Friday, 21 July 2017

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

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

Thursday, 20 July 2017

UK: FRC publishes annual report for 2016/17

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

Wednesday, 19 July 2017

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

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

Tuesday, 18 July 2017

Pakistan: listed companies and board diversity

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

Monday, 17 July 2017

Australia: Treasury consults on Banking Executive Accountability Regime

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

Friday, 14 July 2017

Canada: the personal liability of directors and the oppression remedy

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

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

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

Thursday, 13 July 2017

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

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

Wednesday, 12 July 2017

Canada: corporate governance reform - an update

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

Tuesday, 11 July 2017

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

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

Monday, 10 July 2017

USA: Delaware corporate law and distributed ledger technologies

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

Thursday, 6 July 2017

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

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

Wednesday, 5 July 2017

Zambia: the Banking and Financial Services Act 2017

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

Tuesday, 4 July 2017

Turks and Caicos: the Companies Ordinance 2017

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

Monday, 3 July 2017

Australia: the regulation of financial benchmarks

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

Friday, 30 June 2017

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

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

Thursday, 29 June 2017

Pakistan: implementing the new company law framework

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

Wednesday, 28 June 2017

Kenya: Stewardship Code published in the Kenya Gazette

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

Tuesday, 27 June 2017

OECD publishes annual report on its Guidelines for Multinational Enterprises

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

Monday, 26 June 2017

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

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

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

Friday, 23 June 2017

USA: Delaware corporate law and distributed ledger technologies

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

Thursday, 22 June 2017

EU: Commission proposes new transparency rules for tax intermediaries

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

Wednesday, 21 June 2017

UK: Good Mortgages Bill in Queen's Speech

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

Tuesday, 20 June 2017

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

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

Monday, 19 June 2017

Hong Kong: HKEX publishes New Board concept paper

Hong Kong Exchanges and Clearing Limited (HKEX) has published a concept paper on the formation of a New Board, in addition to the current Main Board and Growth Enterprise Market (GEM): see here (pdf). Companies listing on the New Board would be divided into two segments: one called "Pro" for companies not meeting the financial or track record criteria for GEM or the Main Board; and another called "Premium" for companies meeting these criteria but having what the paper refers to as "non-standard" governance structures. HKEX is also reviewing the GEM and Main Board listing rules: see here.

Friday, 16 June 2017

UK: England and Wales: the fiduciary duties of members of a charitable company

The ICLR has published a summary of the recent judgment Children’s Investment Fund Foundation (UK) v Attorney General [2017] EWHC 1379 (Ch): see here. The judgment is noteworthy because it contains discussion of the extent to which the members of a charitable company limited by guarantee owed duties to the company that served to impose a limitation on the exercise of their voting rights as members. Such a limitation was found to exist.  To quote from the ICLR summary:
"A member of a company limited by guarantee without a share capital with exclusively charitable objects was bound in to the regime now contained in the Charities Act 2011, the whole thrust of which was to ensure that the assets of the company were used for its exclusively charitable objects and for no other purpose. In those circumstances the members of the claimant did not stand outside the charity; they were part of the administration of the charity and they could not lay claim to any private interest. It would be contrary to the whole regime established by the increasingly prescriptive legislative regime reflected in the 2011 Act if the member of a company such as the claimant could vote in his interests or in a manner detrimental to the charitable objects of the company".

UK: FCA consults on powers in relation to LIBOR contributions

The Financial Conduct Authority has published a consultation paper seeking views on how it should exercise the new powers it has been given to require, if necessary, banks to contribute data for the purposes of calculating the LIBOR rate: see here (pdf).

Thursday, 15 June 2017

UK: FRC reports on audit quality

The Financial Reporting Council has today published the results of its annual audit quality inspections, including inspection reports for the six largest audit firms: see here. No overall change in audit quality is reported, with 81% of FTSE350 audits reviewed classified as requiring no more than limited improvements (against a target of 90%).

Apologies: life and work rather hectic, hence the lack of regular posting - but a 'normal' service will resume very soon

Thursday, 8 June 2017

Germany: English translation of the new Corporate Governance Code

A copy of the new edition of Germany's Corporate Governance Code was published in the Federal Gazette earlier this year: see here. An English translation is now available: see here.

Monday, 5 June 2017

South Africa: shareholders' derivative claims and good faith

The Supreme Court of Appeal gave judgment last week in Lazarus Mbethe v United Manganese of Kalahari (503/2016) [2017] ZASCA 67: see here or here (pdf). This is an important - and now leading - authority on the operation of the derivative action in South Africa under section 165 ("Derivative actions") of the Companies Act 71 of 2008. A short summary of the decision is available here (pdf). At issue was the good faith requirement imposed on the applicant under section 165(5)(b). The court held, amongst other things, that the requirement of good faith did not require the absence of a collateral purpose; however, any collateral purpose was relevant when considering (under section 165(5)(b)) whether the proceedings involved a serious question of material consequence to the company.

Friday, 2 June 2017

India: SEBI establishes corporate governance committee

The Securities and Exchange Board of India has established a corporate governance committee and asked it to provide advice, within four months, on a range of governance matters including the independence "in spirit" of independent directors, the effectiveness of board evaluation practices and participation and voting at general meetings: see here.

UK: England and Wales: the exercise of discretion and a share option agreement

His Honour Judge Waksman QC (sitting as a Judge of the High Court) gave judgment at the end of last month in Watson v watchfinder.co.uk Ltd [2017] EWHC 1275 (Comm). A summary of the case has now been provided by the ICLR: see here. Here is an extract from the summary: "Although the court would not, in every case, inevitably find that a discretion should not be exercised in a manner that was arbitrary, capricious or irrational in the public law sense, it was appropriate to do so in relation to the share option agreement. To conclude otherwise would give rise to commercial absurdity and render the share option agreement worthless".

Thursday, 1 June 2017

Pakistan: Companies Bill, 2017 becomes law

The SECP has announced that the President signed the Companies Bill, 2017, earlier this week: see here (pdf). The Bill has, therefore, become law as the Companies Act, 2017, and replaces the Companies Ordinance, 1984. A copy of the Act, which also contains provisions relating to insolvency, is available here (pdf).

Section 204 contains the duties of directors; sub-section (2) provides: "A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees the shareholders the community and for the protection of environment".

According to the SECP, the Act "... is the longest and one of the most exhaustive pieces of legislation ever approved by [the] Pakistani parliament. It has 515 sections and eight schedules, and took almost 12 years in the making".

Wednesday, 31 May 2017

Japan: new edition of the Stewardship Code published

Following a consultation earlier this year, the Council of Experts on Japan’s Stewardship Code has now published a final version of its updated Stewardship Code: see here. An English translation of the new Code is available here (pdf). A copy of the Code, in English, highlighting the changes made is available here (pdf).

Tuesday, 30 May 2017

EU: ECB guidance on 'fit and proper' assessments

The European Central Bank has published a guide on the 'fit and proper' assessments that it undertakes in respect of board members (whether management or supervisory) for those institutions under its direct supervision: see here (pdf). This role forms part of the ECB's supervisory activities under Article 4(1)(e) of the SSM Regulation (Regulation (EU) No 1024/2013).

Monday, 29 May 2017

Jersey: the Bank (Recovery and Resolution) (Jersey) Law 2017

A copy of the Bank (Recovery and Resolution) (Jersey) Law 2017 has been published: see here or here (pdf). The Law was adopted by the States in February and sanctioned by Order of Her Majesty in Council earlier this month: see here (pdf). As its title suggests, the new Law sets out the framework for dealing with failing banks (or those likely to fail) and provides for the creation of the Jersey Resolution Authority.

Friday, 26 May 2017

Isle of Man: The Beneficial Ownership Act 2017

The Beneficial Ownership Act 2017 received Royal Assent last month. The Act - available here (pdf) - replaces the Companies (Beneficial Ownership) Act 2012 (here, pdf). An overview of the new Act is available here. In very general terms, the Act sets out the framework whereby details of those controlling more than 25% of the beneficial ownership of a company are held in the Isle of Man database of beneficial ownership.

Thursday, 25 May 2017

EU: Landeskreditbank fails in its challenge of the ECB's direct supervisory oversight

Earlier this month the General Court of the European Union gave its judgment in Landeskreditbank Baden-W├╝rttemberg ‒ F├Ârderbank v ECB (Case T-122/15). The General Court - sitting in extended composition - dismissed Landeskreditbank's action in which it had challenged the decision of the European Central Bank to classify it as a significant entity (and, therefore, one that fell under the direct supervision of the ECB through the single supervisory mechanism). A summary is available here (pdf).

Wednesday, 24 May 2017

EU: Shareholder Rights Directive published in the Official Journal

The new Shareholder Rights Directive (Directive (EU) 2017/828), amending Directive 2007/36/EC, has now been published in the Official Journal of the European Union: see here. For further information about the changes being made, see here.

Tuesday, 23 May 2017

Jersey: Limited Liability Partnerships (Jersey) Law 2017

A copy of the revised framework governing limited liability partnerships in Jersey - the Limited Liability Partnerships (Jersey) Law 2017 - has recently been published on the Jersey Legal Information Board's website: see here.

Monday, 22 May 2017

Ireland: CLRG publishes annual report

The Company Law Review Group has published its annual report: see here (pdf). The annual report says that, in the coming months, the Group will publish a report into possible protections for company employees and unsecured creditors.  It is also said that the Group's current review of the enforcement of company law is at an advanced stage (a discussion document has been considered by the Group and a final report for publication is underway).

Friday, 19 May 2017

Japan: TSX white paper on the corporate governance of listed companies

The Tokyo Stock Exchange has published the latest edition of its corporate governance white paper: see here (pdf). The white paper - that is what it is called in the English version, although it's not a white paper in the more traditional sense that this term is used in the UK - presents a very comprehensive analysis of listed companies' corporate governance practices as well their compliance with the 2015 corporate governance code.

Thursday, 18 May 2017

UK: Corporate governance and the Conservative Party's manifesto

The Conservative Party published its election manifesto today: see here (pdf). This sets out several commitments concerning corporate governance - under the banners of "fairer corporate governance" and "better corporate governance" - that we can expect to see in a white paper when/if the Party is re-elected to Government (if the election had not been called, it's likely that we would have had the white paper by now, following on from the green paper last autumn). There are also commitments to reform the rules on takeovers and mergers.

With regard to governance, there appears to be a commitment to introduce through legislation an annual binding vote on remuneration (the wording in the manifesto is not as clear as it could be); it is also said that companies will be required to publish pay ratios. Change to the law is also promised to require listed companies to introduce a mechanism for greater employee voice on the board. Several options for achieving this are given including having an employee nominated director, creating an employee advisory council or assigning responsibility for employee representation to one of the non-executive directors. There is also a pledge to consult on how to strengthen the governance of private companies.

EU: Commission begins company law consultation

The European Commission has begun a consultation seeking views on how to promote the use of online tools throughout a company's life, as well as the problems that currently exist in cross-border restructuring and operations (including conflict of law rules): see here.

Wednesday, 17 May 2017

UK: 'Strengthening accountability' - PRA publishes updated policy statements

The Prudential Regulation Authority has published updated supervisory statements in respect of the accountability framework for banking and insurance (including the Senior Managers and Certification regime): see here.

Tuesday, 16 May 2017

Pakistan: Senate passes the Companies Bill, 2017

The SECP has announced that Senate has approved the Companies Bill, 2017: see here (pdf). This follows approval from the Senate Standing Committee on Finance, Revenue, Economic Affairs, Statistics and Privatization earlier this month and approval from the National Assembly in February. The Bill, once enacted and in force, will replace the Companies Ordinance, 1984.

Update (1 June 2017) - the Bill has become law: see here.

Monday, 15 May 2017

UK: Pre-Pack Pool publishes its first annual report

The Pre-Pack Pool has published its first annual report: see here (pdf). The Pool was launched in November 2015, in response to one of the key recommendations in the Graham Review. The Pool was set up to provide  an independent review of proposed connected party pre-pack transactions before they are completed, thereby providing an assurance for creditors.

The report notes that between 1 November 2015 and 31 December 2016, the Pool received for review 53 proposed connected party pre-pack purchases. The majority of these received a 'not unreasonable' opinion; six received a 'case not made' opinion. The report also notes that the number of pre-packs has fallen faster than the overall decline in administrations, and that the number of connected party purchases has also fallen.

Australia: extending crowd-sourced equity funding to proprietary companies

The Treasury is seeking views on draft legislation the purpose of which is to extend crowd-sourced equity funding to proprietary companies. A copy of the Corporations Amendment (Crowd-Sourced Funding for Proprietary Companies) Bill 2017 is available here (pdf). An explanatory memorandum is available here (pdf) and further background information is available here.

Friday, 12 May 2017

Bhutan: the Companies Act 2016 and the pursuit of gross national happiness

A copy (in English) of the Companies Act 2016, which contains Bhutan's new company law framework, is now available: see here (pdf). The influence of the UK's Companies Act 2006 can be seen: compare, for example, sections 161 and 162 of the 2016 Act with section 172 of the UK's Companies Act 2006. The differences between the UK and Bhutan become apparent, however, when looking at section 163 of the 2016 Act, which requires (to quote the English translation), the establishment of "...a Code of Conduct for the governance of companies which shall promote those conditions that will enable the pursuit of Gross National Happiness in accordance with Article 9, section 2 of the Constitution of the Kingdom of Bhutan".

Thursday, 11 May 2017

New Zealand: new edition of the NZX corporate governance code published

NZX has published an updated edition of its corporate governance code: see here (pdf). The Code will apply to all NZX Main Board listed issuers for reporting periods ending on and after 31 December 2017. For further information, see here and here.