UK: creating a corporate governance code for large private companies

Further information about the group formed to develop a corporate governance code for large private companies has been published today by the Government: see here. The group met for the first time yesterday under the chairmanship of James Wates, the chairman of Wates Ltd one of the UK's largest private construction companies (a copy of his acceptance letter is available here, pdf). Mr Wates also chairs Tomorow's Company.

Denmark: new corporate governance recommendations - now available in English

The new Corporate Governance Recommendations, published at the end of last year by the Corporate Governance Committee, are now available in English: see here (pdf).

OECD report: corporate governance rules and the role of stock exchanges in Asia

The OECD has published a report titled The evolving role of stock exchanges in Asia - standard setting, supervision and enforcement of disclosure obligations and corporate governance rules: see here (pdf). In respect of the jurisdictions reviewed, the report notes that most stock exchanges play a secondary role in monitoring corporate governance standards, with the securities regulator the principal custodian of the relevant Codes and Principles.

A quiet anniversary

It is - give or take a day or two - ten years since this blog was launched. And we are still together, a little over 4,400 posts later.* With best wishes, Robert.

* - Yes, I know: I still have not got round to tidying-up the collection of links!

Switzerland: establishing a register of beneficial ownership for companies

The Swiss Federal Council has begun a consultation on a Bill that will, amongst other things, require (a) the conversion of bearer shares into registered shares and (b) the introduction of a register of shareholders and beneficial owners: see here.

UK: Companies House publishes statistics release for Oct-Dec 2017

In its latest statistics release, Companies House reports that on 31 December 2017 there were 3,993,232 companies on the total register and 3,725,610 companies on the effective register (the latter excluding companies in the process of liquidation or dissolution): see here. Of those on the effective register, 5,960 were public companies.

UK: the ownership of quoted company shares

Somewhat belatedly I note that the Office for National Statistics has published updated analysis on the ownership of UK quoted company shares: see here. The report notes that at the end of 2016, 53.9% of shares (in terms of value) were held by investors outside of the UK. Twenty years ago this figure was 30.7%. The following chart indicates the other ownership categories and is taken directly from the ONS report.

The "rest of the world" category is comprised as follows:

Nigeria: FRC Technical Committee formed to review suspended Codes

At about this time last year, a Federal Government directive suspended the new National Codes of Corporate Governance introduced by the Financial Reporting Council. Several days ago the FRC announced that a Technical Committee had been created to review the suspended Code with a view to making revisions and republished the Codes: see here.

Zambia: the Companies Act 2017

A new framework for companies in Zambia - the Companies Bill 2017 - was introduced in the National Assembly early last year and has now become law as the Companies act 2017. A copy of the Act is available here (pdf).

UK: The Office for Professional Body Anti-Money Laundering Supervision

The Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 came into force yesterday. The Regulations give the Financial Conduct Authority a new role, in the form of the new Office for Professional Body Anti-Money Laundering Supervision: overseeing the anti-money laundering and counter terrorist financing supervision undertaken by 22 self-regulatory organisations. Further information can be found in the explanatory memorandum accompanying the Regulations: see here (pdf).

Singapore: MAS consults on revised corporate governance code

The Monetary Authority of Singapore has published a consultation paper seeking views on proposed changes to its Corporate Governance Code: see here. The new code is based on mandatory Principles supported by Provisions. The provisions are subject to 'comply or explain'. The proposed changes are designed, amongst other things, to strength board independence and diversity.

Denmark: updated Corporate Governance Recommendations

The Corporate Governance Committee has published a revised edition of its Corporate Governance Recommendations: see here (pdf, Danish). A copy of the new Recommendations, in English, has not yet been published.

Update (28 January 2018) - now available in English: see here (pdf).

Japan: FSA plans for a new supervisory approach

The Financial Services Agency - the regulator for banks, insurance companies and capital markets - is seeking views on plans to adopt a new supervisory approach. Further information about this new approach, in English, is available in the report published by the FSA setting out its proposals: see here (pdf, English). The FSA proposes moving away from its current approach - described as being too focused on form and the past - to one where judgment is exercised holistically, examines substance and is forward looking.

UK: CUC publishes draft Higher Education Remuneration Code

The Committee of University Chairs has published for comment a draft remuneration code: see here. It seems uncharitable to say that the Code appears to have been produced somewhat hastily. In places there are missing words and/or typographical errors and the general tenor appears somewhat defensive of the status quo.  The structure of the Code is not particularly helpful and what an institution needs to do in order to claim compliance with the Code is set low. This said, it is not clear if the explanatory notes accompanying the Code are part of the Code for compliance purposes (the notes are said to "support" the Code). These notes are more extensive than the Code itself and contain much of the detail covered in media reports (see here for example).

One aspect of the Code is striking given the changes that were made several years ago to the UK's Corporate Governance Code in respect of remuneration. The CUC's draft Code states that remuneration should be "sufficient to recruit, retain and motivate staff of appropriate calibre in the context of the market for that role, balanced with the need to demonstrate the achievement of value for money in the use of resources" (para. 21).  The first part of this quotation - with its emphasis on recruitment, retention and motivation - mirrors closely what was one of the Main Principles in the 2012 edition of the UK Corporate Governance Code (here, pdf). But in the 2014 edition of the Code (here, pdf) the references to recruitment, retention and motivation were removed and the Principle amended to stress that remuneration should be designed to promote the long-term success of the company. The FRC made this change because it wanted to make clear that remuneration policies should be designed to achieve long-term benefit for companies rather than short-term benefits for management (see here, pdf).

UK: LSE proposes 'comply or explain' code requirement for AIM companies

Last month, the London Stock Exchange published a feedback statement (including consultation questions) in respect of the AIM rules discussion paper (here, pdf) published earlier in the year: see here (pdf). It is the LSE's intention that AIM companies should be subject to a 'comply or explain' requirement in respect of a relevant corporate governance code (to be achieved through amendments to Rule 26 of the AIM rules). This would, subject to the outcome of the consultation, take effect from 30 June 2018. At present, Rule 26 does not require AIM companies to adopt a particular governance code (where no code has been adopted this should be stated and the company's governance arrangements disclosed).

UK: Scotland: the Takeover Code and enforcement by the court under the Companies Act 2006

Shortly before the end of last year, Lord Bannatayne, sitting in the Outer House of the Court of Session, delivered his opinion in The Panel on Takeovers and Mergers v King [2017] CSOH 156: see here (pdf). The opinion is an important one on the operation of section 955 ("Enforcement by the court") of the Companies Act 2006 and Rule 9 of the Takeover Code (the mandatory bid rule). Section 955 provides, on application by the Takeover Panel, that if the court is satisfied that a person has contravened a rule-based requirement or a disclosure requirement, the court "may make any order it thinks fit to secure compliance with the requirement". In respect of section 955, Lord Bannatayne stated (paras. [80] - [82]):

The intent of the provision clearly is to provide a means whereby the Panel can seek to have its decisions enforced. However, that does not mean that the court’s function is to act as no more than a rubberstamp ... The court I believe, in nearly all cases, if asked by the Panel to enforce its decision by granting an order will do so. However, there may be very rare cases where it may not do so. I do not believe that in holding that the court has discretion to refuse to pronounce an order, in what undoubtedly would be very exceptional circumstances, undermines the functioning of the Panel".

Sierra Leone: draft of national corporate governance code published

The Corporate Affairs Commission has published for consultation a draft corporate governance code: see here (pdf). The Code is intended to apply to companies, partnerships, state-owned enterprises, non-governmental organisations and trade unions. It will operate on the basis of 'comply or explain' or, where legislation requires it, 'comply or else'.

UK: Revised edition of the Takeover Code published

A revised edition of the City Code on Takeovers and Mergers (aka the Takeover Code) was published yesterday: see here (pdf). Further information about the revisions made is available here (pdf).