Companies Act (2006) - updated ICAEW guidance

The ICAEW has published, as part of its Technical Releases series, updated guidance on realised and distributable profits under the Companies Act 2006: see here (pdf).

UK: Tribunal finds individual 'fit and proper' to be a director

In an interesting decision, the Upper Tribunal (Tax and Chancery Chamber) (Financial Services) has found that an individual wanting to become a director of an authorised firm was 'fit and proper' to do so, contrary to what the Financial Services Authority had argued: see here (pdf).

The conduct on which the Financial Services Authority had relied in declining the individual's application for approval was described by the Tribunal as being "... unfortunate instances of carelessness rather than indications of any lack of honesty or integrity, or of the appropriate competence and capability to perform the function of a director". In the Tribunal's opinion, it was unlikely that the individual would make similar mistakes again.

UK: directors' pay - a response from IDS

Today's Guardian newspaper contains a letter from IDS in response to comments on its survey of directors' pay and a survey by the Institute of Directors published shortly thereafter. The letter - available here - usefully sets out the reasons for the conflicting findings of the surveys: the very different remuneration practices in large, listed companies (the focus of the IDS survey) compared with other smaller companies (the focus of the IoD survey).

USA: IFRS in the US - work plan progress report

The Securities and Exchange Commission has published a progress report in respect of its Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers: see here (pdf). With regard to corporate governance standards, the progress report notes:

The Work Plan noted that the Staff will analyze the impact on compliance with corporate governance standards, should the Commission determine in the future to incorporate IFRS into the financial reporting system for U.S. issuers by: [a] Assessing the potential effects on corporate governance and related concerns of such incorporation [and] [b] Determining possible approaches to address corporate governance concerns and the extent of, logistics for, and estimated time necessary to undertake these approaches.

In August, the Commission solicited public comment to aid in the Staff’s analysis of these components [here, pdf]. The request for comment solicited feedback regarding the challenges that issuers may encounter in identifying audit committee financial experts and in satisfying corporate governance and related quantitative stock exchange listing requirements, as well as, more broadly, compliance with other aspects of corporate governance that may result from the incorporation of IFRS into the financial reporting system for U.S. issuers. The comment period ended on October 18, 2010, and the Staff is analyzing the input from the comment letters received and determining the nature of further public input. In addition, the Staff may meet with or otherwise engage issuers and others, including those who responded to the request for comment, to facilitate the Staff’s understanding of issuers’ perspectives on these components".

UK: directors' pay - IoD survey results

Following on from last week's report on FTSE100 directors' pay by IDS, the Guardian newspaper is reporting the findings of the Institute of Directors' latest survey of directors' rewards in small and medium sized enterprises: see here. According to the Guardian report, published yesterday evening on the newspaper's website:

The Institute of Directors tonight defended executive pay, saying that the average pay rise for the 54% of UK company directors who received one this year was just 2.5%. The IoD said that 46% of directors either had their pay frozen or cut, when adjusted for inflation ... The IoD said average basic pay of a managing director in a small company, with turnover of up to £5m a year, was £70,000; in a medium sized company, with annual turnover of up to £50m, it was £100,000; and in a large company with a turnover up to £500m a year it was £128,000. The directors' organisation insisted that pay cuts for directors were not being offset by better bonuses, which it said remain modest relative to big private sector bonuses. According to its survey, 23% of directors said their bonus had been cancelled or postponed this year. Where bonuses were awarded, the average amount was down nearly 20% on last year. The average bonus for a director in a small company was £10,000; £12,600 in a medium company; and £17,200 in a large company".