Thursday, 31 March 2016
The Companies (Address of Registered Office) Regulations 2016 were made on 23 March and come into force on 6 April: see here or here (pdf). The purpose of the Regulations is to introduce a new administrative procedure to allow the registrar of companies to change the registered office address of a company, or limited liability partnership, where (upon application) the registrar considers that the entity is not authorised to use that address. Further information is available in the accompanying explanatory memorandum: see here (pdf).
Wednesday, 30 March 2016
The Equality and Human Rights Commission has published the results of its inquiry into the fairness, transparency and diversity of FTSE350 board appointments: see here (pdf). A summary of the report is available here. Whilst welcoming the increase in women on company boards, including the fact that women now occupy over 25% of FTSE100 board positions, the report reveals wide differences at individual company level across the FTSE100 and FTSE350. For example, 45 individual FTSE100 companies failed to reach the 25% target set by Lord Davies. Other findings are reported in respect of the recruitment process and recommendations are also made for improving board diversity.
Tuesday, 29 March 2016
Following a consultation last year, the Government has provided further information about the changes it will make to the Limited Partnerships Act 1907, by way of a legislative reform order, in order to introduce a regime for private fund limited partnerships: see here (pdf). The changes will be introduced later this year.
Monday, 28 March 2016
The Financial Reporting Council, which will become the UK's designated competent authority under the new EU statutory audit framework with responsibility for audit enforcement, has published a consultation paper setting out its proposed audit enforcement procedure: see here (pdf).
Friday, 25 March 2016
New guidance on the Register of People with Significant Control has been published on the Companies House website: see here. Included is a document with guidance for companies, LLPs and SEs (here, pdf) and another document with guidance for those with significant control (here, pdf).
Thursday, 24 March 2016
Responsibility for the governance code to which listed companies are subject is to change. The Portuguese Securities Market Commission, Comissão do Mercado de Valores Mobiliários, has announced that it will no longer produce a governance code and that responsibility for Portugal's governance code will move to the Instituto Português de Corporate Governance (IPCG: the Portuguese Corporate Governance Institute): see here (pdf, Portuguese). The IPCG has said that it will publish and consult on a new code later this year.
Wednesday, 23 March 2016
The Institute of Business Ethics, in conjunction with ICSA and Mazars, has published a report exploring the role of FTSE350 board committees formed with specific responsibility for corporate responsibility, sustainability or ethics: see here (pdf). The report notes that 30 companies in the FTSE100 and 25 in the FTSE250 have formed such committees; these committees are more common in sectors with reputation and regulatory risk (e.g., banking, mining, defence). The report also explores the mandate given to such committees. An overview of the report is available here (pdf).
Tuesday, 22 March 2016
NZX has published an update in respect of its review of the corporate governance reporting requirements within the NZX Main Board Listing Rules: see here. Following the publication of a discussion paper last year (here, pdf), and in response to comments received, NZX is working with several organisations (including the Financial Markets Authority) to address the fragmentation of corporate governance reporting requirements in New Zealand. The FMA has informed NZX that it will consider whether to update its Corporate Governance in New Zealand Principles and Guidelines once the NZX review is complete. NZX has stated that it will publish a consultation paper with firm proposals in the third quarter of this year.
CalPERS - the California Public Employees' Retirement System - has published a new edition of its Global Governance Principles: see here (pdf). Amongst the changes made is the inclusion of a new provision suggesting that directors serving more than 12 years on the same board run the risk of compromising their independence.
Monday, 21 March 2016
The OECD has published a report in which it analyses the whistleblower protection frameworks in OECD countries, identifies areas for reform, and proposes recommendations to strengthen laws in the public and private sectors. A copy of the report, titled Committing to Effective Whistleblower Protection, is available here. A summary of the report and its recommendations is available here (pdf).
Friday, 18 March 2016
ICE Benchmark Administration (IBA) has published its proposals for the reform of ICE LIBOR (formerly known as BBA LIBOR): see here (pdf). IBA is proposing, amongst other things, that submissions should be non-subjective and fully transaction-based wherever feasible.
The Companies (Amendment) Bill, 2016 - a Bill that will make (further) amendments to the Companies Act, 2013 - was introduced in the Lok Sabha a couple of days ago: see here (pdf, page 442). A copy of the Bill as introduced is available here (pdf) and an accompanying list of errata has also been published: see here (doc). The Bill implements some of the recommendations made by the Companies Law Committee in the report it published last month (see here, pdf).
Thursday, 17 March 2016
UK: The European Public Limited Liability Company (Register of People with Significant Control) Regulations 2016
The European Public Limited Liability Company (Register of People with Significant Control) Regulations 2016 were made earlier this week and laid before Parliament yesterday: see here or here (pdf). The purpose of the Regulations is to amend the current framework governing the register of people with significant control - Part 21A of the Companies Act 2006, as inserted by section 81 of the Small Business, Enterprise and Employment Act 2015, and the Register of People with Significant Control Regulations 2016 - in order that it applies to European public limited liability companies (Societas Europaea, or SEs) registered in the United Kingdom. Further information is available in the accompanying explanatory memorandum: see here (pdf).
Wednesday, 16 March 2016
Today was the annual budget day in the United Kingdom and, included in the budget publications, was a road map for business taxation: see here (pdf). The headline proposal is a reduction in the rate of corporation tax to 17% in 2020. The road map also explains how the Government proposes to implement the 15 OECD BEPS actions, which includes the introduction on 1 April 2017 of a restriction on the deductibility of corporate interest expenses. The restriction will be achieved by a fixed ratio rule limiting the deduction (for corporation tax purposes) to 30% of a group's UK earnings before interest, tax, depreciation and amortisation. Changes to the loss relief rules for companies are also proposed. More specifically, for losses incurred on or after 1 April 2017, relief will be available against profits from other income or from other companies within a group. A limit on the amount of relief available each year for losses carried forward will also be introduced: from 1 April 2017 it will be 50% of profits (but only where profits are in excess of £5 million).
Tuesday, 15 March 2016
The Institute of Directors and King Committee have published for public comment a draft version of the latest King Report and Code on corporate governance in South Africa (King IV): see here (pdf). The report sets out the philosophy, principles, practices and outcomes that provide the benchmark for corporate governance in South Africa. The draft version states that no significant departures are proposed from the philosophical underpinnings of King III; a refining of concepts is instead outlined. This said, King IV is based on 'apply and explain', whereas King III was based on 'apply or explain'. The report makes clear that it is expected that companies will apply all of the principles in the King IV Code, with explanations provided of the practices that have been adopted in doing so. Whilst the principles are described as aspirations or ideals, they are regarded as basic to good governance.
The Financial Conduct Authority has published an occasional paper titled 'Economics for Effective Regulation', setting out a methodology for regulatory economic analysis: see here (pdf). The FCA is beginning to use the methodology, with early trials underway in respect of its work on general insurance add-ons. The purpose of the methodology is to produce an assessment of market based problems, including information asymmetries, externalities, market power, and behavioural distortions; it also considers any unintended consequences of previous interventions that arose from market responses to changes in the regulatory environment.
Monday, 14 March 2016
The Prudential Regulation Authority has published an updated edition of the document explaining its approach to banking supervision, including management and governance: see here (pdf).
The Higher Education Governance (Scotland) Bill was passed, not without some controversy, by the Scottish Parliament last week: see here (pdf). The Bill contains, amongst other things, provisions about the composition of, and appointments to, the governing bodies of higher education institutions. A copy of the Bill as passed is available here (pdf). In the course of debate at third stage, it was noted that a review of the Scottish Code of Good Higher Education Governance will take place later this year.
Friday, 11 March 2016
HM Treasury is seeking views on proposed reforms to the special administration regime for investment banks, following a review of the regime undertaken by Peter Bloxham: see here (pdf). A copy of the secondary legislation - the Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2016 - through which the proposed changes will be made has also been published: see here (pdf).
Thursday, 10 March 2016
The Advisory Council on the Systems of Accounting and Auditing set up by the Financial Services Agency held its fourth meeting a couple of days ago and has published a series of recommendations including the creation of an audit firm governance code: see here (pdf).
An updated edition of the Singaporean Takeovers and Mergers Code has been published by the Monetary Authority of Singapore: see here. The new Code takes effect on 25 March and has been amended to clarify, amongst other things, that a board's solicitation of a competing offer does not amount to the frustration of the existing offer.
Wednesday, 9 March 2016
A copy of Kenya's new corporate governance code - the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015, to give it its full title - has been published in the Kenya Gazette: see here (pdf, pages 872 to 886). The new code replaces the 2002 governance guidelines for public listed companies.
Tuesday, 8 March 2016
Last year the Securities and Futures Commission published a consultation paper setting out its proposed Principles of Responsible Ownership: see here (pdf). Yesterday it published its consultation conclusions, and stated that the Principles are to be adopted but with some modifications. A copy of the amended Principles, together with the SFC's conclusions, is available here (pdf). The Principles are voluntary and will operate on an 'apply or explain' basis. They are intended for investors who (a) invest money, or hold shares, on behalf of clients and other stakeholders and (b) are accountable to such clients and stakeholders. They are not intended for individual or retail investors.
Monday, 7 March 2016
UK: HM Treasury consultation - the framework for insurance special purpose vehicles and protected cell companies
HM Treasury has published a consultation paper in which it sets out the key features of the proposed new framework for insurance special purpose vehicles (ISPVs): see here (pdf). Chapter four explores the corporate structure for ISPVs, and explains that the Treasury proposes to amend companies and insolvency law to allow for the creation of protected cell companies, thereby permitting pools of assets and liabilities - cells - to be segregated within the company. The protected cell company would have separate legal personality but the cells within it would not have legal personality as they do in some jurisdictions where they are known as incorporated cell companies (see, e.g., Guernsey and the Companies (Guernsey) Law, 2008; and the Isle of Man and the Incorporated Cell Companies Act 2010 [pdf]). The Treasury states that it is not proposing to introduce incorporated cell companies in the UK, but may reconsider if there is demand. Under the proposed UK regime, a new cell within the protected cell company would be created by board resolution. The duties of directors would be the same as those for companies incorporated under the Companies Act 2006 and the Company Directors Disqualification Act 1986 would apply to directors of protected cell companies. The other chapters in the consultation paper consider the taxation of ISPVs and their authorisation and supervision by the Prudential Regulation Authority and the Financial Conduct Authority. The PRA is expected to publish a supervisory statement with further information on the authorisation process by the middle of the year.
UK: BIS consultation - enhancing transparency of beneficial ownership information of foreign companies undertaking certain economic activities in the UK
The Department for Business, Innovation and Skills has published a consultation paper in which it outlines a range of proposals to enhance the transparency of beneficial ownership for foreign companies purchasing land or property in England and Wales, or participating in public contracting in England: see here (pdf).
Friday, 4 March 2016
The UK's central bank - the Bank of England - has published a report in respect of its supervision of financial market infrastructures (e.g., central counterparties, securities settlement system, and payment systems). The report explains how the bank exercised its responsibilities over the past year and also identifies the principal priorities for 2016/17. A copy of the report is available here (pdf). The report contains the following diagram that illustrates well the relationships and linkages between central counterparties and banks:
Thursday, 3 March 2016
The Supreme Court gave judgment yesterday in two cases concerned with vicarious liability and, in doing so, it took the opportunity (to borrow the words of Lord Reed in one of the cases) to take stock of the law's development since 2012, the year in which Lord Phillips observed in The Catholic Child Welfare Society v Various Claimants and The Institute of the Brothers of the Christian Schools  UKSC 56 that the law was on the move. The two cases - Mohamud v WM Morrison Supermarkets plc  UKSC 11 and Cox v Ministry of Justice  UKSC 10 are complementary - and should be read alongside each other. The cases have been summarised by the ICLR: see, respectively, here and here. The Supreme Court's summaries are available here (pdf) and here (pdf).
Wednesday, 2 March 2016
The Banking (Amendment) Bill 2016 was passed by Parliament at the end of last month: see here. The Bill will, when it comes into force, make various changes to the regulatory framework governing banks including governance. It provides, for example, the Monetary Authority of Singapore with the power to direct banks to remove their external auditors where they have not discharged their statutory duties satisfactorily. A copy of the Bill is available here (pdf). An overview of the Bill is available here.
Tuesday, 1 March 2016
The Prudential Regulation Authority and Financial Conduct Authority have announced that they will comply with all aspects of the European Banking Authority's Guidelines on Sound Remuneration Policies, except for the provision that the bonus cap (which limits variable remuneration to 100% of fixed remuneration, or 200% with shareholder approval) should be applied to all firms subject to the Capital Requirements Directive: see here. In reaching this decision, the PRA and FCA state:
All large and systemically important CRD-regulated firms must continue to apply the bonus cap. In parallel, the PRA and FCA will retain the current approach of requiring smaller firms to determine an appropriate ratio between fixed and variable remuneration for their business whilst not applying the bonus cap. Since the introduction of the bonus cap, a number of firms have markedly increased fixed pay as a percentage of total pay, whilst total pay remained stable during the same period. The PRA and FCA believe that the shift to fixed remuneration makes it more difficult for firms to adjust variable remuneration to reflect their financial health, and limits deferral arrangements that put remuneration at risk should financial or conduct risks subsequently come to light.
The blanket extension of the bonus cap to all firms regulated under CRD would, in the PRA and FCA’s view, exacerbate these impacts, and fails to recognise the different incentives and consequences for risk-taking across all CRD-regulated firms by disregarding the size, internal organisation, nature, scope and complexity of their activities".